Lawyers trying to be bankers
I have been in IB 10 months now. In the last three transactions I have worked on, our legal advisers have often derailed meetings by trying to opine on transaction strategy and suggesting different ways to run competitive processes, generate tension between bidders and maximize value - basically what we are being paid by the client to do. Their suggestions are pretty ridiculous (e.g. a 15 minute speech on how to really "get into the CEOs head and manipulate him") and I can see my MDs getting silently frustrated as they try and focus the lawyers on drafting the SPA or reviewing contracts or whatever they are actually meant to be doing.
I'm starting to get the impression that most corporate lawyers are in love with the idea of M&A/doing deals and basically want to be investment bankers. I'm interested to hear others stories of lawyers trying to add-value to deals or be hotshots? This is not to say lawyers don't have their place and can provide invaluable advice - I am just really astonished by some of the shit our lawyers have been coming out with which has just shown really poor commercial acumen and lack of business understanding.
It's not a big deal -- on large transactions lots of voices in the room. Everyone tries to justify their value and thus fees. Think about it from their persepctive. They're billing literally by the hour unlike banks which bill on closing fees
Lawyers love dragging out fees. It's important to set the tone right once engaged. Don't let them speak unless spoken to and only allow them to eat celery or carrots.
interesting point the two guys above made. Never thought about it, but they are billed for the hour. Shit may have to help my bro out and extend that meeting
Lawyers are either deal facilitators or deal killers. Most of the time they are deal killers.
Unfortunately, the lawyer business model is not aligned with the client. They really don't give a shit if a deal closes, as long as they maximize hours and get paid.
They see the fees investment bankers make and think they could run a transaction process themselves. They only see the closing fee to the investment bank. Not the months of work doing diligence, marketing the company, negotiating the IOI, LOI, etc.
Most attorney's have no idea about capital markets / intricate details of the company and acquisition landscape. I literally had a lawyer tell me that the NDA was the most important deal document (for a small company that not one on the planet cared about).
Generally true that a lawyer's business model is not fully aligned with the client since lawyers generally get paid even when a deal doesn't close, but clients have become more sophisticated about billing, such that these days, it is not uncommon to have full payment of legal fees made contingent upon the deal closing.
This is a fantastic writeup. I can't stand 90% of attorney's because of this simple fact. Also consider this, out of the scores of attorneys I've worked with over a decade of IB and PE, there are 3 that I would choose to work with. One of these I can't anymore because they went in-house. Most attorney's that have good commercial sense and business acumen end up transitioning into banking or restructuring because they realize it's far more profitable.
Just here for the comments.
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