2007-08 & All That…
After the 2007-08 financial crisis (aka ‘The Recession’!) the financial markets has become increasingly regulated. As a result, lawyers specialising in financial markets are now in demand as the financial sector gets to grips with its transformed world.
Why is it important? What does it involve?
Financial markets law is vast and covers asset finance, banking, capital markets, commodity and energy trading, financial services and market regulation, funds finance, Islamic finance, private funds, restructuring and insolvency, and retail structured products.
A financial markets lawyer will need to be clued up on all the complex factors of the finance world and should have a trained eye for detail as well as a penchant for mathematics. A top financial markets lawyer will look for new approaches to traditional products and will essentially act as a business adviser to their clients, so an ability to analyse and predict future market trends is an absolute must.
A financial markets lawyer must have an abundance of communication skills and an ability to convey complicated information in a straightforward manner.
Break it down for me a little bit!
Asset management involves liaising and advising with clients who have shares in a company, property investments, bonds and foreign exchange products. A LOT of money is involved in asset management, so lawyers need to make sure their clients toe the line whilst making as much money as possible.
Other areas, such as capital markets, will see a lawyer act for financial institutions and corporates, advising them on the regulation changes (remember the post-recession legislation!) and understanding the clients’ position, having previous transactional experience and the ability to understand new regulation is a huge advantage. Commercial awareness, therefore, needs to be top-notch!
Speaking of regulation, financial services and market regulation would involve work for brokerage houses, investment exchanges, investment banks, commodity traders and other financial institutions. A financial markets lawyer would advise clients on the Financial Services and Markets Act 2000, strategic regulatory issues, investigations, disputes and disciplinary matters, derivatives and commodity trading and documentation.
Working in Islamic finance would involve advising Shariah-compliant financial institutions, fund managers, financial advisors and corporate.
Financial markets is a vast area of law and requires a thorough understanding of complex market data and client business needs and requirements.
A day in the life of Xi Chen, trainee in Finance & Projects at DLA Piper.
What’s the first thing that you do when you get into the office?
As I come into the office, my supervisor and I usually have a brief chat about our day ahead and anything interesting we are doing outside of work. I would then check my emails and my to-do list. I usually prioritise and tackle any urgent tasks first. However, if I have time in the morning or I am waiting for a document or instructions, I would spend a few minutes reading BBC News or the Financial Times to ensure I am up to date with current affairs.
How do you handle, organise and prioritise your workload?
Whenever I am given a task, I always ask for the deadline, whether it is a client deadline or an internal one. If the task is unfamiliar or if I expect it may take a long time, I would also enquire about the length of time the associate or partner thinks I should spend on the task. This information gives me a clearer idea on what my workload looks like and how the tasks fit into my day.
The deadline usually dictates the priority of the task concerned. It always helps to know about the background and timetable of the transaction, so I can contextualise the tasks I have been given. It also gives me a clearer understanding on how the tasks fit into other fee earners' work schedule. If all of my tasks have the same level of priority, I find the most efficient thing to do is to start with the task that requires the most concentration, such as drafting or research.
What kind of daily responsibilities you have? How do they differ from an associate role?
No two days are the same in Financial Markets at DLA Piper. I have worked on a bond issue, several different types of loans, portfolio sales, derivatives and so on. My daily tasks vary depending on the type of transaction and the client's role in the transaction.
For all types of transaction I would get involved in rigorous review and cross-reference checks of the final drafts of all transaction documents. When acting for a lender in a loan transaction, my responsibilities include drafting the ancillary documents, the documents list and the signing and closing agenda, managing the conditions precedent checklist, conducting company searches and arranging for the execution of relevant documents.
In portfolio sales, my tasks would involve reviewing documents in the data room and drafting structure diagrams and memos on transferability or on other issues which are of concern to the buyer. After a transaction successfully closes, I would circulate the executed documents and create deal bibles for the client.
The associates and partners in Financial Markets are often happy to give me more than the typical trainee tasks. As a result, in the last four months I have drafted a guarantee, a loan agreement, two novation agreements, two U.S. law opinions, and parts of a prospectus. I was also given the responsibility of advising our U.S. colleagues on a question regarding the European Corporate Bank's asset purchase programme.
An associate's role differs from that of a trainee because he or she acts as the main point of contact with the client, balances the client's expectations with the team's workload and deals with the most fundamental and difficult part of the transaction, i.e. structuring the deal and driving it to closing. Trainees also play an important role in the process because their work ensures that the transaction goes through smoothly.
Can you give us an idea of the type of projects you manage from day to day?
There are often a multitude of different transactions going on and a trainee is usually involved in more than one transaction at a time. The debt securities listing I have been working on is scheduled to take months to complete, and I have been in the drafting and reviewing of the base prospectus and any related documents. Alongside this, I have been involved in the management of checklists, annotations and verification when a first draft of the prospectus is ready to be submitted to the UK Listing Authority.
On the other hand, certain loan transactions take a much shorter time to complete. My management tasks in loan transactions would include updating the conditions precedent checklist, drafting and reviewing ancillary documents, and preparing documents and instructions for signing, and post-completion tasks.
What kind of clients do you generally deal with on a day-to-day basis?
Our biggest clients are banks and investment firms. As a trainee, I have been invited to take notes at client meetings or listen in on conference calls. There will often be other parties to the transaction joining the meeting or call, such as the counter-party and their lawyers, an agent or a trustee. My interaction with clients is most frequent when I'm completing a conditions precedent checklist or collecting signatures on the signing day. Attending client meetings is a great way to understand what the client cares about, as the most pressing issues will most often be discussed or negotiated.
Interview with Emmie Morris, a managing associate in banking at Simmons & Simmons.
Can you give us a brief overview of what financial markets law is all about?
Financial markets incorporate a whole range of financing work, which includes banking, real estate, tax, capital markets, asset finance and financial services.
What are some of the daily tasks that you come across when working in this area of law?
As financial markets covers a broad spectrum, my focus is on banking law. There’s rarely something I would call a typical day in a City law firm, but broadly my work would involve:
- Drafting facility agreements
- Advising lenders on commercial solutions to lending issues
- Drafting security documentation to support the credit for a lender
- Assisting my clients on structuring a financing transaction
- Working with my trainee on their development, looking at the work they are doing and how I can help them moving forward
- Analysing a corporate structure to ensure that the lender obtains the best and most suitable security package
Why did you choose to specialise/qualify in financial markets law?
I chose to qualify in banking because I liked the commerciality of the work. You often work closely with the bank or financial institution and develop a close working relationship. Usually the work is exciting; there is a common desire to work towards setting up financing with commercial solutions to legal issues. The work is varied and I frequently work with our international offices on cross border transactions. Any transaction will involve several members of the banking team and require input from other teams within Simmons (e.g. tax and real estate). I enjoy being part of a large team and I equally thrive under the pressure of working towards hard deadlines.
In your experience, what qualities or attributes does a lawyer need to work in financial markets law?
They need to have good analytical skills and understanding of the law, alongside a good understanding of the commercial and business needs of their clients. They need to be a team player and often put the team requirements above their own. Due to the deadlines and transactional nature of our work, you need to be able to work under pressure, manage your work load (as you will frequently be working on a number of transactions at the same time) and have good time management skills.
What kind of clients do you find yourself working with most?
I mostly work for banks, financial institutions and large corporate borrowers. We are on the panel for all UK clearing banks, so I am frequently working with the likes of Barclays Bank PLC, Lloyds and HSBC Bank plc.
How would you describe your workload? Do busy periods alternate with lulls or is it all go, go, go in the world of contract law?
I work in transactional banking and so your workload flow moves with the demands of the transaction. I am frequently on the go, particularly in the last few weeks of a transaction because the work will be demanding. If I am not working on deals, I will be usually be marketing - this can be anything from taking clients to see Beyoncé, a crazy golf competition, heading off to the Ashes, or running a training session.
How has this area of law transformed since the 2007-8 financial crisis?
I feel that the work is demanding and client expectations are higher. There’s a focus on costs and so a drive to be efficient, while providing great client service. There’s a focus on lender protection, alongside borrower flexibility, which is essential in this market.
Have you had any particularly memorable cases while working in financial markets law? Can you tell us a little bit more about one (confidentiality permitting, of course!)?
I worked on a large cross-border, international financing deal over Christmas, which completed in the New Year. The deal was time pressured and involved 10 different jurisdictions and required lawyers from corporate, capital markets and tax to be involved. The deadline was one that was set by the market and required us to work around the clock. It was exciting to be involved in such a large deal, with such a big team. The client was fantastic and a borrower client which we still work with today.
What advice would you give to aspiring lawyers looking to eventually qualify in financial markets law?
My advice is to enjoy their training contract and to aim to get as broad experience as possible in the department you would be working with as a financial markets lawyer. This helps you because you get to know people in and around the firm and it helps you understand the wider part of a transaction that you may be working on. When you work in a financial markets department try to obtain a wide variety of work for a similar reason. It’s also important to keep up to date with what’s going on: business news, The Financial Times and information on the economy generally, are all great sources of further information.