Is Deal Making in a Law Job for You?

To answer the question of whether you would enjoy doing corporate or securities work in the deal making area, begin with this understanding: as a deal maker, you may never in your career see the inside of a courtroom. So, if you have always dreamed of swaying a jury or dramatically finding a fatal flaw in an opponent's case, then transactional work is probably not for you.

However, if you enjoy work that allows for a high degree of creativity and the opportunity to work with lawyers representing other parties who are less than starkly adversarial, and if you enjoy negotiation and convincing other lawyers that your approach and your client's desires are reasonable, logical, and appropriate, then corporate, financial, and securities work may be for you.

There is another, somewhat more subtle difference between deal making and litigation. Litigation is by definition an adversarial process. The feeling of accomplishment at a post-closing celebration dinner is one that most litigators never experience.

Deal making (with the possible exception of hostile takeovers and some bankruptcies), on the other hand, is by nature usually a cooperative process of working with, rather than against, the other parties. By the time the lawyers become involved, the parties have generally reached an agreement to "do the deal." In short, the deal maker's challenge is to find creative ways around the tough points so that all parties concerned finally feel comfortable with the deal and the relationship that it has created.

Give life as a deal maker a try. Compared to your litigator colleagues, you may not see your practice on television as much, but the rewards and the challenges are all there.

Securities Practice

One of the main areas of law in which the deal makers toil is securities offerings, which really are specialized types of financing transactions. These securities may be common or preferred stock, bonds, debentures, warrants, or other instruments, and the attorney may represent either the issuer, whose securities will be sold in the offering, the underwriter, who arranges and coordinates the sale or-particularly in a private placement-the investor who will purchase the securities. These securities offerings may be either public or private transactions.

Public offerings are, to many securities lawyers, the most exciting and interesting of all possible projects, in spite of the fact (or because of the fact) that the federal and state regulatory framework and the often large amount of money involved make public offerings highly complex processes. While some public offerings can become routine, conducting the initial public offering of the stock of a company involves hundreds if not thousands of hours of legal work, usually spread out among a team of lawyers over a three- to four-month period or even longer. Lawyers for the issuer and the underwriter work together to put together the offering prospectus, which is distributed to the public, and the registration statement, which comprises the prospectus and other required disclosure documents and is filed by the issuer for review by the various federal and state regulatory authorities.

A great deal of negotiation takes place in a public offering, usually centered on the sale price of the securities, the size of the offering, and the commissions that the underwriter will charge. Unlike litigation, this process-like most transactions-is not a zero-sum game; in other words, all parties can to some extent come out ahead. The issuer wants to raise as large an amount of money as possible while retaining control of the corporation and the flexibility to raise additional money in the future. The underwriter wants the size and price of the offering to be set so that the securities will sell in the market in which they are offered. The underwriter also wants as large a commission as it can negotiate with the issuer.

There will often be a number of "all hands" meetings among the issuer, the underwriter, and their respective counsel, as well as accountants and other advisers, at which the prospectus and the terms of the offering will be negotiated. Once the parties are happy with the prospectus, the registration statement is filed with the Securities and Exchange Commission and the various state regulatory agencies for review. The final step in the process is responding to the comments of, and to some extent negotiating with, these regulatory agencies and obtaining clearance for the issue and distribution of the securities.

Work on a public offering is very detailed. It may require drafting the same provisions over and over again, each time making what seem like only slight improvements in an effort to perfect the document. Some lawyers consider this to be tedious work. Many deal makers, however, derive great satisfaction from producing a high-quality prospectus and successfully guiding the offering through the various phases and avoiding the various pitfalls.

Private placements of securities are similar to public offerings, but with fewer regulatory constraints and much more flexibility. In a private placement, a small number of investors who are usually fairly sophisticated and who are often somehow affiliated with the issuer form the sole market for the securities. Therefore, less disclosure is required than in public offerings, the rules for sale and distribution of the securities are somewhat less stringent, and at its simplest the transaction can resemble a bank loan.

Finance Practice

Almost every corporation (and many individuals) turn to lawyers for help when they borrow money. Financial institutions, including commercial banks, savings and loans, and other large institutional lenders, employ lawyers to protect their interests and document security arrangements to assure the maximum chances of repayment.

Because most borrowers have longstanding relationships with banks and because most banks have a standard approach to most loans, bank lending work often is less hectic and more manageable than M&A work or securities practice. Usually the lender's counsel drafts the loan documents restricting the borrower's actions while the debt is outstanding. Then the negotiation begins. The borrower's counsel argues for less restriction on the borrower's operations; the lender's counsel typically wants more, but not so much as to hamper the business. Most financings are complicated and require the advice of counsel as the legal and business issues get intertwined.

Among the more complex financings are those that involve the borrower's promise of some asset-land or equipment, a copyright, or a trademark-that can be sold to repay the loan if the borrower fails to do so. Home mortgages and car loans are probably the best known and smallest types of secured transactions.

When the borrower is insolvent or otherwise unable to repay a loan, bankruptcy lawyers enter the picture to handle the liquidation of the corporation or otherwise work out a compromise settlement (the process is often called a "work-out"). Because relations at that point are inevitably strained, bankruptcies and work-outs have elements of litigation as well as corporate finance. Bankruptcy work is a specialty, although the same lawyers often do bank lending work in economic good times and bankruptcy work during economic bad times, particularly in smaller practices.