WSJ.com is available in the following editions and languages:
Thank you for registering.
We sent an email to:
Please click on the link inside the email to complete your registration
Please register to gain free access to WSJ tools.
An account already exists for the email address entered.
Forgot your username or password?
This service is temporary unavailable due to system maintenance. Please try again later.
The username entered is already associated with another account. Please enter a different username
The email address you have entered is already in use.Please re-enter the email address.
From time to time, we will send you e-mail announcements on new features and special offers from The Wall Street Journal Online.
Create a profile for me in the Journal Community
Why Register?
Privacy Policy | Terms & Conditions
As a registered user of The Wall Street Journal Online, you will be able to:
Setup and manage your portfolio
Personalize your own news page
Receive and manage newsletters
Receive and manage newsletters
Keep me logged in. Forgot your password?
You can connect your Facebook profile with WSJ.com to share articles, comments, and other activity with your friends.
Digg
There are lots of things I never understood about lawyers — like exactly what motivates them.
I never understood, for example, how a lawyer could defend a murderer he knew was guilty of an awful crime.
(Counterpoint: Dealpolitik: 6 Ways Bankers Drive Lawyers Nuts)
The right to counsel may be enshrined in the Constitution's Bill of Rights. But that didn't mean I could ever see myself in court arguing for Charles Manson.
On Wall Street where I spent most of my career, motivations are much more straightforward. Nearly everyone is out to make a buck — or as many of them as they can.
Which makes the puzzle of the Wall Street securities lawyer all the more puzzling.
Why work at Cravath or Skadden Arps or S&C when you could work at Goldman Sachs? Why throw yourself into Wall Street's ring knowing you'll be stuck as a cornerman for the rest of your life?
Consider your career. Four years for your B.A. Three years for your law degree. Another six to eight years of 24/7 partnership-track servitude.
And after a dozen dreary years of study and apprenticeship, your likely reward is to take orders from arrogant 35-year-old Wall Street bankers for another decade or two.
This of course isn't news. This was the reality when I started at Goldman back in 1986. On Wall Street, lawyers have been second-class citizens for decades.
What does “second-class” mean?
It means that if you're a Wall Street deal lawyer, you're a well-paid functionary. You're necessary to the deal and probably superb at what you do, but a functionary nonetheless.
You're there to make sure the documents are right and filed on time. You're there to make sure you have a case for the courts. You're there to make sure no one ends up in jail.
But you don't negotiate the price of a merger between two CEOs. You don't pledge billions in bank money for bridge loans or stapled finance. And you don't get to schmooze at Davos with Tony Blair or Steve Schwarzman.
Sure, if you're a top lawyer at a top firm, you may shape a big deal, but you'll only rarely make or break it.
Wall Street's first-class citizens, the bankers, do that. Or at least, claim they do. And no, we're not talking about a bunch of Einsteins or Supermen.
Read my colleague Ron Barusch's piece on a lawyer's take on Wall Street bankers. It's pretty accurate. Most bankers are fee-hungry opportunists who almost never come across a deal they can't learn to love.
But at least the bankers are honest with themselves. They're in it for the money. They want to get the deals done, the fees banked and the year-end bonus secured.
Don't assume their clients -– the CEO or CFOs who write the checks –- are fooled or misled in any way. Nearly all of my clients derided or decried the magnitude of our “success” fees on a regular basis.
And here's the rub. Wall Street's lawyers aren't all that different. They too are ruthless in negotiating fees for their services. They don't walk away from clients because of some principled, high-falutin' objection to a deal.
And they rarely reject an unconventional deal term or structure out of hand, preferring instead to chalk up extra hours “investigating” its feasibility.
The main difference with bankers is that lawyers get paid whether or not a deal gets done. The bankers don't.
The lack of “success fee” payment for lawyers actually makes sense. A CEO doesn't want his lawyer to have any incentive to cut corners. He'll be the one going to jail, not the lawyer.
But no “success fee” de facto means less money for lawyers. And if it's less money, again, why pick the law? I suppose there is more stability and job security.
After all, can you name any of the lawyers that helped put together Goldman's Abacus CDO? Can you name one law firm that went belly-up as Bear Stearns or Lehman collapsed?
But is this enough reason to be a lawyer and accept second-rate pay and second-class citizenship on Wall Street?
Who knows? But you might want to ask Goldman's Lloyd Blankfein, who graduated Harvard Law School to practice corporate law at Donovan, Leisure, Newton and Irvine.
Read Full Article »