Capital markets law: area of practice
This may involve the sale of equity securities (equity capital markets or ECM) or debt securities (debt capital markets or DCM). ECM transactions include initial public offerings (IPOs) where a company lists its shares on the stock market for the first time, usually together with a sale of shares by existing shareholders and/or new shares by the company. Following an IPO, a company may seek to sell further shares, for example to fund an acquisition or capital investment or to refinance debt, and this may be done through different types of offerings such as placings, open offers and/or rights issues. In addition, shareholders may seek to sell their shares in the company, with a disposal of a significant number of shares typically being carried out by way of a block trade.
DCM transactions involve companies raising money by selling debt obligations, in the form of notes or bonds, to investors.
I specialise in ECM transactions, as well as other transactions undertaken by listed companies. Solicitors typically work on two to six transactions at the same time, depending on market conditions, in addition to ongoing advisory work for corporate clients.
Lawyers might work on an IPO for four to six months or longer; rights issues typically take three or four months. One of my most significant transactions in 2015 was a crossborder merger between an Italian-listed company and a US-listed company, with the new holding company being dual-listed in the US and the UK – we worked on that transaction for approximately 12 months.
Balancing work and family
Despite working on international deals, most of my meetings tend to be in London, although there is some international travel. Capital markets work can involve late nights and some weekend working in the run-up to signing a transaction or launching a deal. A typical working day for me would be 9.30 am to 9.00 pm, but there are quieter periods – often in the summer time.
One of the highlights of capital markets work is the variety of transactions and clients. In the last 12 months, I have advised on transactions involving companies in the airline sector, the medical devices sector, the entertainment sector and the mining industry. It is a legally heavy area of practice and you have to be a technically sound company lawyer to succeed. On top of the black letter law, there is also a lot of regulatory guidance and practice that you need to be familiar with. It is a good area of law for those who like an intellectual challenge.
The downsides include unpredictable working hours – as in most transactional areas of law. I have never had to cancel a holiday, however, and manage to juggle my working life with being a mum to my two daughters. I have found that I have more control of my diary as my career has progressed.
How recession proof is this area of legal practice?
IPO transactions are not recession proof and depend on there being stable market conditions as companies generally avoid launching an IPO during times of market uncertainty or volatility. Certain types of ECM transactions can be counter-cyclical, such as ‘rescue’ rights issues for listed companies.
How much responsibility are trainee solicitors given?
As transactions in this field are heavily regulated, this is a document heavy area of law – for example, an IPO may have between 100 and 200 documents that need drafting. Typical trainee tasks involve: assisting with drafting and reviewing prospectuses, presentations and other offering-related documents; fact-checking statements made in a prospectus or presentation (known as ‘verification’); assisting with the due diligence review of documents; and preparing ancillary documents for a deal. Trainees also take on research on new regulations and changes to legislation, and on collecting precedents and assisting with transaction management. Liaising with clients and taking ownership of drafting and negotiating documents is expected of good trainees.
The types of law capital markets solicitors use in their job
- Financial services.
- Financial Conduct Authority regulation and guidance.
- European Union law (many laws are either derived from EU directives or enshrined in EU regulations that have direct effect).
Good capital markets solicitors have…
- The ability to distil complex concepts in a way non-lawyers understand.
- An understanding of how the markets work.
- Ability to juggle a number of matters at once.
CLAIRE KEAST-BUTLER is a partner in the corporate department at LATHAM & WATKINS in London. She graduated from University College London in 1998 with a degree in law.