2 January 2008
Corporate lawyers provide legal advice on a wide range of business transactions for a broad range of clients.
Whats it all about?
Corporate lawyers provide legal advice on a wide range of business transactions for a broad range of clients. Clients include corporations, investment banks and private equity funds, from household names such as Tesco, Barclays and and Virgin, to smaller privately held or local businesses and investment funds. Corporate lawyers advise clients on buying and selling businesses, raising funds (for example, by floating on a stock exchange), entering into partnerships and joint ventures or restructuring existing business operations.
The value and complexity of any deal will depend on a variety of factors such as whether the businesses involved are regulated (common in the media or banking sector), whether businesses operate in several countries, as well as the particular law firm that you work for. At a larger international law firm transactions can be worth billions of pounds and involve a number of multinational corporations.
The primary feature of corporate transactions is that all of the parties involved are ultimately seeking a common objective. For example, a buyer wants to buy a business that a seller wants to sell. Therefore not only do the parties negotiate against each other, but they also have to cooperate to reach an agreement. Corporate lawyers work as part of a larger team. In a typical transaction, they are only one of a number of parties involved, working alongside their client, as well as the clients accountants and financial advisors, and the parties and advisors on the other side. Also, corporate transactions usually involve several specialist areas of law, which means corporate lawyers often have to liaise with other lawyers in employment, pensions, competition, real estate or intellectual property.
To be a successful corporate lawyer you need to have an intimate understanding of the clients business, the industry in which they operate and their objectives on a particular transaction. Corporate lawyers must be able to identify all of the pertinent issues and the risks involved, and then come up with solutions that are appropriate both from a commercial and legal perspective. Corporate lawyers will often have the overall view and understanding of a transaction. Because of this, they play an important role in coordinating the transaction generally, in particular by ensuring that the input from the client, the other advisors and specialist lawyers comes together properly.
Ultimately, a corporate lawyer translates a commercial deal into a legally enforceable agreement. Corporate transactions necessarily involve a significant amount of paper and for the most part it is the lawyers who are responsible for drafting this documentation. On a typical transaction, corporate lawyers may prepare client memos on an aspect of law, minutes of board meetings, due diligence reports, sale and purchase agreements, stock exchange admission documentation and regulatory submissions (to comply with the City Code on Takeovers and Mergers, for example). Some of these documents may be hundreds of pages long.
The working culture
As corporate work is transaction-based, the work can be very time pressured and therefore very demanding. It is not uncommon for corporate lawyers to find themselves drafting complex documents late into the night. However, along with the hard work comes the excitement and adrenaline of working to tight deadlines and there is a real sense of achievement when a deal completes successfully. We often read about the deals we have closed in the next days newspapers.
One of the most enjoyable aspects of corporate legal work is its team-focused approach. Team members assist in brainstorming and considering complex issues, share the workload, support you during the long hours and, of course, make the transaction fun its important to have a sense of humour in this job. Corporate transactions involve working with people at the highest level within an organisation. Its inspiring to work with intelligent people at the top of their field and also to be challenging yourself every day.
Working as a corporate lawyer involves much more than just the law. Corporate lawyers are also transaction managers and effective transaction management requires being organised, being able to think ahead and learning to manage people and your time effectively. Against the background of the law, corporate lawyers also need to be able to think strategically and creatively, as well as have excellent writing and negotiation skills.
One of the most important skills to enable you to work successfully as part of a team and on demanding corporate transactions is good communication (whether by telephone, face-to-face meetings, emails often via Blackberries or video conference). For example, corporate lawyers need to keep the lawyers providing specialist advice informed of the status of a transaction and any developments which may impact the advice they have provided.
The wide range of skills required of a good corporate lawyer also provide an excellent foundation for any future career choices you may make. Corporate lawyers are often sought in a wide range of capacities, inside and outside of the law.
The corporate sector is always evolving and developing and this keeps the job of a corporate lawyer intellectually stimulating and challenging. Changes in the law, such as the enactment of the Companies Act 2006, can have a significant impact on the transactions we work on and how they are structured. The nature of deals also develop and change, often reflecting wider economic influences. The past few years have seen the involvement of a large number of private equity funds investing in businesses in the UK and abroad.
Private equity is a term often used to describe a particular class of investors or model of investment. While the definition of who is and is not a private equity investor is ambiguous, broadly these investors will have a longer-term outlook, contribute their funds to a larger pool of funds and divest their right to choose where their money is invested to the professional manager of the fund. Commonly, the manager of the private equity fund will look for undervalued businesses, use leverage (a term used to describe the use of borrowed money to fund investment) to buy them, seek to add value through effective management, then re-sell that business in part or whole at a profit.
The increasing popularity of this investment model has meant there have been a lot more potential buyers chasing a smaller number of targets, making auctions more common and the mergers and acquisitions market much more competitive. At the same time, until very recently, banks have been more willing to lend money and so the volume and size of deals has increased as private equity firms have been able to highly leverage their acquisition.
However, because of wider economic concerns recently, some lenders have become less confident that those who have been borrowing their money will be able to pay them back. Ostensibly, this has resulted in a reduced willingness to lend money in general. As such, private equity managers have found it increasingly difficult to borrow for their transactions. This reduced liquidity in the credit markets is often termed a credit crunch by the newspapers.
As a consequence, several high-value transactions have been postponed or called off. For example, the joint venture between the pub operator Mitchells & Butlers (which manages chains such as Beefeater and Brewers Fayre) and the investment company R20 (connected with the property mogul, Robert Tchenguiz) was recently abandoned. It was reported in the media that the credit crunch had increased the cost of borrowing, reducing the amount of leverage available and thereby lowering any possible return on investment.
On the other hand, while there seems to be a cooling in the volume of deals in the UK, there has been renewed interest in emerging markets. As firms and private equity funds seek greater returns for their stakeholders, they are increasingly looking for new opportunities in countries such as China and India, and regions such as Eastern Europe and Latin America. A recent example of this is B&Qs expansion of its OBI stores: 58 shops are now trading in China and 21 in Taiwan. Of particular interest to corporate lawyers, these transactions require understanding and working with legislation that may not have been tested before, and can raise interesting political issues involving local and regional governmental authorities.