Career Clinic: Can lawyers really cut it as bankers?

Yes they can 'cut it' quite happily as bankers so long as they are prepared to erase all memory of their entire legal training.

Bank -30 Jul 2007 | 16:35

I am sure some lawyers can cut it, but why ask a bunch of lawyers? What would they know? Ask the bankers themselves. My advice to you - you're looking in the wrong place. Use your initiative - surely a pre-requisite for "cutting it" as a banker, as to where to look and who to ask!!!

Unhelpful Bankwit -30 Jul 2007 | 16:40

Some lawyers can make the transition, but the majority won't manage, even if they wanted to make the switch. What is your attitude to risk (in your job), are you happy to be judged purely by your P&L performance? Or are you essentially a risk-averse service provider by nature, in which case you are probably better suited to remaining a lawyer? If proceeding, there are essentially two types of business roles in IB you might consider. One is on the trading floor, perhaps fixed income or equities, could be derivatives. You will be hired because of your documentation and structuring expertise, knowing how to document termsheets, how to make sure trades settle OK, etc. You will need to be quite numerate. The other role is working in the corporate finance area, but that is more suited if you are a corporate lawyer with M&A experience. You don't need to be too numerate in this role, although you will need to get up to speed with how to do discounted cash flow valuations etc. Don't move to a bank as an inhouse lawyer in the hope of moving to a business role, it can be done but it is more difficult than coming straight into a business role from private practice. Finally, to demonstrate your numeracy skills, you might consider doing a course like the London Business School's Masters in Finance degree, which you can do part time while working. It's expensive (about £20K) but there's none better. Good luck. Try and talk to bankers who used to be lawyers. Like Investment Banker, who often posts on this forum.

May -30 Jul 2007 | 16:41

What they would know about is crossing the floor from law, which is what I want to know about and what a banker-from-uni wouldn't know anything about. Thanks, May, that was much more helpful.

Anonymous -30 Jul 2007 | 16:54

I agree with most of what May says, except for the part about it being easier to go straight from pp to a front office role; i've seen many in-house lawyers make the transition; and am working on a few front office roles now where they are looking for lawyers to 'retool' and they will not contemplate lawyers straight from practice. I think some lawyers do get 'tapped up', but they are the exception not the rule - it's just too big a leap. I would definitely recommend going in-house for a year or so, then start looking (both internally and externally).

Recruiter -31 Jul 2007 | 11:01

I've worked in a global investment bank as a banker for a year and thought about making the transition. To make the move you're going to have to get a finance qualification, either part-time or through a finance-focused MBA, and then loads of practical experience running models and spreadsheets. To some extent, your legal skills will be useful but you may have got to the stage where you have greater autonomy now than you'll get intially as part of a larger investment banking team. One alternative is to go into a smaller integrated house where you'll get more hands-on experience but if you're interested in big, cross-border, high-profile deals, you're going to spend a considerable time sweating over models as a junior banker learning your trade.

Partner, national firm -31 Jul 2007 | 11:32

If you can go straight into a business role in IB from PP, do it. In a specialised field such as structured finance and derivatives (your field I think) I do think you have a substantially better chance of doing that than most other specialisations. Much better than using an in-house position as a stepping stone, which is rarely that anyway - there are very few in-housers that transfer across to the business. In my 5 years at a big US bank, only one did, and that was after 3 years in the transaction management area, doing ECM (equities capital markets) work, she joined the ECM desk doing new issues. If you know what you want, better to go for it now, plus you would have more credibility. You should be in demand in your field. Another such field is securitisations and CDOs. Good luck!

May -31 Jul 2007 | 11:38

What about the prospects of a junior corporate lawyer going into a bank working on M&A? Will the skills gained in M&A as a lawyer be highly regarded?

junior lawyer -01 Aug 2007 | 09:21

Face it - as a junior lawyer you should be fairly well versed in M&A execution skills but you will, however, know nothing about the financial analysis behind a deal and that, at the end of the day, is what the client is generally paying an M&A banker for. So you'll have to spend quite a bit of time (and money) getting your financial analysis skills up to speed - see above. If you can't do the analysis behind a fairness opinion or model a merged group, you're not much use as a banker. Increasingly lawyers seem to be paid to do an IB's execution role so while your project management skills are useful, they're not what an IB director really needs on an M&A deal.

Partner -01 Aug 2007 | 15:32

To junior lawyer. Your experience is relevant and useful to the extent you know your way around the takeover code, i.e. UK public M&A deal experience, and you are going to be involved in that area at the IB. In fact, it could be useful even for non-UK M&A work. Like with so much of what we do, so long as you have a sense of asking the right questions of the deal counsel, you should be OK. Private M&A experience is not worthless but will be much less prized. So choose an IB that is rated for UK public takeover work. My bank hired quite a few junior corporate lawyers with good M&A experience, they were mainly drafted in to do UK M&A work unsurprisingly. Good luck.

May -01 Aug 2007 | 16:37

Having read the comments so far and recently jumped over the fence from being a senior associate in a US firm to being a structured finance banker I think the answer depends on the exact role you seek and what is being offered. While numeracy is important i don't agree that you need to spend long hours poring (and stressing) over honing your maths and finance. Bankers are a savvy bunch, if they think you won't make it ab initio because your numeracy is weak or untested, they simply won't hire you. Other candidates will have those skills - bankers don't hire lawyers for those roles simply because there are no alternatives! Lawyers are prized for their thorough approach to problem-solving (or structuring in my case), their ability to articulate ideas clearly and negotiate credibly with clients. You have something to offer with those skills despite no practical banking experience. I do think you should go directly on to the business side if that's available (though it is rarer than being offered an in-house role). It does boil down to the individual though: most lawyers are risk-averse animals who, to an extent, conform to the lawyer stereotypes. Most lawyers who choose to leave the relative safety of a law firm and embark on a brand new venture like banking are, by virtue of that choice, displaying the kind of backbone that bankers appreciate. It's too early for me to say how successful I will be but the vibe is good so far - there's a lot to learn and you must be open-minded and put down your legal hat. But there's a lot of opportunity too and your skill-set and training prepare you well for the challenge - nothing ventured, nothing gained... to be trite. As a former Linklaters associate now at Goldman told me: read lots and lots and lots and... you get the picture.

MC -01 Aug 2007 | 18:05

As a former associate at a US firm who just made the jump into banking, I concur with everything that MC wrote. While I am in a banking role, being known as a former lawyer gives me significant credibility with colleagues, clients and counsel, as I can present myself as able to understand each parties' viewpoint. Do not underestimate the value ascribed to being able to spot problems, find creative solutions and speak and write intelligently. While some roles will indeed at least initially be inaccessible, everyone must start somewhere. If you show that you have the right skills and aptitude you will be given work commensurate with your skills. Banks are seeking productive employees who will enhance their ability to generate revenue, and their are many ways in which one can make such a contribution; it goes well beyond the single-minded law firm equation of associate = x number of billable hours annually * y billing rate.

Anonymous -02 Aug 2007 | 09:58

One other option, which nobody has mentioned. I went from PP into in house banking about 5 years ago. I am now a legal director at a fairly boutique outfit, but this means I get to sit at a very senior level and have direct input on the strategy of the bank as a whole. Now I'm not sure if all you want to do is trade, and if so good luck to you you can earn a lot of cash very quickly, but if you actually want to be at the heart of decision making then being a lawyer can actually be a good way to the top. I'd never be this senior if I'd joined as a front office banker 5 years ago (albeit that the way the markets have gone (until very recently) I'd be a lot richer!)

In house banking lawyer -03 Aug 2007 | 17:41

i am fairly young and thinking about careers - Investment banking seems exciting, well - paid, and above all challenging. My numeracy skills are good, yet not genius. I am however, very strong at the aspects of education that are suitable for lawyers. i read somewhere that lawyers have not got the same social status as they used to - What degree would be best for me? I was thinking PPE or law

Anonymous -13 Feb 2008 | 12:28