Can anyone describe the typical day of a cap. markets lawyr? Forum

[californiauser]

Had to truncate the title.

Can any attorneys or anyone familiar with the field describe the typical day-to-day work of a capital markets attorney at a large firm or provide a link with a description?

thanks

[zugzwanger]

http://www.chambers-associate.com/Artic ... ceArea/601

[SplitMyPants]

http://www.chambers-associate.com/Artic ... ceArea/601

Hadn't seen that site before. That's great. Thank you!

[zugzwanger]

NP, Chambers is awesome--dig around the site for a while you'll find a lot of great information about practice areas and also about firms under the search.

[IAFG]

http://www.chambers-associate.com/Artic ... ceArea/601

Hadn't seen that site before. That's great. Thank you!

Not saying that link isn't a great resource but that doesn't answer your question, which I think is an important question to get answered.

[JusticeHarlan]

There are any number of reasons why no one can describe what a "typical day" is like in cap markets, or most fields of corporate law. Junior associates do work that is different from more senior associates who do work that is different from partners (though at the borders there is going to be some overlap). There's also going to be a very different pace to the day depending on what stage your deals are on - slogging through diligence a month out is a lot different from finalizing documents the day before closing.

Capital markets will also vary greatly depending on if you're representing underwriters or companies (the "company" or "issuer" is the entity that is selling securities in the capital market; the "banks" or "underwriters" are the investment banks that buy the securities directly from the issuer and take the risk of selling the securities to investors"). I'm not really the best person to describe capital markets; I'm just a junior who has dabbled a little in the field. But if you want to know what the capital markets work entails, on an overly-broad and general level:

There are a few different primary buckets of things that fall into capital markets. IPOs, follow-on offerings, general public company SEC reporting work are the big ones I've worked with.

An IPO is a pretty all-consuming transaction. You're working on drafting an S-1, which is a long-ass document that describes everything the SEC requires you describe about the company: what it does, what it's plans are, what it's financials look like, what it's capitalization structure looks like, etc. A lot of an S-1 you can steal from earlier S-1s for similar companies, but much of it gets drafted from scratch for the sections that describe the particulars of the company and it's business model. That makes it somewhat unique among corporate law transaction documents.

Seniors/mid-levels, and partners if they feel like it, will do the lionshare of the drafting. You have "drafting sessions" where people argue about comma placement and about how describe certain risk factors. You sit around and a senior/partner from company counsel will say "anyone have anything on page one? Page two, first paragraph? Second paragraph?" This goes on once a week or so for a month or two, maybe. As a junior, you're doing a lot of diligence during this time. The lawyers for the underwriters will take every factual statement in the S-1 that isn't obviously true on its face and literally circle it with a pen. They'll send that circle-up to the company side lawyers, and the junior there will assemble a binder that contains "back-up": a document that proves that each circled statement is true. (It's a process similar to cite checking law review articles, actually, though no blue booking and you're looking at the truth of actual things, not court cases or other law review articles.) Auditors will generally do this process for the financials, however (phew!). Both sides will also check into the capitalization of the company: do they have X many shares of Series B Preferred Stock, like they're claiming? Was each amended certificate of incorporation approved under proper procedures per Delaware law? Are there any shareholders that get the rights to register their securities with the IPO? Your diligence will also be about all the material agreements a company has, making sure there are no red flags that should be disclosed in the S-1, or that might require consent of a counter-party. This will basically require reading every major financing document, every board meeting minute, every contract, everything the company has done of note since inception.

There are also questionnaires every officer, director and large stockholder will fill out. The junior will make those and review for any issues, like conflicts of interest of directors or past arrests of officers or the like.

You're also doing something called "rules checking" or "form checking." The SEC has guidelines about what has to be in each filing, and so the junior is generally tasked with going through and ticking off to make sure everything is covered. Does the S-1 describe all the unregistered issuances of securities in the past three years? Does it say how long the proceeds of the offering will last? Have you properly described the lease for the main headquarters? Stuff like that.

There are also ancillary documents and background work. The company needs to register with a stock exchange (NYSE, NASDAQ, etc.). It needs to approve an audit committee charter. It needs to approve new certificates of incorporation for both right before and just as the offering is effective (the "pricing charter" and the "closing charter"). It need to do a stock split to get the right number of shares being offered v. those held by current holders, which will require an amendment to the charter. It needs to redo its stock option plan. It needs a per-cleanance policy for trading the company's stock once it goes public. Directors and officers need to get stet up with EDGAR for their Section 16 filings. The company website needs to get scrubbed for anything that might be seen as conditioning the market for the offering. Juniors and mid-levels on the company side will do a lot of drafting of these documents and those on the underwriter side will be checking everything.

Once the S-1 is in decent shape, you all meet up at the "printers" and hammer every last thing out in person over two or three days. The printers provides conference rooms and an ungodly amount of food for you while some poor shmoe on the company side has to take print-offs of the S-1 and hand mark every single change anyone wants to make on a master copy and give it back to the printer staff, who will make the changes. The junior or mid-level will review to make sure every comma that was supposed to be added actually gets added. Once everyone is signed off, you submit to the SEC (perhaps confidentially at first, depending on the size of the company, thanks to the JOBS Act).

The banks will also want every officer, director, equity and option holder to sign a "lock-up", under which they agree not to sell stock of the company for 6 months after the IPO, to keep the price stable. This will entail underwriter side counsel drafting the lock-up, company counsel chasing down signatures from employees with stock and everyone haggling over the terms of the lockups with the bigger institutional investors (VCs, mutual funds that make VC investments, etc.).

The S-1 gets filed, and the SEC will provide comments. Is this accounting treatment being done correctly? Did you disclose enough information about the relationship between this director's other company and the issuer? Company side counsel will take the lead in drafting responses, with under writer side counsel checking everything to make sure they approve. On the flip side, the S-1 also gets submitted to FINRA, the self-regulatory organization for the banks, and the bank-side counsel will take the lead in answer comments to FINRA. Are the banks buying any securities in the offering? Have they received items of value in the past 180 days from insiders? So on. You'll revise the S-1, you'll get more comments (hopefully fewer), repeat until the SEC and FINRA are signed off.

The banks are running the "road show" in the meantime, drumming up investors who want to buy the securities. Juniors will work with the pritner to prospectuses get printed off "(red herrings" with a price range at first, then final prospectuses post-pricing).

The last big step for the lawyers before closing is pricing: the banks and the company agree on the price to sell the stock at. This is when each party signs the Underwriting Agreement, which is the primary transaction document between the banks and the company. This is more of a mid-level/Senior/partner thing than a junior thing, but you might have some tasks like running changes or researching other underwriting agreements to see other ways to describe certain provisions. You sign, the deal "prices". Some days later, you close - the shares get transferred from the company to the banks, who then sell them to investors. Then some junior make a nice set of binders/CDs with everything in it to distribute for everyone's records.

A follow-on offering is like an IPO, but you did most of the heavy lifting already. You already have the back-up binder that supports all the factual statements, because you lifted them from the IPO S-1 for you new S-1 or S-3, updating as needed. You already drafted the language about what the company does. So you'll work to do what you did in the IPO for anything that's new or updated. You'll have another underwriting agreement to negotiate, another pricing call, another road show, more prospectuses to proof, new statements to provide backup for, etc. Much less work than an IPO but usually on a much condensed timeline. If you're lucky, someone else has done most of the work already with a previously effective S-3 and you can just toss in a new prospectus to update (the "shelf take-down" follow-on).

Ongoing public company work entails making sure that the Company's yearly reports and quarterly reports get filed, that they comply with SEC guidelines, get properly turned into EDGARized forms by the printers, and so on. You'll also need to do 8-Ks if something happens: they fire an executive officer? They have to file something within 2 business days. Much of this is taken care of by the company, but you have to double check everything and rules check. There's also Section 16 work: did an officer get granted new stock options? He's got to file a form with the SEC within 2 business days, and you'll be making sure it's all correct.

That's my experience so far, and I'm sure someone who's been at it for real can chime in.

[IAFG]

Thanks for taking the time Harlan. That's super helpful and is closer what 0Ls/1Ls/2Ls need to know.

[lawhopeful10]

Yea, that was really helpful thanks.

[croissantlover]

Thanks Harlan. Your response is very informative.

[wons]

That excellent post describes the IPO process very accurately, but it doesn't get at the heart of the problem with your question which is that "capital markets" is one of those euphemistic terms that means lots of things

Capital markets generally means "securities". So if you're a garden variety securities lawyer, the IPO is sort of the pinnacle of what you do. Between IPOs (which are rarer and rarer), you do a great deal of cookie-cutter type stuff on shorter time frames for repeat clients. Shelf takedowns, etc. This sort of work is the grind of securities work, because it is profoundly uncreative, demands exquisite attention to detail and often is the sort of thing where the client calls on Monday to take advantage of market conditions and wants the offering launched that week (or more tragically, calls on Friday to launch early next week....)

But there are lots of wrinkles to this. Some firms do their registered high yield work out of their cap markets group. Some firms do both registered AND 144A work of their cap markets group. Some firms do all high yield work out of a leveraged lending group, though that's less common. High-yield work tends to be much higher pressure than ordinary cap markets, with tighter deadlines and less predictability. It's also, however, less cookie-cutter, which can be a blessing. It's a very different experience.

Then everyone generally reviews the periodic reporting and prepares the proxies for ongoing clients. Juniors will be doing form checks, which are as dreadful as they sound. Mid levels will be substantively reviewing and working it through with the company. This can actually be sort of interesting, since you learn a great deal about the client - like a poor mans version of the IPO process. Proxy work gives me the hives, so I can't speak to that.

Generally, cap markets work is the most boring / repetitive of the major transactional practice ares, though I suspect that non-leveraged bank finance is just as bad but is no longer done at the big transactional firms other than DPW and STB. It demands an exquisite attention to detail, way more than other practice areas (which is saying something in a profession that is distinguished by its obsession with typos). However, the hours can be generally more regular and predictable than other deal work, though in hot markets you can literally be drowning in a sea of little offerings (I say literally because you should see the stacks of paper you can hardly see over) and that's miserable. Many firms have their cap markets folks do a little light corporate work on the side - JVs, minority investments, etc, and that's a nice feature to break up the monotony.

Exit options are excellent - every big corporate needs in house folks to oversee their cap markers offerings / interface with outside counsel. The nature of periodic reporting and the way that corporates tend to access the market regularly means that there's a good opportunity to build relationships with clients from early on. However, the market for high end securities legal work at firms has been decimated in recent years because of the commoditization of the practice, so it is extremely difficult to make partners these days as a cap markets attorney, unless you also do high yield.

If boring, detail-oriented, but less intense work sounds like your thing, cap markets may be the field for you.