M&A practice area v. Fund Formation v. Tax Forum

[Anonymous User]

Curious about anyone's experience in any of the above areas? What I gathered so far is below. Any confirmations of below, new information, or conflicting information is greatly appreciated. Thank you ahead of time.

M&A tends to have wild swings with hours. Peaks and valleys. Not as bad as capital markets, but still pretty bad. Of the three areas listed, this area tends to bill the most hours and work the most weekends. But also have the widest variety of exit options

Fund Formation tends to be concentrated on a few firms. Can be a little boring as preparing and raising capital for PE can be monotonous as things tend to be the same each time, with minor variations. Tend to be a little more regular with the hours than M&A, but less weekend work. Completely unsure about exit options, so any help here is helpful

Tax tends be a unique area. Rather than working on a couple of deals at a time, this area often involves working on discrete project in various areas. Because of this, the hours tend to be most regular. Also, it seems that billable hours aren't as high as the above areas because thinking and doing great work is more important than slamming down hours. Not to say tax lawyers don't work, but not the same hours as the above areas. Exit options tend to be plentiful, but tax lawyers are severely limited in what area the exit options are in because they are not as experienced with deals as M&A.

[thesealocust]

Seems about right. Lots of variance firm to firm though.

Also keep in mind that when you talk about exit options, variety for variety's sake doesn't mean much. If you like tax, the fact that tax exit options are, well, tax related shouldn't be a bad thing. And even if you do M&A and have the mythical wide variety of exit options... you can still only have one job at a time, in one place a time, so the fact that you may have had a little more flexibility the moment you jumped isn't necessarily going to be that meaningful long term.

[Reinhardt]

Tax sounds all well and good, but I don't think there are that many opportunities for young associates, especially those two weren't CPAs before law school. Looking at a handful of major firms on the NALP directory seems to confirm my sense of this: about 20 tax associates in big firm, and 400 "Corporate" associates.

[guano]

Tax sounds all well and good, but I don't think there are that many opportunities for young associates, especially those two weren't CPAs before law school. Looking at a handful of major firms on the NALP directory seems to confirm my sense of this: about 20 tax associates in big firm, and 400 "Corporate" associates.

Tax is a niche, corporate is an umbrella term. Try looking up something like corporate governance, or securities regulation (or, for something more mainstream, insurance - regulatory or transactional) which tend to fall under corporate, and you'll notice that the number of attorneys is probably much smaller

[thesealocust]

Tax sounds all well and good, but I don't think there are that many opportunities for young associates, especially those two weren't CPAs before law school. Looking at a handful of major firms on the NALP directory seems to confirm my sense of this: about 20 tax associates in big firm, and 400 "Corporate" associates.

Wat. There is tons of opportunity in tax for young associates, because nobody wants to do it, almost every firm does some, and a CPA or other background is absolutely not necessary.

[imchuckbass58]

Most of what you said sounds accurate to me.

Re: fund formation exit options: Exit options are narrow, but good. They're also heavily firm-dependent to an even greater degree than other practice areas.

Other than lateraling to other firms, fund formation lawyers pretty much only go in-house at funds, either as lawyers, or as hybrid lawyers/investor relations people. Moreover, at least in private equity, only large funds will have fund formation lawyers in-house (many mid-size funds only have one lawyer, and the first in-house hire is usually an M&A lawyer), and they tend to hire almost exclusively from their outside counsel (since knowledge of their fund's particular agreements is important). Finally, the fund formation market is heavily concentrated. Three firms (STB, Kirkland, and Debevoise) dominate PE fund formation. For large funds, they historically have had well over 75% market share. There are a couple of other firms who play in the space (Weil, Cleary), but to a much lesser extent.

I guess what I'm saying is exit options from fund formation are pretty much only lateraling to another firm, or going in-house at a fund. If you're fine with that narrowness, the options themselves are actually quite good, but only if you're coming from the 3 or so firms that dominate the market.

I don't know much about hedge fund practice, so can't really be of any help there.

[badaboom61]

Are long term career options in tax limited if you never get an LLM? Or is big firm experience sufficient?

[Reinhardt]

I think it's an exaggeration to say "nobody wants to do it." A number of M&A associates (and partners) I've spoken with have expressed how they loved tax, but I think when OCI rolls around people go for the surer strategy of expressing an interest in "transactional" because that group is probably hiring 5 to 10 times the number that the tax group is. If you have the guts to focus on tax at OCI, more power to you, but I think that can be a difficult sell with no tax or accounting in your background, no tax in your 1L classes (obviously), and probably no tax 1L summer job.

[thesealocust]

I think it's an exaggeration to say "nobody wants to do it." A number of M&A associates (and partners) I've spoken with have expressed how they loved tax, but I think when OCI rolls around people go for the surer strategy of expressing an interest in "transactional" because that group is probably hiring 5 to 10 times the number that the tax group is. If you have the guts to focus on tax at OCI, more power to you, but I think that can be a difficult sell with no tax or accounting in your background, no tax in your 1L classes (obviously), and probably no tax 1L summer job.

At many big firms, you can get an offer and start as a summer before needing to express an interest in tax.

I had no interest in tax and still wound up having to fend off the advances of my summer firm's tax department because I accidentally showed an interest in it.

If you want to do tax and have the school + grades to swing biglaw, it really shouldn't be a problem.

Are long term career options in tax limited if you never get an LLM? Or is big firm experience sufficient?

I'm not an expert, but tax LLMs seem helpful and common (even obtaining them part time while employed at a firm) but far from mandatory.

[AllDangle]

Tag

[Old Gregg]

I had no interest in tax and still wound up having to fend off the advances of my summer firm's tax department because I accidentally showed an interest in it.

Your experience is one instance. At my firm, the number of associates wanting to do tax slightly exceeded the number of spaces available. The margin became greater when associates realized that tax associates generally have better hours than M&A associates (I'm pretty sure the only associates who can bill 1800 hours at my firm and still be well regarded is in tax).

On top of that, tax attorneys are kings of M&A deals, where they dictate the structure of the transaction from the get go.

If I had patience for dealing with the tax code and the intelligence needed to go far (and believe me, tax attorneys are smarter than your average corporate attorney), I'd be a tax lawyer right now.

[Anonymous User]

Most of what you said sounds accurate to me.

Re: fund formation exit options: Exit options are narrow, but good. They're also heavily firm-dependent to an even greater degree than other practice areas.

Other than lateraling to other firms, fund formation lawyers pretty much only go in-house at funds, either as lawyers, or as hybrid lawyers/investor relations people. Moreover, at least in private equity, only large funds will have fund formation lawyers in-house (many mid-size funds only have one lawyer, and the first in-house hire is usually an M&A lawyer), and they tend to hire almost exclusively from their outside counsel (since knowledge of their fund's particular agreements is important). Finally, the fund formation market is heavily concentrated. Three firms (STB, Kirkland, and Debevoise) dominate PE fund formation. For large funds, they historically have had well over 75% market share. There are a couple of other firms who play in the space (Weil, Cleary), but to a much lesser extent.

I guess what I'm saying is exit options from fund formation are pretty much only lateraling to another firm, or going in-house at a fund. If you're fine with that narrowness, the options themselves are actually quite good, but only if you're coming from the 3 or so firms that dominate the market.

I don't know much about hedge fund practice, so can't really be of any help there.

Do you know anything about ease of movement between different types of fund formation, e.g., between private equity and venture capital?

[imchuckbass58]

Do you know anything about ease of movement between different types of fund formation, e.g., between private equity and venture capital?

Not really. I know there's relatively little movement between hedge fund work and private equity work. VC seems like it would be substantively closer to private equity (at least as far as formation goes), but I don't really know how much mobility between the two there actually is in the real world.