How much finance/econ do you have to know for corporate law?

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roranoa
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How much finance/econ do you have to know for corporate law?

Postby roranoa » Wed Mar 02, 2011 10:54 am

I was a literature major in undergrad and only took Econ 101 during that time.

I want to do corporate law, but I'm worried how unprepared I would be for it with my lack of knowledge in finance and economics.

I heard from people around me that law firms prefer candidates with finance backgrounds and that if you have a CFA or a CPA it helps immensely. Is this true?

How much finance or economics do you really have to know to do a good job in corporate law?

(I'm a 0L btw, didn't know which forum would be appropriate for this question so I just picked this one.)
Last edited by roranoa on Fri Mar 04, 2011 12:14 am, edited 1 time in total.

dark
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Re: How much finance/econ do you have to know for corporate law?

Postby dark » Wed Mar 02, 2011 12:05 pm

I was a poli sci undergrad. I think in general its possible to redefine yourself as a corporate/business guy in lawschool, but it is an uphill battle for good grades and a corporate associate position without any kind of business background.

From my experience, it's an uphill battle for these reasons:
-a lot of people in your corporate/business classes will have business backgrounds or will be JD/MBAs, they will understand what is going on in the cases quicker than you, and the prof may teach up to this level accordingly. This might make it harder to get good grades.
-(unless you've got a better GPA than everyone) you won't look like as good of a candidate for a corporate position without any demonstrable business background/prior job or degree. This is exacerbated right now because of the supply of law students with great business backgrounds and credentials compared to hiring for corporate associates right now

A CPA is a plus.

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thesealocust
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Re: How much finance/econ do you have to know for corporate law?

Postby thesealocust » Wed Mar 02, 2011 1:01 pm

In my experience, background is in no way a barrier to entry to corporate law. I know piles of liberal artists who have never taken an econ class in their life (and don't plan to start in LS) who got corporate law offers. Grades/school are much more important.

Sup Kid
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Re: How much finance/econ do you have to know for corporate law?

Postby Sup Kid » Wed Mar 02, 2011 1:21 pm

thesealocust wrote:Grades/school are much more important.

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prezidentv8
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Re: How much finance/econ do you have to know for corporate law?

Postby prezidentv8 » Wed Mar 02, 2011 1:45 pm

QFThis
thesealocust wrote:liberal artists

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romothesavior
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Re: How much finance/econ do you have to know for corporate law?

Postby romothesavior » Wed Mar 02, 2011 1:50 pm

thesealocust wrote:In my experience, background is in no way a barrier to entry to corporate law. I know piles of liberal artists who have never taken an econ class in their life (and don't plan to start in LS) who got corporate law offers. Grades/school are much more important.

This.

It seems like it is helpful to have the background, but it certainly is not a pre-req or a barrier (like science/engineering sort of is for IP).

roranoa
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Re: How much finance/econ do you have to know for corporate law?

Postby roranoa » Thu Mar 03, 2011 5:50 am

I would like some more insights on this.

I understand that if you have background in finance/business/econ, it would help.

Someone said up there that a CPA would give me a boost when job hunting.

Which is better? CFA or CPA ? (I have no idea what a CFA is exactly)

ruski
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Re: How much finance/econ do you have to know for corporate law?

Postby ruski » Thu Mar 03, 2011 9:32 am

a CFA is much more impressive, and difficult. but no CFA in his right mind would go to law school.

roranoa
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Re: How much finance/econ do you have to know for corporate law?

Postby roranoa » Thu Mar 03, 2011 11:22 am

bump

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well-hello-there
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Re: How much finance/econ do you have to know for corporate law?

Postby well-hello-there » Thu Mar 03, 2011 1:56 pm

ruski wrote: no CFA in his right mind would go to law school.

why is that?

Curry

Re: How much finance/econ do you have to know for corporate law?

Postby Curry » Thu Mar 03, 2011 2:02 pm

well-hello-there wrote:
ruski wrote: no CFA in his right mind would go to law school.

why is that?

Because CFA's become partners/principles at big 4 accounting firms.

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pokerlaw
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Re: How much finance/econ do you have to know for corporate law?

Postby pokerlaw » Thu Mar 03, 2011 2:09 pm

well-hello-there wrote:
ruski wrote: no CFA in his right mind would go to law school.

why is that?


To earn a CFA takes a long time. There are three levels, each require a 6 hours test to pass. To receive the full CFA I believe you need something like 4 years investment/finance related work experience.

It is a big time/career investment to switch to law where you won't need your CFA.

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well-hello-there
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Re: How much finance/econ do you have to know for corporate law?

Postby well-hello-there » Thu Mar 03, 2011 2:17 pm

Curry wrote:
well-hello-there wrote:
ruski wrote: no CFA in his right mind would go to law school.

why is that?

Because CFA's become partners/principles at big 4 accounting firms.

what's the catch though? The CFA exams are difficult but totally do-able for someone with an analytical mind and an accounting/finance background in undergrad. Is the pay at such Acc. firm jobs drastically greater than corporate big-law pay schedules?
pokerlaw wrote:
well-hello-there wrote:
ruski wrote: no CFA in his right mind would go to law school.

why is that?


To earn a CFA takes a long time. There are three levels, each require a 6 hours test to pass. To receive the full CFA I believe you need something like 4 years investment/finance related work experience.

It is a big time/career investment to switch to law where you won't need your CFA.

Oh I see....the work experience requirement to get the charter....wasn't factoring that in.

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Mickey Quicknumbers
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Re: How much finance/econ do you have to know for corporate law?

Postby Mickey Quicknumbers » Thu Mar 03, 2011 2:19 pm

well-hello-there wrote:
Curry wrote:
well-hello-there wrote:
ruski wrote: no CFA in his right mind would go to law school.

why is that?

Because CFA's become partners/principles at big 4 accounting firms.

what's the catch though? The CFA exams are difficult but totally do-able for someone with an analytical mind and an accounting/finance background in undergrad. Is the pay at such Acc. firm jobs drastically greater than corporate big-law pay schedules?
pokerlaw wrote:
well-hello-there wrote:
ruski wrote: no CFA in his right mind would go to law school.

why is that?


To earn a CFA takes a long time. There are three levels, each require a 6 hours test to pass. To receive the full CFA I believe you need something like 4 years investment/finance related work experience.

It is a big time/career investment to switch to law where you won't need your CFA.

Oh I see....the work experience requirement to get the charter....wasn't factoring that in.


Not to mention, something like a 40% pass rate at each level. It's a feat that a LOT more people come into than actually succeed.

Curry

Re: How much finance/econ do you have to know for corporate law?

Postby Curry » Thu Mar 03, 2011 2:22 pm

CFA's are in no way easy to get. The market isn't as dead as it was 3 years ago and the income potential is just as great, if not greater, than a biglaw associate. It also opens you up to all sorts of executive positions in big companies where you rake in millions at a time.

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Mickey Quicknumbers
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Re: How much finance/econ do you have to know for corporate law?

Postby Mickey Quicknumbers » Thu Mar 03, 2011 2:24 pm

Curry wrote:CFA's are in no way easy to get. The market isn't as dead as it was 3 years ago and the income potential is just as great, if not greater, than a biglaw associate. It also opens you up to all sorts of executive positions in big companies where you rake in millions at a time.

FWIW, if I end up at a job where i'm not working unreasonable hours. I'm still probably going to go back and get a CFA I think after I graduate.

edit: I think you're waaaaaay overestimating the value of a CFA though, bring it back down to earth a bit there.

Curry

Re: How much finance/econ do you have to know for corporate law?

Postby Curry » Thu Mar 03, 2011 2:26 pm

Mickey Quicknumbers wrote:
Curry wrote:CFA's are in no way easy to get. The market isn't as dead as it was 3 years ago and the income potential is just as great, if not greater, than a biglaw associate. It also opens you up to all sorts of executive positions in big companies where you rake in millions at a time.

FWIW, if I end up at a job where i'm not working unreasonable hours. I'm still probably going to go back and get a CFA I think after I graduate.

edit: I think you're waaaaaay overestimating the value of a CFA though, bring it back down to earth a bit there.

Probably. But we're waaaay overestimating the value of a JD when we say it will get you into corporate law. A tiny proportion of JD's get corporate law. A tiny proportion of CFA's become partners/executives at big firms. That being said, the earning power of a CFA in these situations > earning power of a JD

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well-hello-there
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Re: How much finance/econ do you have to know for corporate law?

Postby well-hello-there » Thu Mar 03, 2011 2:36 pm

A CFA I spoke with on a few occasions stressed the point that making it big in his field required excellent salesman skills.

JeNeRegretteRien
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Re: How much finance/econ do you have to know for corporate law?

Postby JeNeRegretteRien » Thu Mar 03, 2011 2:58 pm

Let me just say that finance =/= accounting. Different skill sets, different training/credentials, different people, different career track. There's overlap, in the same way strategy and finance overlap, but they are not interchangeable. Having said that:

Roberta Romano (Prof. of Corp Law at YLS and a giant in the field), at least, seems to think enough finance knowledge is necessary that a JD/MBA is valuable and worthwhile for practitioners - especially if it can be done through an integrated 3 year program. Short of an MBA, she argues that a meaningful background in Finance (whether through coursework or professional training) is essential. --LinkRemoved--? ... _id=824050

Her's is obviously not the final word, of course, but a well-informed one.

As for the CFA: a lot of work. if I recall correctly it takes a minimum of two years (exam I, exam II six months later, exam III one year later is, I think, the fastest they allow you to do it), most take more, and according to the CFA institute each exam requires a bare minimum of 250+ hours of concentrated study (and the consensus seems to be that 250 is ridiculously low, even for people who already have a lot of exposure to the material).

Moreover, the CFA is NOT a trivial exam, substantively. The CFA I is ostensibly pretty straight-forward for a person in iBanking/fund management or with graduate quant work (e.g. lots of MBA finance), but II and III (as I understand it) are more quantitatively intensive and hang people up on more exotic subjects (derivatives) than the basic valuation that's the stuff of CFA I (and most of working finance, frankly).

To wit: the pass rate for EACH exam is 35%-45% (approximately like the bar exam). And I think we can stipulate that MOST people who take the exams are immersed in the business. And by definition the people who flunk exam II and exam III were in the minority of candidates able to pass the previous exam(s).

In fact, most MBAs don't take the CFA and most CFAs don't have MBAs. They're seen, among the MBAs and CFAs I know/went to school with, as substitutes for each other. To say nothing of JDs. The only prominent JD I know of that has a CFA, also has an MBA, and manges the distressed debt portfolio at PIMCO. And wrote the text book on distress debt. So it seems like rarefied air.

Almost last but not least, a CFA is not (in my experience) for people on the accountanting career track and not the credential that accountants are expected to have. It's for would-be hedgefund and mutual-fund managers (and a small number of Treasury people, maybe). Partners at accounting firms need CPAs; there may be a few that have CFAs, but I think that's a confused oddity that may be a liability for their career (mixed signals on whether they want to work in Finance or Accounting). The CFA, as the CFA institute puts it, is an "investment credential" for people with "investment management experience" who, not surprisingly, want to become investment managers.

Finally: I don't think a CPA is all that value-add for a CorpLaw person. If you already have one, that's great and I'm sure there will be times when it's helpful. But if you don't have one, it's not worth the effort. 90% of business, and frankly most of finance, has not that much to do with accounting - not at the level of a CPA, anyway. I mean most PE people and senior executives don't know that much about accounting, and a truly tiny number have CPAs. A lot of CFOs don't even have CPAs. Finance is, conventional wisdom holds, super helpful for CorpLaw. Strategy probably is too for CorpLaw partners. But accounting is just a tiny part of a transaction, and not a driver. I mean the deal-valuation drives the price paid, the strategy drives the deal, and if anything the tax drives the structuring.

The time it takes to get a CPA (or a CFA for that matter) would be better spent getting business experience as a management consultant (people who often drive the M&A strategy) or iBanker (the people who actually drive the transaction itself), or frankly getting an MBA. And while those experiences (Bain/McKinsey, Goldman, MBA) are clearly helpful, and probably a competitive advantage, clearly none are absolutely required for a CorpLaw person.
Last edited by JeNeRegretteRien on Thu Mar 03, 2011 5:14 pm, edited 1 time in total.

2LLLL
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Re: How much finance/econ do you have to know for corporate law?

Postby 2LLLL » Thu Mar 03, 2011 4:47 pm

In fact, most MBAs don't take the CFA and most CFAs don't have MBAs. They're seen, among the MBAs and CFAs I know/went to school with, as substitutes for each other.


Want instant entertainment? Hang out with finance guys and innocently ask which is better between an MBA and CFA. Then, sit back and watch the fireworks fly.

A CFA, like an MBA but even moreso I would say, is completely different than a JD in that it is not a pathway into a new field. Rather, the value of a CFA is that it allows you to advance to a higher level position at your current finance/consulting job. That's why I have several friends/acquaintances whose employers pay for their study materials and fees.

As mentioned above, the pass rate for a CFA is brutal- like under 40% at each level. This is largely because people typically are working while they study and don't put the requisite time in, but you have to consider that the ~60% of people who fail Level II are those who passed Level I.

JeNeRegretteRien
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Re: How much finance/econ do you have to know for corporate law?

Postby JeNeRegretteRien » Thu Mar 03, 2011 5:11 pm

2LLLL wrote:
Want instant entertainment? Hang out with finance guys and innocently ask which is better between an MBA and CFA. Then, sit back and watch the fireworks fly.


SO. VERY. TRUE. Absolute hilarity, ad hominem, unsubstantiated generalization, and generally comical self-justification and posturing will ensue.

2LLLL wrote:
A CFA, like an MBA but even moreso I would say, is completely different than a JD in that it is not a pathway into a new field. Rather, the value of a CFA is that it allows you to advance to a higher level position at your current finance/consulting job. That's why I have several friends/acquaintances whose employers pay for their study materials and fees.


TITCR.



[Edited for quote formatting fail.]

roranoa
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Re: How much finance/econ do you have to know for corporate law?

Postby roranoa » Thu Mar 03, 2011 11:55 pm

JeNeRegretteRien wrote:Let me just say that finance =/= accounting. Different skill sets, different training/credentials, different people, different career track. There's overlap, in the same way strategy and finance overlap, but they are not interchangeable. Having said that:

Roberta Romano (Prof. of Corp Law at YLS and a giant in the field), at least, seems to think enough finance knowledge is necessary that a JD/MBA is valuable and worthwhile for practitioners - especially if it can be done through an integrated 3 year program. Short of an MBA, she argues that a meaningful background in Finance (whether through coursework or professional training) is essential. --LinkRemoved--? ... _id=824050

Her's is obviously not the final word, of course, but a well-informed one.

As for the CFA: a lot of work. if I recall correctly it takes a minimum of two years (exam I, exam II six months later, exam III one year later is, I think, the fastest they allow you to do it), most take more, and according to the CFA institute each exam requires a bare minimum of 250+ hours of concentrated study (and the consensus seems to be that 250 is ridiculously low, even for people who already have a lot of exposure to the material).

Moreover, the CFA is NOT a trivial exam, substantively. The CFA I is ostensibly pretty straight-forward for a person in iBanking/fund management or with graduate quant work (e.g. lots of MBA finance), but II and III (as I understand it) are more quantitatively intensive and hang people up on more exotic subjects (derivatives) than the basic valuation that's the stuff of CFA I (and most of working finance, frankly).

To wit: the pass rate for EACH exam is 35%-45% (approximately like the bar exam). And I think we can stipulate that MOST people who take the exams are immersed in the business. And by definition the people who flunk exam II and exam III were in the minority of candidates able to pass the previous exam(s).

In fact, most MBAs don't take the CFA and most CFAs don't have MBAs. They're seen, among the MBAs and CFAs I know/went to school with, as substitutes for each other. To say nothing of JDs. The only prominent JD I know of that has a CFA, also has an MBA, and manges the distressed debt portfolio at PIMCO. And wrote the text book on distress debt. So it seems like rarefied air.

Almost last but not least, a CFA is not (in my experience) for people on the accountanting career track and not the credential that accountants are expected to have. It's for would-be hedgefund and mutual-fund managers (and a small number of Treasury people, maybe). Partners at accounting firms need CPAs; there may be a few that have CFAs, but I think that's a confused oddity that may be a liability for their career (mixed signals on whether they want to work in Finance or Accounting). The CFA, as the CFA institute puts it, is an "investment credential" for people with "investment management experience" who, not surprisingly, want to become investment managers.

Finally: I don't think a CPA is all that value-add for a CorpLaw person. If you already have one, that's great and I'm sure there will be times when it's helpful. But if you don't have one, it's not worth the effort. 90% of business, and frankly most of finance, has not that much to do with accounting - not at the level of a CPA, anyway. I mean most PE people and senior executives don't know that much about accounting, and a truly tiny number have CPAs. A lot of CFOs don't even have CPAs. Finance is, conventional wisdom holds, super helpful for CorpLaw. Strategy probably is too for CorpLaw partners. But accounting is just a tiny part of a transaction, and not a driver. I mean the deal-valuation drives the price paid, the strategy drives the deal, and if anything the tax drives the structuring.

The time it takes to get a CPA (or a CFA for that matter) would be better spent getting business experience as a management consultant (people who often drive the M&A strategy) or iBanker (the people who actually drive the transaction itself), or frankly getting an MBA. And while those experiences (Bain/McKinsey, Goldman, MBA) are clearly helpful, and probably a competitive advantage, clearly none are absolutely required for a CorpLaw person.


This response is awesome on so many levels. Thanks!

So, going back to my original question. I understand now that background experience/knowledge in finance helps a lot.

Then, as a liberal arts major, what should I do in terms of gaining knowledge in finance to prepare myself for corporate law?
Would studying for the CFA level 1 help? Or should I just self study on...well, what should I study? What, in your opinion, is most helpful?
I don't have the chance of getting an MBA at the moment (no WE) nor do I have a chance in getting into a IB or consulting firm at the moment. (no preperation)

So can anyone give me some tips on what I CAN do before getting into corporate law?

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vamedic03
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Re: How much finance/econ do you have to know for corporate law?

Postby vamedic03 » Fri Mar 04, 2011 12:02 am

There's a ton of BS in this thread.

If you want to work for a top corporate practice, you only need 1 thing: great 1L grades.

Look, this blabbing back and forth about CFA and CPA is a waste of time. You don't need any business background to get a position as a corporate SA. You need good law school grades.

Curry

Re: How much finance/econ do you have to know for corporate law?

Postby Curry » Fri Mar 04, 2011 12:06 am

vamedic03 wrote:There's a ton of BS in this thread.

If you want to work for a top corporate practice, you only need 1 thing: great 1L grades.

Look, this blabbing back and forth about CFA and CPA is a waste of time. You don't need any business background to get a position as a corporate SA. You need good law school grades.


This is right. DB and I were just having a discussion on the side. Sorry.

Anonymous Loser
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Re: How much finance/econ do you have to know for corporate law?

Postby Anonymous Loser » Fri Mar 04, 2011 12:11 am

Because this thread has reached a surprising length without anyone bringing it up, I feel it is worth pointing out that learning how to use CNTRL+F encompasses 95% of the tasks assigned to the typical first- through fifth-year corporate associate.




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