Banking vs. Law

Intern in IB - Gen

Hi everyone,

I'm an incoming intern at a mid-tier BB but I've always been interested in law (specifically securities law, think Davis Polk, Skadden, Cravath type work). It seems like more and more people are going to IB (and then PE, MBA) over Law and I wanted to get some insight as to why.

How does a career in Law (say aforementioned firms) compare to IB (say BBs, and include the PE route) in comp, lifestyle, long-term comp ceiling, job security, etc.

Are people just choosing IB because the immediate payoff is much higher or is IB truly a "more desirable" path for legitimate reasons?

For context: I have a legitimate interest in either career and don't have an overwhelming preference for either. And, again, I'll be joining a mid-tier BB in IB and I'm confident I can land a top 5, 6, or 7 law school (based on GPA and LSAT)

Comments (25)

May 23, 2020

Idk if you can say if either is more desired than the other. After all, top law schools and top firms are most likely as/more difficult to get into than top investment banks just due to the smaller numbers top law firms may employ (Wachtell for instance). I don't think there is a huge difference in pay between the two industries as the top players in both can walk home with 8 figures each year. I think the main difference is fit. Lawyers definitely benefit from being more cynical. I think a lot of people make the mistake of going into law without knowing what they're getting into (which is why you hear a lot of lawyers complaining). Neither is more desirable, I think each one is a good fit for a certain kind of person.

  • Analyst 1 in IB-M&A
May 23, 2020

Can you elaborate on the fit differences you see? While I think I'm a good fit for the analytical aspects of the junior level of IB, I don't want to be entirely sales/client facing as MDs are

May 23, 2020

I guess I can because strangely enough most my family members are in some sort of securities/ finance related law. Your whole MD thing is a misconception, If you reach a certain level in any industry (including law) you will have to be sales/client facing. In the case of law, the "MD" level people I know are obsessed with the sales/client aspects. They are constantly promoting the services that "only" their firm can provide compared to others. I think for both you have to work hard, and I think both have quite a bit of grunt work for starting positions. I think both are good because they give you a lot of flexibility starting off in your career (as long as you go to like BB/EB or T7 Law).

For fit, the single thing that I know of is that lawyers are more cynical (which gives them the ability to kind of be able to anticipate more stuff). If you're really cynical/paranoid, it is kind of second nature to think of things to put into contracts. One way I've seen it explained on this site is that lawyers stay up all night thinking of things that could go wrong in the future so they can put into writing. People in finance look at the future, but not in the same way as lawyers might. This can be a bad fit for certain people as the natural cynicism/worrying that lawyer might do can wear down a person if they do it all day. I think both have some level of analytics I guess, but I would imagine that is more top-level stuff than starting position/grunt work.

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  • Intern in IB-M&A
May 23, 2020

Bro who's walkin away with 8 figures? Wtf

May 23, 2020

Idk I read some Bloomberg article on it like a month ago about the rise of the "superstar lawyer". Like I said if you read carefully, these are only the superstars or top players. They're aren't a whole of people in finance who are making the kind of dough either. For both it is a minuscule number of people.

  • Intern in IB - Gen
May 23, 2020

Agreed. Top partners at top PE/VC will he making 7-8 figures. Top rainmaker MDs in IB, probably 7. If you want a shot at 8 you need to take on more risk, but that's true in anything.

I'm curious about the risk/reward of top law comp vs top IB comp. Why go to school for three more years, is your average comp higher? Ceiling comp higher? Lower risk of firing? Less comp volatility (I.e. banking base is little in a low-to-no bonus year)?

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  • Analyst 2 in IB-M&A
May 23, 2020

Maybe cause some people actually want to practice law? shocker

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May 23, 2020

If you're looking at this from a purely monetary perspective, you're just wrong. People choose to go to law school because they might want a high paying law career and they like the work. One thing is that if you're making 7 figures, you're probably working so much you don't have all the time to enjoy that money. That is why you have to enjoy your work. The point of me bringing up the similar pay of the superstars in both industries was just to erase any worries anybody has of "oh well I won't be paid as much in law" when that is definitely not true. I really don't think there is any higher reward for going to law school other than you can probably pass the bar now.

May 23, 2020

Law is 3 years of paying for school, which is 200k plus the missed opportunity to make ~150k/year as an analyst. If you can get a job coming out of law, which is no guarantee these days, your pay is on par with an IB associate.

Climbing the ranks in either profession will net you a strong salary (8 figures is rare). If you're truly indifferent I can't see the value of paying 200k+, plus opportunity cost of ~500k from not working those three years. If you're strongly interested in law go that route, but it's not some gold mine for more money

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  • Intern in IB - Ind
May 23, 2020

I thought about Banking vs. Law, but pretty quickly realized that IB was more appealing for me. For context, T30 school headed to a BB.

Here's why:

  1. The misery of law school. I came across many 2L and 3L students during undergrad, and they seemed to dread the studying/classes. 3 years opportunity cost, plus the crazy debt/expense didn't seem so appealing.
  2. Compensation. If tracking by age, you will most likely make more money in finance than in BigLaw. Obviously, you see that at the junior level, when bankers are making more than 500k (in the 3 years) while future lawyers are still in school. MBA cost for some finance roles could reduce the gap, but again, it's not necessary. Assuming an exit to PE, you can make very good money (average 500K+ yearly) before your 30s. No point in analyzing partner level comp since it's so variable and the chances of making partner are crazy slim. I still think that PE partners make more on average than law partners.
  3. The exit opps. IB opens doors for virtually everything in the finance world and everything outside it. VC, PE, HF, CorpDev, Strat, Consulting, back office- you name it. It would be much harder to pivot to anything else after being a lawyer. And even if you are able to pivot, which many Harvard Law types end up doing, why tf would you go to law school to end up in a different industry. I know you still have applicable knowledge/skills, but not worth it imo.
  4. The work. This is more personal. I feel that the work in finance is much more exciting than in law. I haven't experienced the work in law firsthand, but it sounds pretty boring to me. At the junior level, the work will be BS everywhere. But think this: the lawyer's client is the banker and the banker's client is the PE guy. Who would you rather be?
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  • Analyst 1 in HF - Other
May 23, 2020

What bankers/PE/HF guys are making 500K 3 years out of undergrad? Unless you're a quant, that's not a thing...

  • Intern in IB - Ind
May 23, 2020

I was using 500K as a worst case for 3 years combined as an analyst/AS1. I see where you misunderstood that, my fault. I wish it was 500K yearly lol.

May 23, 2020

What quant is making 500k 3 years out of undergrad...

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  • Analyst 1 in IB - Gen
May 23, 2020

Well you're in for a big surprise when you get to your BB. Nobody is making 500k+ 3 years out of college anywhere in IB/PE.

  • Intern in IB - Ind
May 23, 2020

I meant in total. Give of take 500K total over the analyst years.

May 23, 2020

This recent thread will answer a lot about why banking is more preferable for people interested in business:

https://www.wallstreetoasis.com/forums/ma-bankers-...
To each their own, but having done both I can say without a doubt that corporate law has a much higher disappointment rate over a long term career. Young bankers and young lawyers may have a similar disappointment rate of their immediate job, but IB is transferable to so many things and corporate law really isn't.

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May 23, 2020

I think this forum is a bit too doom-and-gloom about law. I worked in legal practice and I know lots of lawyers at all levels who are happy, successful, and get paid well. The pay ceiling in IB is higher, but on average you'll be working quite a bit more than your legal counterparts. Law also seems to have a more defined career path (defined partnership track or get 3-5 years experience and exit to a cushy in-house or government job). It's a career for more risk-averse people (makes sense as your entire job is to mitigate risk). I also think it's significantly easier to get a high-paying job at a law firm than to get a high-paying IB job at a BB or EB.

However, in the end, it all comes down to what your interests are. If you like reading and writing, go with law. If you like numbers, go with IB. If you're indifferent and all you care about is money, go with IB. If you're indifferent and all you care about is "prestige" to random people you meet, go with law, because the vast majority of Joe Blows know law is a "prestigious" career, but most will think you're a bank teller if you tell them you work in IB.

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  • Intern in IB - Gen
May 23, 2020

It's hard to get unbiased info on an IB website so I appreciate this. I think what it comes down to in the end is what is a better fit, because that's naturally where I'll succeed the most anyway

  • Intern in IB-M&A
May 23, 2020

Is being a partner at a law firm more prestigious and higher paying than a MD at a bank?

May 24, 2020

The point is that most "average" people don't really have any idea of what IB is and what it entails, therefore law looks more prestigious.

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  • VP in PE - LBOs
May 23, 2020
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