Banks and fund managers swap legal staff

One specialist legal recruiter says traffic is increasing between investment banks and asset managers.

Nick Lloyd, managing director of search firm Hogarth Davies Lloyd, says investment banks and asset managers are increasingly interested in poaching each other's legal staff.

"There's blending and crossover in legal staff working at asset managers and banks," says Lloyd. "Historically, investment managers wanted lawyers with funds experience and banks wanted people with product experience. Today, they are both interested in those profiles."

Investment managers are increasingly scouting for law staff who know about derivative products, says Lloyd. "A lot of investment managers are looking for higher margins, and trying to set up funds that contain highly structured derivative products. They need to hire lawyers who understand how the components of those funds actually work."

On the other hand, he says banks are interested in hiring fund lawyers to work on new fund-linked or 'fund wrapped' derivative products, which allow investors access to customised derivative products based on underlying funds. "Because these products are wrapped in funds, banks need people who know how those funds are established," says Lloyd.

Lloyd says the exchange of staff has been given a boost by Ucits III (Undertakings for Collective Investment in Transferable Securities), which formalised the cross-border sale of funds in Europe with a view to creating a single market in fund sales. The new rules allow fund managers to use derivatives in mass-market retail products for the first time.

Another financial services-focused legal recruiter says the exchange of staff is leading to an equalisation of pay. Historically, he says investment managers compensated less aggressively than investment banks. But today, they are having to pay up. With five years' post qualification experience, a fund-linked lawyer in an investment bank can apparently fetch a base salary of 90,000 to 100,000, plus a bonus of 50% to 100%.