Cecily Zamora
A law degree can be a great asset when pursuing a career in investment banking. While it may not be the most common path, legal knowledge can be advantageous in certain areas of investment banking, such as restructuring or distressed private equity. The financial services industry, including investment banks, is a significant employer of both law students and practicing attorneys, offering a range of opportunities to utilize their legal expertise in various capacities. However, it is important to address the assumptions and stereotypes bankers may have about lawyers, such as their comfort with numbers and arithmetic. Breaking into investment banking often requires a strong network and the ability to articulate how your legal skills can be applied in the new role.
| Characteristics | Values |
|---|---|
| Salary | Investment banking tends to be more lucrative than a career in law. |
| Workload | Bankers don't have any downtime. |
| Work Culture | Bankers are perceived to be more action/sales-oriented, whereas lawyers are perceived to be more risk-averse. |
| Work Hours | Investment banking hours are perceived to be worse than those in law. |
| Stereotypes | Bankers are assumed to be good with numbers, accounting, and finance, whereas lawyers are assumed to be bad at these things. |
| Career Transition | It is possible to transition from law to investment banking, but it may be challenging. Networking and relevant work experience are crucial. |
| Education | A law degree can provide a good foundation, but additional knowledge in finance, accounting, and economics may be beneficial. |
| Skills | Both lawyers and investment bankers require skills such as process management, client management, drafting skills, attention to detail, and the ability to work in a fast-paced environment. |
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What You'll Learn
- Investment bankers' assumptions about lawyers
- How to make a career transition from law to investment banking?
- The financial services industry as a large source of hiring for law students
- Regulatory and compliance space as a career option
- Commonalities between an attorney's and an investment banker's work
Investment bankers' assumptions about lawyers
Investment bankers hold several assumptions about lawyers. One of the most common stereotypes is that lawyers are uncomfortable with numbers and lack knowledge about basic arithmetic, accounting, finance, and Excel. Bankers assume that lawyers are bad at math, which may be a challenge when transitioning from law to investment banking.
Another assumption held by investment bankers is that lawyers are detail-oriented to the extent that they get lost in the details and fail to see the bigger picture. Lawyers are perceived to be cautious and risk-averse, focusing on mitigating risks rather than seizing opportunities. This perception may be due to the nature of legal work, which often involves analyzing and managing risks within a complex regulatory framework.
Additionally, investment bankers may assume that lawyers lack business acumen and commercial awareness. They might perceive lawyers as solely focusing on legal issues without considering the broader business context. This assumption could be a result of the different skill sets required in each profession, with investment banking emphasizing financial analysis, deal-making, and generating revenue, while law emphasizes legal expertise, risk management, and client service.
Furthermore, investment bankers may hold the view that lawyers lack strong communication and interpersonal skills. They might assume that lawyers are better suited for solitary research and writing tasks rather than collaborative, client-facing roles. This perception could be influenced by the traditional image of lawyers working independently in their offices, drafting contracts, and conducting legal research.
Lastly, investment bankers may assume that lawyers are less adaptable and resistant to change. They might perceive lawyers as preferring stability and structure, which could be a challenge in the dynamic and ever-changing world of investment banking. However, it is important to note that these are assumptions, and individual lawyers may possess a wide range of skills and attributes that challenge these stereotypes.
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How to make a career transition from law to investment banking
It is possible to transition from law to investment banking, and several people have done it. However, it is not a straightforward path, and you may need a bit of luck and a lot of strategy.
Understand the Investment Banking Landscape
Firstly, it is important to understand the industry and the role. Breaking into investment banking is mainly about networking, and it is important to build a network of people in the industry. It is also beneficial to research the different types of roles within investment banking and the specific skills required for each. This will help you understand the skills you need to develop and showcase during your transition.
Get the Right Education
A law degree is a good starting point, but it may not be enough on its own. Consider getting additional qualifications, such as an MBA from a well-regarded programme, to boost your resume and signal your commitment to the industry. If you are still in law school, consider taking on internships or summer associate positions at large firms, preferably in New York City, to gain relevant experience and build your network.
Develop Transferable Skills
As a lawyer, you already possess many transferable skills that are valuable in investment banking, such as analytical thinking, research, and communication skills. Highlight these skills when applying for roles and use them to your advantage. Additionally, consider investing in specialised courses and training to develop the skills needed for investment banking, such as financial modelling and valuation analysis.
Make a Compelling Case for Your Transition
When applying for roles, be prepared to explain your career transition convincingly. Downplay your previous passion for law and focus on why investment banking is now a better fit for you. Use your prior experience to showcase how your skills are transferable and beneficial for a career in finance.
Be Prepared for a Different Work Culture
The work culture in investment banking can be very different from the legal profession. Bankers often work long hours with little downtime and are constantly pitching and marketing their services. Be prepared for a potentially more intense and demanding work environment, and consider if this is the right fit for you.
Network, Network, Network
As mentioned earlier, networking is crucial in the world of investment banking. Attend industry events, join relevant online communities, and utilise tools like LinkedIn to connect with people in the industry. Building relationships with people in investment banking will significantly increase your chances of learning about and landing suitable roles.
Remember, a career transition from law to investment banking is possible, but it may take time and strategic planning. Be persistent, stay informed about industry trends, and continue developing your skills and network to increase your chances of success.
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The financial services industry as a large source of hiring for law students
The financial services industry is a large source of hiring for law students. Roles in the financial services industry that hire law graduates include compliance officers, financial lawyers, and corporate lawyers.
Compliance officers are responsible for ensuring that companies adhere to legal standards and in-house policies. They support monthly, quarterly, and annual FP&A processes and provide management reporting, variance analysis, forecasting, and scenario planning. Risk management liaisons are also a part of their role, where they work with faculty, department administrators, central administration, outside legal counsel, and third-party auditors.
Financial lawyers are another career option for law graduates in the financial services industry. These lawyers work with senior decision-makers and their teams to support their interactions with regulators.
Corporate lawyers are also in-demand within the financial services industry. For example, corporate lawyers in M&A work as hard as or harder than bankers and are involved in all aspects of national bank and federal savings association organization and operations. They can also work in a "federal" corporate law practice, such as the Office of the Comptroller of the Currency (OCC), which deals with banking regulations, legislation, international banking issues, and negotiating international supervisory arrangements.
The financial services industry offers a range of career opportunities for law students, providing them with diverse paths to apply their legal knowledge and skills in a dynamic and well-compensated sector.
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Regulatory and compliance space as a career option
A law degree can be a great starting point for a career in investment banking. However, if you're more inclined towards the regulatory and compliance space within the financial industry, there are several options to explore.
The financial services industry is a significant employer of law students and attorneys, including investment banks, private equity funds, hedge funds, and government regulatory agencies. These organizations offer various opportunities for legal professionals to work in legal, non-legal, and hybrid roles. For example, an attorney at an investment bank may work directly with the business side on mergers & acquisitions and capital raises, or they may join the compliance division to ensure policies and procedures comply with anti-money laundering rules (AML compliance).
To prepare for a career in this field, consider the following steps:
- Education: Pursue a Juris Master in Financial Regulation and Compliance or a similar degree. This degree can provide a strong foundation in legal areas critical to working in the financial industry, such as contracts, torts, legislation, and regulatory compliance. Additionally, more specialized topics like anti-money laundering compliance, consumer compliance, and financial privacy are covered in such programs.
- Internships: Seek internships with regulators, industry trade groups, or government entities such as the Securities Exchange Commission (SEC), the Federal Reserve, the Financial Industry Regulatory Authority (FINRA), or state departments of financial services. These experiences will provide valuable insights into the regulatory landscape and enhance your marketability in the financial services industry.
- Exams and Certifications: Consider taking relevant exams, such as the Securities Industry Essentials (SIE) exam, to demonstrate knowledge and increase your competitiveness. While some exams require sponsorship, the SIE exam does not, making it an excellent option to showcase your expertise.
- Networking and Information Sources: Stay informed about regulatory developments by subscribing to alerts from regulators like the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, and law firms specializing in this area. Additionally, networking within the industry, including with alumni from your law school, can open doors to potential job opportunities.
- Specialized Programs: Explore top LL.M. programs in Banking and Finance Law, such as those offered by Boston University School of Law, George Washington University Law School, and the University of Hong Kong. These programs provide in-depth knowledge of the intersection between finance and regulatory policy.
- European Options: If you're based in Europe or interested in European law, consider the University of Edinburgh's LL.M. in International Banking Law and Finance, which covers topics like cryptoassets, fintech law, and AI's legal and regulatory implications. Alternatively, Oxford's MSc in Law and Finance offers a joint curriculum between its Faculty of Law and the Saïd Business School, providing insights from multiple disciplines.
By following these steps and leveraging your law degree, you can build a strong profile for a career in the regulatory and compliance space within the financial industry.
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Commonalities between an attorney's and an investment banker's work
Although the work of attorneys and investment bankers differs, there are some commonalities. Both careers are well compensated, with investment bankers earning more on average, but corporate law is regarded as the most lucrative legal field. Both careers also require a lot of hard work and long hours, especially in the first few years.
Attorneys and investment bankers also share some similar skills, including process management, client management, drafting skills, attention to detail, and the ability to keep up with fast-paced workstreams. For example, an attorney must manage and oversee the performance of assistants, paralegals, and other team members, while an investment banker works with private clients to advise them on investment options and financial transactions. Both roles require excellent knowledge of their respective fields and the ability to make quick, informed decisions.
In terms of educational background, both careers require a bachelor's degree, but the requirements for becoming a lawyer are more rigid, with law school being a necessity. However, investment banking has fewer hard-and-fast educational requirements, and a law degree can be advantageous when transitioning into the field, especially for roles in mergers and acquisitions or compliance divisions.
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Frequently asked questions
Yes, it is possible to become an investment banker with a law degree. However, it is not a direct path, and you will likely need to gain some work experience and build relevant skills first.
To become an investment banker, you will need to develop strong evidence of your numerical and financial skills, as bankers often assume lawyers are uncomfortable with numbers. You will also need to show that you are action/sales-oriented and that you have an interest in finance.
To increase your chances of becoming an investment banker, you should consider taking finance-related classes, networking with bankers, and gaining relevant work experience. You should also be prepared to articulate your rationale for wanting to make the career shift and highlight any transferable skills you have developed during your law career.
