Why lawyers are the new M&A bankers
City AM handed out its annual financial gongs earlier this month and Lazard’s Will Lawes walked away with the dealmaker of the year award.
Lawes’ achievement is noteworthy because he only moved into banking three years ago, when he joined the independent advisory firm from Freshfields where he was a partner. At Freshfields, Lawes ran the firm’s financial institutions group and worked on M&A deals and capital raisings.
While such transitions are commonplace in the U.S., they are relatively rare in the U.K., but are certainly on the rise. Lawes is not the only successful lawyer to have made the transition to an investment bank. When Morgan Stanley won a plum role advising the London Stock Exchange on its acquisition of Refinitiv and successful defence against HKEX, its team was led by Mark Rawlinson, who is chairman of Morgan Stanley’s investment banking unit.
Rawlinson was formerly managing partner at Slaughter & May, where he was retained adviser to the LSE. Morgan Stanley has enjoyed a long-standing relationship of the LSE but having Rawlinson on board as well clearly didn’t do it any harm. Freshfields has a top M&A practice and also proved a happy hunting group for Jefferies which in 2014 appointed Freshfields veteran Barry O’Brien as chairman of its European M&A and corporate finance group. This year O’Brien was part of the Jefferies M&A team that advised Provident Financial on its successful defence against NSF. Meanwhile in 2011, Citi recruited from the legal world when it hired Stuart Popham from Clifford Chance as vice chairman of its EMEA banking group.
“Lawyers have long-standing relationships and can apply good judgement,” said the head of investment banking at one European firm. “It also helps I they’re personable and trustworthy.”
The timing of the recent moves is interesting. By taking senior M&A deal-making positions, lawyers are plugging the gap at big banks left in recent years by an entire generation of M&A rainmakers that have left to join or set up their own boutiques. They include the likes of Michael and Yoel Zaoui, Simon Warshaw and Simon Robey, all senior bankers with decades of experience advising blue-chip clients.
Boutiques are not bound by the same restrictions on bonuses as bulge bracket firms, while bankers that join them also cite the lack of bureaucracy and ability to focus on clients as a big draw. “When you look on Wall Street, there are probably 20 bankers who have the skills and experience to negotiate a multi-billion dollar merger. A decade ago they were at the big banks, now they are at boutiques like Evercore and Centerview,” said the former CEO of an investment banking division.
The boutique brain-drain, coupled with increased juniorisation has left banks casting about for senior talent that have the key to boardroom relationships and lawyers fit the bill. Lawyers are attracted because they have the skills to do the job and the pay is better, while they don’t have the hassle that comes with being a partner at a so-called ‘Magic Circle’ law firm. It seems that banks value grizzled experience more than ever in M&A and don’t mind looking to other industries in the quest to secure it.
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