Investment Bankers Vs. Corporate Lawyers: Join the Debate

November 21, 2006, 11:30 am
Investment Bankers Vs. Corporate Lawyers: Join the Debate
Posted by Peter Lattman
An age-old rivalry reared its head yesterday on the Law Blog: Investment bankers versus corporate lawyers. If lawyers are scribes, wrote one reader, investment bankers are the equivalent of real estate brokers. “Bankers sell ice to eskimos” while “M&A Lawyers make sure the ice is neither a liquid, or a gas,” said another.
Corporate lawyers have long leapt to Wall Street. Ex-Treasury Secretary Robert Rubin left Cleary Gottlieb in the 1960s for Goldman Sachs. In the 1970s Bruce Wasserstein billed by the hour at Cravath before becoming a master of the universe. In 2000, Robert Kindler left a Cravath partnership for a senior banking post at Chase Manhattan (now J.P. Morgan).
After Davis Polk M&A chief Dennis Hersch joined Kindler at J.P. Morgan Chase last October, he and Kindler gave an interview to the Deal telling the world how much richer and happier they were as investment bankers. “I’ve read my last merger agreement!” exclaimed Hersch. Kindler, who earlier this year left J.P. Morgan for Morgan Stanley, discussed why he prefers banking and why it’s not for everybody:
The law firm practice can sometimes become too document-focused and too cerebral and removed from the real business of operating a company. . . .
I think that bankers are more free-thinking, are more generally creative, and they generally get rewarded for coming up with good ideas for clients. Lawyers don’t get rewarded for coming up with ideas; they get rewarded for protecting clients and for drafting the document to give them the best protection, but not for coming up with good ideas.
I think you have to do some soul-searching as to whether you have the personality to be constantly driven, constantly on the road and constantly marketing. Most lawyers — most people — don’t have that. But if you are an outgoing person with great business instincts, I actually think long term it’s good to make a career change. You’d be happier as a banker than as a lawyer.
Law Blog readers, those are some pretty provocative words. What should we make of them?
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Neither.
Comment by Litigator - November 21, 2006 at 11:51 am
Wasn’t Rubin a trader at Goldman?
Comment by MDNY - November 21, 2006 at 12:05 pm
He’s right, but most bankers are whores. (Actually, at least whores have some principles.)
Comment by realist - November 21, 2006 at 12:13 pm
The argument that investment bankers are whores is, in the end, untenable. Every whore knows that it’s time to quit when you start coming with the customers. Such quaint scruples are irrelevant, if not completely unknown, to investment bankers.
Comment by Thirdman47 - November 21, 2006 at 12:29 pm
So the question really is, would you rather be a lawyer, or a whore?
Comment by MDNY - November 21, 2006 at 12:35 pm
Q. What do you call a 50-year old investment banker?
A. A failure.
Q. What do you call a 50-year old scrivener?
A. M&A “lawyer”.
Q. What do you call a 50-year litigator?
A. Tired.
(Q. What do you call someone who graduate last in her medical school class?
A. Doctor.)
Comment by What debate - November 21, 2006 at 12:36 pm
lawyers wish they were bankers…bankers wish they were running a hedge fund…
Comment by anon - November 21, 2006 at 12:43 pm
For guys at the top of the pyramid to make a jump is one thing, but do any associates actually transition into banking?
Comment by Fernand - November 21, 2006 at 1:19 pm
In the words of Campbell’s mother in Bonfire of the Vanities. Both the IB’s and the M&A lawyers are running around trying to collect the crumbs falling off of other peoples’ cakes when being sliced.What would be great is if more IBs and Lawyers would figure out how to make their own cake. Didn’t Jeff Bezos do this (not sure what he did on Wall Street, but he left and only returned as a client).
Comment by Lots of tiny little crumbs - November 21, 2006 at 1:20 pm
Let me see, investment banker or M&A lawyer?? It’s hard to say which would bore me to death first.
Further, I don’t think a banker could cut it without a good lawyer. While clients may pay bankers to come up with “ideas,” bankers frequently come up with bad, rather than good, ideas. Indeed, I’ve seen plently of litigation which was directly rooted in a banker’s arrogant dismissal of the need to pay attention to legal intricacies. It reminds of that old saying, there are bold young pilots, cautious old pilots, but there are no bold, old pilots.
Comment by trial attorney - November 21, 2006 at 1:44 pm
Without question, every corporate lawyer I encountered in a decade practicing in large firms in NY wanted to be an investment banker. I now place attorneys — in both legal and banking jobs. Now young lawyers want to work for hedge funds. Inevitably, the most talented corporate lawyers want to “move over to the business side”. Most of them don’t know that they’ll be operating under different assumptions and with a different skill set. What it comes down to is the sense that only the business side has control over the deal (and the time schedule) and only the business side makes important decisions.
PS — why do people leave comments disparaging one or the other profession. I could only assume that a tremendously frustrated person would waste his time with such a silly response.
Comment by Ex-Big Firm Associate - November 21, 2006 at 2:00 pm
There are some of us out there who as Kindler suggests believe that transitioning to the business side would allow us to use a different set of skills and think about issues in a different way that would be a lot more fun and creative than practicing law
Comment by esq. wanting to be a banker - November 21, 2006 at 2:21 pm
Most of the comments assume you can easily transition from being a lawyer to a banker, and treat the “business side” as some sort of paradise where money flows easily and hours are easier. Wrong. I’ve known lawyers who became bankers who said 1) the they did not have the skill set to do their new job, 2) their new job was much more stressful, and sometimes just as time consumming and 3) there was much more job insecurity than with the law. I’m not saying I haven’t thought of making the leep, but there is a lot of wishful thinking out there about the business side. And lawyers going to hedge funds? Only as lawyers! Legal training has nothing to do with analysis of financial assets or trading.
Comment by Big Firm Associate Whose Seen The World - November 21, 2006 at 2:21 pm
M&A lawyers and bankers are both just whores. The bankers are just the richer ones.
Comment by Lawyer - November 21, 2006 at 2:37 pm
Yes, the M&A bankers are the richer whores — because they get a percentage of the assets that transact.But lawyers have their bigger whores too!What about the great contingency fee litigators.Now those whores whore more than any banking whore has ever whored before!That’s whorin’ my friends!
Comment by Yes, because they get a percentage... - November 21, 2006 at 2:58 pm
It is incorrect to characterize M&A lawyers as being too document oriented. I think they are confusing the associates with the lead partners in their deals.
The M&A lawyers I have worked with have contributed great value to their deals in terms of structure, process, and helping very different constituencies with very different objectives find common ground. It is a real pleasure to see a master M&A lawyer and investment banker bring the intangibles in a deal together like that.
This being said, I love a good lawyer joke as much as the next guy.
Comment by Alan in Denver (Oil & Gas Lawyer) - November 21, 2006 at 3:06 pm
Isn’t the first requisite for following a fightg being able to cheer for at least one side?..M & A lawyers vs. Investment Bankers…Hmm, isn’t that kind of like the Iran/Iraq war, where you wished there was a way for both sides to lose…Let any one of them try to convince an 85 year old guy that his calculations of his CD interest payments are wrong, and the bank’s are right, even though the bank’s are $2.47 lower than his! Now that’s skill!
Comment by KDM--Just a little Jimmy Stewart Small Town Banker - November 21, 2006 at 3:19 pm
Bankers are clients. Therefore by definition corporate lawyers are servants who always need to be perfect and treated as such. Whatever comfort they can take in their relatively more secure and occasionally more cerebral atmosphere cannot change this fact.
Comment by Former Deal lawyer - November 21, 2006 at 3:36 pm
Which career will cause me fewer heart attacks?
Comment by Anonymous - November 21, 2006 at 3:54 pm
Easy question. How many lawyers do you know were able to retire at age 45?
Comment by MA (Middle Aged) Lawyer - November 21, 2006 at 4:32 pm
Lawyers make less money, but can insult bankers, avoid work on the margins, and generally maintain the hope that at some point work-life balance will be achieved. Bankers make more money but are constantly being insulted, on the verge of being fired, and actively staving off self-hatred. Pick your poison.
Each profession misses the point - they are both servants who provide an essentially irrelevant service and, therefore, need to establish in their master’s mind a sense of their value. Lawyers have the benefit of knowing a detailed, precise environment; bankers have the benefit of a broad perspective and the ability to see other masters’ plates. Any decent client of either should be able to do without the services of either one. Clients don’t have it easy either - they usually are on the verge of bankruptcy, in which case they’ll need a different type of both lawyer and banker.
At the end of the day, if we’re capitalists, we’re all essentially savages who will sacrifice our kin for another dollar or another hour of sleep. Get used to it and the whole pill will go down easier.
Comment by Done it from all sides - November 21, 2006 at 4:45 pm
How many lawyers does it take to unscrew an M&A deal?Well, all the ones who have unbillable hours this month, of course!
Comment by How many lawyers does it take to unscrew an M&A deal? - November 21, 2006 at 8:56 pm
After having a good time litigating against the usual suspect defense firms, I had a good time papering private equity deals for a good client using forms just like the usual suspects use. At some point I got to be the client’s stand-in for a couple deals, bossing around lawyers, accountants, bankers . . . The last gig was the most fun.
Comment by Dark Side - November 21, 2006 at 9:35 pm