Why do lawyers do so well in finance?
I have noticed James Gorman, Lloyd Blankfein, David Rubenstein, and others go into finance and do extraordinarily well. Does anyone understand which skills overlap or why they end up doing so well?
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Don't forget Kramer -- Harvard Law School.
I didn’t know Kramer from Seinfeld went to Harvard Law
That actually made me laugh out loud and almost spit out some expensive wine. Well done!
A law degree was viewed much differently in the 70s and 80s. Back in the day, it was more of a generalist degree and the "default" path for bright liberals arts students. Business school was considered that backup for people who couldn't get into law school. These days, business school is just as selective (or even moreso) while law school has become much more akin to a trade school than a general purpose finishing school. Plus, as law firms have gotten bigger and more global, the practice of law has shifted from a general advisor and counselor to a service provider. Meanwhile, prestigious business school grads are much more common. As a result, you'll notice that far fewer people transition from legal to business roles these days.
Law school is more similar to a trade school now in that you generally go to law school to become a lawyer, as opposed to back in the day when you'd go to law school to hobnob with other rich folk and then come out and do whatever
I always thought it was ironic that most smart M&A lawyers could do a banker’s job in a second, whereas the reverse can not be said.
I mean I'm sure your average banker could figure out how to find/replace a company name in a precedent document and refresh a table of contents
Ah, sorry, forgot for a second that this site was full of hardo wannabe career bankers, my mistake
I’ve done both and I feel the opposite is true. As an M&A lawyer the bankers were often telling me things about my own job that I didn’t know. There are no doubt some details that lawyers know better than bankers, but bankers understand the bigger picture much better than lawyers.
Ultimately, success in either field is about your ability to make clients see you as a trusted advisor and the banking skillset is much more valuable for that.
I think you see a lot of older folks in successful finance roles because the entire finance hiring process was less structured when these folks transitioned from law to finance, back in the 60s-80s. The financial industry also really exploded during this time, so there was a need for top talent, so it would have made sense for banks/PE funds and so on to hire the lawyers who worked with them on deals.
Now, I don't think it would make sense to pursue a law degree if you want to work in finance. You'd have to spend 3 years in law school plus at least 2-3 years practicing as a lawyer before you could transition, and at that point, why would Wall Street hire you when there's an endless supply of MBAs and undergrads out there? You could just go to business school (or often not even go to business school) and work in finance directly.
I have MANY friends who went to top law schools and worked at big firms, and I don't know any of them who are trying to work in finance--and frankly I think they would have a hard path for themselves to make the transition, with some exceptions (I have a friend that went to Yale law and got an interview at a huge hedge fund, but I think they were looking for a generalist and interviewed him because he was a generica smart guy with a good background, not necessarily because his law experience would be super helpful).
Quantitative finance might be a good analogy. Banks hired lots of physics and CS PhDs back in the day, but it would be silly to take that path to work in quant fin now when you can do a quant fin masters degree or somethibng.
Finance is very cross disciplinary and becomes more LAC at the higher levels.
Early on acctg, econ, excel with higher level math for quants. You use databases for market info, you are reading and writing a lot, buying/selling, or managing assets/funds. Tax and regulatory issues come up to learn as well. You are cross discipline but at a tactical and largely reactionary level.
At the highest level the need is not just for someone strategic but future planning and able to shape the future - convincing someone to do what you want them to do and attracting talent/organizing it/and being able to communicate the future vision to have it realized.
At the most senior level the execs are measured by who you know, who you attract, how you can influence others, political connections - regulators, tax issues (state, national and international), economic themes and conversations with futurists and other bleeding edge people matter the most.
Some of these leaders some out of finance, but many of these top leader skills have been developed in attorneys - especially those who have moved back and forth between industry and government at high levels. It would make Ayn Rand sick to read this but successful finance people at the highest levels for the last 30 years are closely tied to government regulators and tax e.g, Regulation Q, Glass- Steagall, Basel Accords, and QE.