I've been following this discussion with a fair bit of amusement (& eventual consternation).. While I am not entirely sure if the mudslinging is nearing the end, I think it would be useful to try and redefine this conversation into one that at least brings some meaningful outcomes to lawyers, i-bankers and of course the clients involved.
The question should be, what would it take for investment bankers and lawyers to better understand one another such that they bring value to their work / role, which in turn flows back to the client(s) and the outcome of the deal? I'm gonna put down a few things that in my experience as a lawyer, require fixing from both lawyers and investment bankers.
In my practice as a lawyer, I see that the most common problems that lawyers create (I'm just being candid here) are the following:
1. failing to appreciate the work / effort that has gone into the deal, prior to the involvement of the lawyers. Most lawyers, in my observation show little or no understanding (let alone empathy) for the fact that the client, the bankers (& the tax advisors) would have spent several months (sometimes years) in trying to thrash out a commercial understanding with the counter party. The presumption that most legal teams walk in with is that everyone on the table is a greenhorn to the current deal, when in reality a lot of effort would have gone into even bringing the deal up to the stage where lawyer involvement becomes necessary. Of course there are good arguments to change this arrangement where lawyer involvement comes in earlier but lets touch on that later;
2. poor staffing on deals. This is of course partly (or largely) due to the very strangely budgeted lawyer fees that are allocated in a deal process. But the simple fact is that after a mandate is 'won' by a firm, inevitably the implementation (i.e. doing the DD and documentation) is left to a legal team which is led by a person who often don't have enough experience to handle such a matter. When I say experience, I mean that the senior-most person from the legal team who is on each call / meeting should have at least 8-10 years of experience (nothing less!). In an ideal world, the Partner or the PA (each carrying a track record of 8-10 years of experience) should be on each call such that there is at least some effort made in working towards closure (& issues can be resolved quicker, assuming of course the Partner / PA isn't a complete idiot!). The reason I harp on experience is because when you are on a vortex of z(d)oom calls trying to work out a deal, an experienced lawyer (or any professional for that matter) at least demonstrates a certain credibility and seriousness on the part of the firm and that side to try and resolve the matter and brings in some maturity to the trajectory of the conversation. In my experience of working with i-bankers (& I've worked with nearly all the big names), most of them always ensure that the main contact person: (i) has relevant experience of several years in the space; (ii) is constantly accessible throughout the process; and (iii) has the 'people' skill to manage all kinds of 'hairy' situations. The other allied problem of inexperienced lawyers on the deal is that we end up wasting time dealing with what are frankly timepass issues. A senior enough team will make the effort of at least pointing out the problems that can stop the deal or create a budgetary mess, instead of wasting large group discussion times on explaining the implications of under-stamped non-disclosure agreements whose term lapsed in 2017.
3. strange expectations of timelines. When you, as a lawyer, walk into a deal that's running under an i-banking process (whether as a Partner or as a first year associate), you should know that there is a timer that's immediately gone off the minute that your firm got mandated (even if your involvement came in much later - yes it is harsh, but that's life). Deals that are run through an i-banking process are ALWAYS aggressive on deadlines. I've never had a single i-banker come to me and say "Take all the time you want"; its always, "everything is due as of yesterday". That reality has not changed in years and it's unlikely to change in the future. If you get staffed on a deal which is being run under an i-banking process, you have to expect to be bombarded with deadlines.
Now, lets move on to things that I think i-bankers have gotten wrong, in the times I've worked with them:
1. Zero ability to prevail on the counterparty. If you ask me, the Dharma of an i-banker is to be an aggressive shark; whether it's through in your face combativeness or through consistent nagging and followups, an i-banker has to manage the deal effectively and keep pushing everyone towards closure (especially if there are no 'serious' issues or gaps in the commercial deal). I've met quite a few bankers who are useless at being able to prevail on the other side and push hard on their client's positions. Incidentally I did a deal with Avendus last year and they were brilliant at chopping / crushing / pummelling down the other side into a big sobbing mess (which worked brilliantly for my clients). Frankly that was very much the need of the hour in that deal and Avendus did exactly what was expected of a professional banker (i.e. push our point across, hard!). But I've seen several i-bankers who are a meandering mess when it comes to pushing a point across.
2. Inability to set a negotiating tone. If it is the i-banker(s) that has/have created the deal, brought the parties together and engaged the tax and legal advisors, it is important for the i-bankers to keep / preserve / maintain a negotiating tone throughout the process. I've seen this enough and more times to know that when an i-banker goes from being all out class monitor from chasing on documents, fixing calls, hounding for xyz, to suddenly going quiet, something has gone awfully wrong. Sometimes there may be reasons for the change but what a lot of i-bankers fail to understand is that if you suddenly change the pace of your functioning from fast to unresponsive, that's bound to kill a deal a lot quicker than you can imagine. It may seem like a rookie mistake but it has happened with a lot of very senior guys I've dealt with in the past.
3. No rapport with the counterparty. This is closely linked to 1 above (for i-bankers). To me a good i-banker should be pally, if not chaddi buddies with the counterparty (or if nothing else, the counterparty's worst nightmare - see point 1 above) and be able to push through otherwise tough positions and reach agreements on sticky issues, purely through a personal rapport that they build (remember that long process they run before the lawyers come in? WTF was happening then, I tell you!). A lot of i-bankers I have dealt with, despite their intelligence and IIM / ISB / Ivy-league MBAs are a disaster when it comes to trying to persuade the counterparty on a sticky issue, purely due to their inability to communicate or convey a POV meaningfully. A personal rapport, a connect, or at least a carefully positioned stance can do wonders at times like these - this is something that I've seen go wrong multiple times.
I am sure people can think of other problems as well for both sides, but enough of the chiding. The 'solutions' to what I mentioned above are, I'd imagine, not hard to appreciate and don't need to be laboured on.
To conclude, to anyone and everyone who thinks that lawyers or i-bankers are replaceable or worse, dispensable on a deal because of the challenges in working with one another, I would say you are hopelessly wrong. I would also say that you clearly have not experienced enough in life where you fail to understand the crucial importance of professional relationships, equations, friendships in creating a stake for yourself in the M&A/PE advisory space. Personal rapports are everything, especially for lawyers and investment bankers. And if you want to succeed, this mudslinging will do you no good, whether you are a lawyer or a banker.
The question should be, what would it take for investment bankers and lawyers to better understand one another such that they bring value to their work / role, which in turn flows back to the client(s) and the outcome of the deal? I'm gonna put down a few things that in my experience as a lawyer, require fixing from both lawyers and investment bankers.
In my practice as a lawyer, I see that the most common problems that lawyers create (I'm just being candid here) are the following:
1. failing to appreciate the work / effort that has gone into the deal, prior to the involvement of the lawyers. Most lawyers, in my observation show little or no understanding (let alone empathy) for the fact that the client, the bankers (& the tax advisors) would have spent several months (sometimes years) in trying to thrash out a commercial understanding with the counter party. The presumption that most legal teams walk in with is that everyone on the table is a greenhorn to the current deal, when in reality a lot of effort would have gone into even bringing the deal up to the stage where lawyer involvement becomes necessary. Of course there are good arguments to change this arrangement where lawyer involvement comes in earlier but lets touch on that later;
2. poor staffing on deals. This is of course partly (or largely) due to the very strangely budgeted lawyer fees that are allocated in a deal process. But the simple fact is that after a mandate is 'won' by a firm, inevitably the implementation (i.e. doing the DD and documentation) is left to a legal team which is led by a person who often don't have enough experience to handle such a matter. When I say experience, I mean that the senior-most person from the legal team who is on each call / meeting should have at least 8-10 years of experience (nothing less!). In an ideal world, the Partner or the PA (each carrying a track record of 8-10 years of experience) should be on each call such that there is at least some effort made in working towards closure (& issues can be resolved quicker, assuming of course the Partner / PA isn't a complete idiot!). The reason I harp on experience is because when you are on a vortex of z(d)oom calls trying to work out a deal, an experienced lawyer (or any professional for that matter) at least demonstrates a certain credibility and seriousness on the part of the firm and that side to try and resolve the matter and brings in some maturity to the trajectory of the conversation. In my experience of working with i-bankers (& I've worked with nearly all the big names), most of them always ensure that the main contact person: (i) has relevant experience of several years in the space; (ii) is constantly accessible throughout the process; and (iii) has the 'people' skill to manage all kinds of 'hairy' situations. The other allied problem of inexperienced lawyers on the deal is that we end up wasting time dealing with what are frankly timepass issues. A senior enough team will make the effort of at least pointing out the problems that can stop the deal or create a budgetary mess, instead of wasting large group discussion times on explaining the implications of under-stamped non-disclosure agreements whose term lapsed in 2017.
3. strange expectations of timelines. When you, as a lawyer, walk into a deal that's running under an i-banking process (whether as a Partner or as a first year associate), you should know that there is a timer that's immediately gone off the minute that your firm got mandated (even if your involvement came in much later - yes it is harsh, but that's life). Deals that are run through an i-banking process are ALWAYS aggressive on deadlines. I've never had a single i-banker come to me and say "Take all the time you want"; its always, "everything is due as of yesterday". That reality has not changed in years and it's unlikely to change in the future. If you get staffed on a deal which is being run under an i-banking process, you have to expect to be bombarded with deadlines.
Now, lets move on to things that I think i-bankers have gotten wrong, in the times I've worked with them:
1. Zero ability to prevail on the counterparty. If you ask me, the Dharma of an i-banker is to be an aggressive shark; whether it's through in your face combativeness or through consistent nagging and followups, an i-banker has to manage the deal effectively and keep pushing everyone towards closure (especially if there are no 'serious' issues or gaps in the commercial deal). I've met quite a few bankers who are useless at being able to prevail on the other side and push hard on their client's positions. Incidentally I did a deal with Avendus last year and they were brilliant at chopping / crushing / pummelling down the other side into a big sobbing mess (which worked brilliantly for my clients). Frankly that was very much the need of the hour in that deal and Avendus did exactly what was expected of a professional banker (i.e. push our point across, hard!). But I've seen several i-bankers who are a meandering mess when it comes to pushing a point across.
2. Inability to set a negotiating tone. If it is the i-banker(s) that has/have created the deal, brought the parties together and engaged the tax and legal advisors, it is important for the i-bankers to keep / preserve / maintain a negotiating tone throughout the process. I've seen this enough and more times to know that when an i-banker goes from being all out class monitor from chasing on documents, fixing calls, hounding for xyz, to suddenly going quiet, something has gone awfully wrong. Sometimes there may be reasons for the change but what a lot of i-bankers fail to understand is that if you suddenly change the pace of your functioning from fast to unresponsive, that's bound to kill a deal a lot quicker than you can imagine. It may seem like a rookie mistake but it has happened with a lot of very senior guys I've dealt with in the past.
3. No rapport with the counterparty. This is closely linked to 1 above (for i-bankers). To me a good i-banker should be pally, if not chaddi buddies with the counterparty (or if nothing else, the counterparty's worst nightmare - see point 1 above) and be able to push through otherwise tough positions and reach agreements on sticky issues, purely through a personal rapport that they build (remember that long process they run before the lawyers come in? WTF was happening then, I tell you!). A lot of i-bankers I have dealt with, despite their intelligence and IIM / ISB / Ivy-league MBAs are a disaster when it comes to trying to persuade the counterparty on a sticky issue, purely due to their inability to communicate or convey a POV meaningfully. A personal rapport, a connect, or at least a carefully positioned stance can do wonders at times like these - this is something that I've seen go wrong multiple times.
I am sure people can think of other problems as well for both sides, but enough of the chiding. The 'solutions' to what I mentioned above are, I'd imagine, not hard to appreciate and don't need to be laboured on.
To conclude, to anyone and everyone who thinks that lawyers or i-bankers are replaceable or worse, dispensable on a deal because of the challenges in working with one another, I would say you are hopelessly wrong. I would also say that you clearly have not experienced enough in life where you fail to understand the crucial importance of professional relationships, equations, friendships in creating a stake for yourself in the M&A/PE advisory space. Personal rapports are everything, especially for lawyers and investment bankers. And if you want to succeed, this mudslinging will do you no good, whether you are a lawyer or a banker.