I remember when I was about to join my job as a banking and finance associate, I had reached out to several people as to what should I know or read up before entering the profession, and I usually got the standard response of:
“Don’t worry. You will learn on the job.”
While it is true that most of the drafting work, and even the experience of how to manage a due diligence comes from working on a live deal, there are actually a few things which I could have done before joining the job. I feel this would have made my transition in the first few months much easier.
You see – when we learn something new, we usually have a reference framework basis which we learn the new thing. Let’s say you are trying to learn how to speak in Gujarati. Intuitively, your brain will try to link it with your previous experience of the words you normally use in Hindi, and how certain words are spoken differently in Gujarati. On the contrary, if you suddenly move to a new country (let’s say China) where everyone speaks a very different language and they have foreign concepts such as tones while speaking, you will constantly struggle to say even basic words.
Joining a banking finance team (or any other niche practice area) straight out of college feels a lot like that because the supposed “reference framework” you have built up by studying in college doesn’t help. You are basically starting from scratch, and without a background in finance and deals moving quickly, the initial months can become painful. So hopefully the following tips should help you build a reference framework and ease your transition into the finance world:
LEVEL: BEGINNER
1. News: Interest in business developments:
Assuming you are starting from the absolutely beginning, I think a good place to start is read financial news/ newsletter so you can develop some interest in finance. Websites like ‘TheCapTable’, ‘Bloomberg’ and ‘The Ken’ usually have paywalls, so I would recommend websites like ‘Finshots’ – they publish only 1 story a day, so it’s easier to keep up.
For example, ed-tech company Byjus is currently in a legal dispute with BCCI over sponsorship revenue. A while back, Finshots had come out with an article on Byju defaulting on its loan repayment:
[This is a good introduction to concepts like Term loan, rating agency, LIBOR]
2. LinkedIn: Following deal alerts
Before you understand what documents are involved in legal work, it is important to follow deal alerts to understand broadly what kind of work is done by law firms. My suggestion:
Follow TT&A on LinkedIn.
Wait, why not other firms like KCO, SAM etc. which are also working in the debt space? Sure, you can (and you should) follow other firms, but personally I feel that since firms like TT&A are boutique firms working in the debt space, every other update on their LinkedIn page deals with some banking related work. Whereas with other full service law firms, since they post on variety of practice areas, your LinkedIn feed will be filled with various other updates, and you may miss the relevant alert.
Information overload is real.
3. LinkedIn: Subscribe to news reporters, not newspapers
Initially, I would read newspapers to stay up-to-date with any news related to banking. But this was a rookie mistake. You see, unlike M&A/ PE work where newspapers often cover funding raises or mergers between companies, or even capital markets work where newspapers regularly cover IPO news of newly listed companies, in relation to banking finance work, there is hardly any coverage of companies availing loans or issuing debentures. This is because these things are extremely confidential and companies wouldn’t want the public to know about their funding actions. Occasionally, news coverage does happen when companies default on loans and are about to be dragged into insolvency, or if there is some government project financing work. But apart from this, there is generally no coverage.
Instead, I would suggest - follow these news reporters on LinkedIn. They work with the top financial newspapers and only post when they have something relevant to share:
Krishna Merchant – IFR/ also posts on Twitter
Tamal Bandyopadhyay – Business standard
Sangita Mehta – Economic Times
Ira Dugal – Reuters News
Paula Seligson – Bloomberg
This is going to help you stay up-to-date with market dynamics and also anticipate what kind of deals your firm will be working on. While some of the articles may be behind paywalls, the news reporters often give descriptions while posting on Twitter/ LinkedIn.
4. Follow clients on LinkedIn
There are several banks, financial institutions and private credit funds which are clients for these banking deals. You can easily figure them out by going through deal alerts of various law firms on LinkedIn. For banks, I wouldn’t recommend following them on LinkedIn as their pages mostly reply to customer grievances.
But since we are in the ‘golden age of private credit’, you can follow private credit funds and their higher level employees. The top management often post their thoughts on LinkedIn. Edelweiss is a big name in this space.
Note: On a day-to-day basis, lawyers don’t refer to the above sources. But if you are starting out as an A0, the above sources will help you understand the important context within which the deals take place.
LEVEL: INTERMEDIATE
Here are some tips which will complement the work done in law firms. The following points don’t involve the actual hard work done in law firms, but gives you a window into the kind of work you can expect:
1. Invest in IPOs, stocks
Investing in IPOs is as simple as downloading the Kite app by Zerodha. Trading in stocks is an easy way to get a sense of the stock market, and it is as simple as swiping to buy/sell a stock on Kite. By actually investing in stocks yourself, you will yourself take the initiative to read offer documents, read up about the securities market, develop a basis understanding of primary/ secondary market, and understand the role of depository participants.
This way, when you have to review Form 39 while working on a live transaction, you won’t be wondering what is CDSL, NSDL, NeSL.
Additionally, as lawyers, we have to work on the PAS-4 form which is filed during debenture issuance. The offer letter/ shelf prospectus for an IPO has similar language and reading such documents beforehand will make the transition easier. No need to read all 500+ pages, just glace through them once.
2. Cursory review of DTDs on the BSE website
This bit is specifically for banking work involving debenture issuance. Although you may not have access to the confidential documents being drafted by law firms, there are several DTDs available on the BSE website. Now, the obvious question arises that without any background in banking practice, which DTD is a good precedent.
Here is a sample of a Debenture Trust Deed for ‘secured, listed, redeemable non-convertible debentures’. It is only 44 pages so for a beginner, it should be relatively easy to review this. Although the DTDs we work in law firms are usually 200+ pages and have more complex concepts and structures, as a starting point, this can be a good base to familiarize yourself how a DTD draft is structured.
For example, in Recital B of the document, there is reference to shareholder resolution passed under Section 180(1)(a) and 180(1)(c). Recital B also has reference to Section 42 (deals with private placement of securities) and Section 71 (deals with Debentures). Going back to the Companies Act, and just reading up these sections definitely helps.
As an A0, while you won’t have to draft the DTD as it will be too complicated, you may have to draft these resolutions and also update the items as part of conditions precedent checklist. So it helps to know when Section 180 is applicable during debenture issuance and when it is not. [This para will make more sense if you have already done one transaction]
Another executed debenture trust deed (with stamp duty):
If investing in stock markets, and hoping for 100% returns via IPOs gives you a kick, here’s another avenue to boost your savings - ‘WintWealth’. WintWealth runs a platform which allows you to invest in FDs and bonds, and they also run a blog which discuss concepts related to debentures.
You can choose to invest in bonds to get an investor perspective on debenture issuance, or simply follow their blog. While I wouldn’t use the blog as a legal source, their blog does a good job in breaking down concepts. Such as this article on market-linked debentures:
“Don’t worry. You will learn on the job.”
While it is true that most of the drafting work, and even the experience of how to manage a due diligence comes from working on a live deal, there are actually a few things which I could have done before joining the job. I feel this would have made my transition in the first few months much easier.
You see – when we learn something new, we usually have a reference framework basis which we learn the new thing. Let’s say you are trying to learn how to speak in Gujarati. Intuitively, your brain will try to link it with your previous experience of the words you normally use in Hindi, and how certain words are spoken differently in Gujarati. On the contrary, if you suddenly move to a new country (let’s say China) where everyone speaks a very different language and they have foreign concepts such as tones while speaking, you will constantly struggle to say even basic words.
Joining a banking finance team (or any other niche practice area) straight out of college feels a lot like that because the supposed “reference framework” you have built up by studying in college doesn’t help. You are basically starting from scratch, and without a background in finance and deals moving quickly, the initial months can become painful. So hopefully the following tips should help you build a reference framework and ease your transition into the finance world:
LEVEL: BEGINNER
1. News: Interest in business developments:
Assuming you are starting from the absolutely beginning, I think a good place to start is read financial news/ newsletter so you can develop some interest in finance. Websites like ‘TheCapTable’, ‘Bloomberg’ and ‘The Ken’ usually have paywalls, so I would recommend websites like ‘Finshots’ – they publish only 1 story a day, so it’s easier to keep up.
For example, ed-tech company Byjus is currently in a legal dispute with BCCI over sponsorship revenue. A while back, Finshots had come out with an article on Byju defaulting on its loan repayment:
https://finshots.in/archive/byjus-refuses-to-repay-its-1-2-billion-loan/
[This is a good introduction to concepts like Term loan, rating agency, LIBOR]
2. LinkedIn: Following deal alerts
Before you understand what documents are involved in legal work, it is important to follow deal alerts to understand broadly what kind of work is done by law firms. My suggestion:
Follow TT&A on LinkedIn.
Wait, why not other firms like KCO, SAM etc. which are also working in the debt space? Sure, you can (and you should) follow other firms, but personally I feel that since firms like TT&A are boutique firms working in the debt space, every other update on their LinkedIn page deals with some banking related work. Whereas with other full service law firms, since they post on variety of practice areas, your LinkedIn feed will be filled with various other updates, and you may miss the relevant alert.
Information overload is real.
3. LinkedIn: Subscribe to news reporters, not newspapers
Initially, I would read newspapers to stay up-to-date with any news related to banking. But this was a rookie mistake. You see, unlike M&A/ PE work where newspapers often cover funding raises or mergers between companies, or even capital markets work where newspapers regularly cover IPO news of newly listed companies, in relation to banking finance work, there is hardly any coverage of companies availing loans or issuing debentures. This is because these things are extremely confidential and companies wouldn’t want the public to know about their funding actions. Occasionally, news coverage does happen when companies default on loans and are about to be dragged into insolvency, or if there is some government project financing work. But apart from this, there is generally no coverage.
Instead, I would suggest - follow these news reporters on LinkedIn. They work with the top financial newspapers and only post when they have something relevant to share:
Krishna Merchant – IFR/ also posts on Twitter
Tamal Bandyopadhyay – Business standard
Sangita Mehta – Economic Times
Ira Dugal – Reuters News
Paula Seligson – Bloomberg
This is going to help you stay up-to-date with market dynamics and also anticipate what kind of deals your firm will be working on. While some of the articles may be behind paywalls, the news reporters often give descriptions while posting on Twitter/ LinkedIn.
4. Follow clients on LinkedIn
There are several banks, financial institutions and private credit funds which are clients for these banking deals. You can easily figure them out by going through deal alerts of various law firms on LinkedIn. For banks, I wouldn’t recommend following them on LinkedIn as their pages mostly reply to customer grievances.
But since we are in the ‘golden age of private credit’, you can follow private credit funds and their higher level employees. The top management often post their thoughts on LinkedIn. Edelweiss is a big name in this space.
Note: On a day-to-day basis, lawyers don’t refer to the above sources. But if you are starting out as an A0, the above sources will help you understand the important context within which the deals take place.
LEVEL: INTERMEDIATE
Here are some tips which will complement the work done in law firms. The following points don’t involve the actual hard work done in law firms, but gives you a window into the kind of work you can expect:
1. Invest in IPOs, stocks
Investing in IPOs is as simple as downloading the Kite app by Zerodha. Trading in stocks is an easy way to get a sense of the stock market, and it is as simple as swiping to buy/sell a stock on Kite. By actually investing in stocks yourself, you will yourself take the initiative to read offer documents, read up about the securities market, develop a basis understanding of primary/ secondary market, and understand the role of depository participants.
This way, when you have to review Form 39 while working on a live transaction, you won’t be wondering what is CDSL, NSDL, NeSL.
Read more about CDSL: https://finshots.in/markets/cdsl-is-rich-thanks-to-the-stock-market-boom/
Additionally, as lawyers, we have to work on the PAS-4 form which is filed during debenture issuance. The offer letter/ shelf prospectus for an IPO has similar language and reading such documents beforehand will make the transition easier. No need to read all 500+ pages, just glace through them once.
2. Cursory review of DTDs on the BSE website
This bit is specifically for banking work involving debenture issuance. Although you may not have access to the confidential documents being drafted by law firms, there are several DTDs available on the BSE website. Now, the obvious question arises that without any background in banking practice, which DTD is a good precedent.
Here is a sample of a Debenture Trust Deed for ‘secured, listed, redeemable non-convertible debentures’. It is only 44 pages so for a beginner, it should be relatively easy to review this. Although the DTDs we work in law firms are usually 200+ pages and have more complex concepts and structures, as a starting point, this can be a good base to familiarize yourself how a DTD draft is structured.
Sample debenture trust deed:
https://www.bseindia.com/corporates/download/11459/PPDI_Prior/DTD%20AKCFL%2028052021%20signed_20210528185955.pdf
For example, in Recital B of the document, there is reference to shareholder resolution passed under Section 180(1)(a) and 180(1)(c). Recital B also has reference to Section 42 (deals with private placement of securities) and Section 71 (deals with Debentures). Going back to the Companies Act, and just reading up these sections definitely helps.
As an A0, while you won’t have to draft the DTD as it will be too complicated, you may have to draft these resolutions and also update the items as part of conditions precedent checklist. So it helps to know when Section 180 is applicable during debenture issuance and when it is not. [This para will make more sense if you have already done one transaction]
Another executed debenture trust deed (with stamp duty):
https://www.bseindia.com/corporates/download/9576/Debenture%20Trust%20Deed/Pragati%208%20-%20EFSL%20-%20Executed%20DTD_20230724174245.pdf
3. Invest in bonds
If investing in stock markets, and hoping for 100% returns via IPOs gives you a kick, here’s another avenue to boost your savings - ‘WintWealth’. WintWealth runs a platform which allows you to invest in FDs and bonds, and they also run a blog which discuss concepts related to debentures.
You can choose to invest in bonds to get an investor perspective on debenture issuance, or simply follow their blog. While I wouldn’t use the blog as a legal source, their blog does a good job in breaking down concepts. Such as this article on market-linked debentures:
https://www.wintwealth.com/blog/bonds-vs-market-linked-debentures/
LEVEL: ADVANCED
I suppose this will happen when you are working under a partner/ experienced lawyer.
.
.
That’s all for today!
XOXO
Dalal Street Attorney
____________________________________________________
If you are new here, check out the introduction to banking finance I wrote a while back on LI:
https://www.legallyindia.com/convos/topic/277270-banking-finance-oversimplified-part-1
For more information, you can find all my posts at one place here:
https://dalalstreetattorney.wordpress.com/2023/10/11/banking-finance-oversimplified-part-1-overview/
You are truly gem of a person.
Keep it up!!