AMA: Hedge Fund Lawyer

Hi, I'm a hedge fund attorney in my early 30s. I was a finance major in college (and a good one) so I understand the business side a little bit better than most attorneys. Unfortunately, I went to undergrad during the financial crisis and didn't get a finance job because I had no idea what I was doing and I somehow ended up in software testing before going to law school. I've tried to get into the financial sector since, but I've pretty much given up hope over the last year now that I have a little bit of experience as an attorney and now everyone thinks I suck at math and can only do lawyer things. I do a bunch of investing in my spare time to the extent that I can given the trading policies I'm subject to.

I'm happy to answer any questions that I can as I have seen things from several different perspectives. I'm also a big believer in the power of forums like these. I never looked online for help and largely relied on career services (lol) for help in college. Then I looked to forums for getting into law school and ended up at Harvard Law School and then a top-top tier law firm. I've since moved to a boutique law firm so I can have more of a life.

Comments (36)

Most Helpful
Sep 25, 2019

How much do you make per year total comp?

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Oct 15, 2019

Sorry about the delayed responses! It took a while for this to get posted and I've been busy.

I make $205k base and bonus will probably be around $25k. The link below shows the comp that almost all New York firms follow. A lot of the better firms pay this scale in low cost-of-living offices (e.g. Houston) as well, so idk why I chose New York.

https://www.biglawinvestor.com/biglaw-salary-scale/

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Sep 25, 2019

I hear ya man. Kids today don't get how bad the financial crisis really was. You could be smart enough to get into Harvard Law School, but not good enough for an entry level finance position. Almost nothing was out there.

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Sep 25, 2019

It was a bloodbath--no doubt.

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Sep 27, 2019

on the other hand, for some it was a great time to start a business, go to grad school, or try something completely different (move abroad)

WSO's COO (Chief Operating Orangutan) | My Linkedin

Oct 15, 2019
AndyLouis:

on the other hand, for some it was a great time to start a business, go to grad school, or try something completely different (move abroad)

Law school apps actually went way up during the financial crisis because everyone thought (omg, I should just go to grad school!). I think applications were down 20% the year I applied (I waited 3 years after graduation to apply) and it was still like the 5th most competitive year every for law schools.

Sep 25, 2019

Thanks for doing an AMA! Can you talk a little about what would and would not get you charged for insider trading? I have one understanding from the CFA and a completely different one from my hedge fund friends, who tell me they can only get charged if they paid for the information.

Funniest
Sep 25, 2019

All you need to say is "I am not uncertain" and you're in the clear.

Sep 26, 2019

That line is the go to jail line for sure.

There are guys who did less and got convicted and sentenced and winning on appeal. There are funds that got raided with no charges filed but all the investors fleed so shut down.

Spoofing is similar. They never defined it and then started putting people in jail. Some guys won there cases and some lists.

Overall the US is terrible at having well defined securities law. You never know what you will get arrested for ten years later.

Array
Sep 27, 2019

It's a quote from Billions i don't think Kiwi was being serious.

  • Associate 2 in CorpDev
Sep 27, 2019

Statistically speaking, people who ask this question tend to end up charged for insider trading

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Oct 15, 2019
celtics2007:

Thanks for doing an AMA! Can you talk a little about what would and would not get you charged for insider trading? I have one understanding from the CFA and a completely different one from my hedge fund friends, who tell me they can only get charged if they paid for the information.

You have to trade on what is called "Material Non-Public Information". The actual regulation for insider trading is copy/pasted below. Notice how unbelievably broad it is. In simplest terms, you make a trade knowing information that will materially affect the price of the stock. You also get in trouble if you tell someone the info and they trade on it. You don't have to pay for the info for it to be insider trading. When I did M&A deals as an attorney, I was literally paid to be given the information. For example, I knew that a company trading for $15/share on Friday was going to announce its sale for $22/share that Monday. If I told anyone or traded on that, I would go to jail. Federal prosecutors/law enforcement get paid way less than big firm lawyers, so they love going into those offices whenever they can in their windbreakers and arresting some fools.

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,
in connection with the purchase or sale of any security.

Sep 25, 2019

Thanks for doing this. Is it possible to land an associate position at a BB bank with a JD from Harvard? Additionally, are there any PMs at your hedge fund with a JD?

Sep 25, 2019
mitch-paul:

Thanks for doing this. Is it possible to land an associate position at a BB bank with a JD from Harvard? Additionally, are there any PMs at your hedge fund with a JD?

It is possible, and a few do it every year (with and without biglaw experience).

However this doesn't reflect the amount of people that likely tried and failed.

Array

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Oct 15, 2019
mitch-paul:

Thanks for doing this. Is it possible to land an associate position at a BB bank with a JD from Harvard? Additionally, are there any PMs at your hedge fund with a JD?

I don't work at a hedge fund. Many of my clients are hedge funds and occasionally you will see a JD on the business side, but it's really really rare. Most of the JDs running hedge funds got into it decades ago when there really wasn't a whole recruiting pipeline for buy side. Now, PMs make 3 phone calls to recruiters and have a line of candidates with trading experience knocking down the door.

I-banking is possible from Harvard Law, but it's rare. In a graduating class of 600, maybe like 10 do it, where 8 of them are JD/MBAs and the other 2 worked in IBD before law school. It's much easier to get IBD out of business school nowadays. IBD associate is no longer the most sought-after job out of top MBA programs (behind consulting, tech jobs, entrepreneurship, etc.) and it is harder to get into private equity from a post-MBA IBD job, so there is much less demand.

I've seen some M&A lawyers go from top NY firms to banking after practicing for 3-4 years, but it's rare and only like 3 or 4 banks do it. Lazard is probably best known for poaching JDs from law firms. Once again, it is nowhere near the path of least resistance.

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Sep 25, 2019

Thanks for doing this , does it make sense to go from IB --> Top Law school ---> Big Law or is law school and big law not as good as it used to be?

Sep 25, 2019
leonardo dicaprisun:

Thanks for doing this , does it make sense to go from IB --> Top Law school ---> Big Law or is law school and big law not as good as it used to be?

If you want to practice any sort of transactional law, law school does not make sense. If you are interested in Lit/Gov this is a full career change and really depends on your goals.

Array

Sep 25, 2019

I am mainly interested in working for a Big law firm covering the energy sector

Oct 15, 2019
leonardo dicaprisun:

Thanks for doing this , does it make sense to go from IB --> Top Law school ---> Big Law or is law school and big law not as good as it used to be?

I worked at a top Big Law firm and hated it. Some people like it. It isn't as much face time as IBD, but you only get credit for the time you actually bill. At top firms, I'd say the median associate bills 2100 hours per year, but some go much much higher (a bunch crack 3000/year). You won't know if you like it until you're actually doing it, and by then you've already spent 5 years preparing for a legal career. It is still definitely (assuming you go to a top-top school) the path of least resistance for earning $200k+ per year. If I could go back though, I don't think I'd go to law school again though.

Sep 25, 2019

Why not go into litigation finance? There are several reputable funds doing this these days. They want lawyers not traders.

Just a thought.

Sep 26, 2019

delete

Sep 26, 2019

I looked into this when I was in law school and these are usually Lit/arbitration lawyers as they need the background to underwrite claims.

I assume OP is more governance/corporate but could be wrong.

Array

Oct 15, 2019
brotherbear:

Why not go into litigation finance? There are several reputable funds doing this these days. They want lawyers not traders.

Just a thought.

Yeah, I'm a corporate attorney, but I don't litigate. Most of my job is drafting PPMs, subscription documents, limited partnership agreements, compliance policies, etc. for hedge funds. I have been in a courtroom twice in my life: once for jury duty and once to get sworn in as an attorney. If you want to see the doc that the big deal bro partners negotiate the most, go on SEC Edgar and search for a company that had an acquisition announced recently. The merger agreement should be an exhibit to the 8-K. Transactional associates don't even really get to look at that document until their 3rd year and don't get to touch it until their 4th or 5th year.

Sep 25, 2019

Why don't you think you could move to a role in finance?

Depending on what specific hedge fund work you do and based on your pedigree I'd think you have skills/background that could lateral to a bank in a HF coverage team or on an activism defense team at banks.

Is the issue primarily losing seniority?

Array

Sep 26, 2019

I second this. Activist funds need lawyers as much or more than they need bankers. A good lawyer's judgment is worth a great deal to activists.

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Sep 26, 2019

Just check out Elliott. Paul Singer has his JD from Harvard, and they have a slew of other lawyers that wear many hats. With the right networking you're possibilities are not bound.

Oct 15, 2019
Redelephant:

Why don't you think you could move to a role in finance?

Depending on what specific hedge fund work you do and based on your pedigree I'd think you have skills/background that could lateral to a bank in a HF coverage team or on an activism defense team at banks.

Is the issue primarily losing seniority?

My plan is to eventually move to one of my hedge fund clients once I get a little more seasoned. Most of the attorneys that hop to the bigger hedge funds in leadership roles were partners at the firm that does the hedge fund's outside work. Very few attorneys (like less than 5%) ever make partner, so it's a long road to get to one of those places. Hedge funds aren't hiring lawyers with 2 years of experience, except for really repetitive compliance stuff and doing simpler tasks like negotiating form NDAs.

Oct 19, 2019

Agreed that hedge funds aren't looking for in-house attorneys with 2 years of experience.

But if you still have aspirations to move to the business side, I think you have a decent shot and now would be the time to try to make the move. I believe I am your law school graduating year (2017) and activist defense banking groups were very receptive when I was recruiting in 2018 from a worse school/firm combo. I also saw a few other lawyers at superdays for these roles. I ended up taking a different role but I think if I had pushed my recruiting there, I would have found a home in one of those groups. I know for a fact Camberview (PJT) is very receptive to lawyers and is recruiting nonstop.

Array

Sep 26, 2019

Former attorney and now internal equity analyst at a family office. You're correct that there's an assumption out there that lawyers can't do math. But you know what's the bigger myth? That math matters. Generating alpha is more about critical thinking, diligence and conviction. The math skills one needs to confirm a good idea are minimal. If you want to be an investor then use your free time to generate ideas and use your perch inside the fund to bounce them off people.

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Sep 26, 2019

lol the ol' "post an AMA and then forget to answer them" trick. I'm sure OP is just busy and will come back sooner or later, but this happened several times this summer.

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Oct 15, 2019
Edifice:

lol the ol' "post an AMA and then forget to answer them" trick. I'm sure OP is just busy and will come back sooner or later, but this happened several times this summer.

Sorry! It took a while for the mods to approve it and I completely forgot about it until tonight. I'm sure people wouldn't ghost as often if the topics got approved sooner.

Sep 26, 2019

Thanks for the AMA. Your answers have been enlightening thus far!

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Sep 27, 2019

What type of investing do you do? How did you learn investing skills while working as a lawyer?

Oct 15, 2019
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Sep 27, 2019