Jump in M&A Activity Increases Opportunities for GraduatesSean Griffith in The New York Law Journal, April 22, 2013
by Sean J. Griffith
The prospects for law school graduates are apparently abysmal. That's the message you get from the media these days, but it's not entirely accurate. While the recession hit the legal marketplace particularly hard, two trends in business—increased M&A activity and growth in corporate compliance programs—are stimulating the legal economy. That means a rise in opportunities for law school graduates for the foreseeable future. There are several strategies that current and prospective law school students should pursue to take advantage of these trends.
Rise in M&A, Compliance Work
The jump in M&A activity early this year is well documented. In March, Brunswick Group issued its 6th Annual M&A survey of 100 top advisors from North America, China, and Europe. The report concluded: "M&A practitioners are the most bullish on deal activity since the collapse of the last buyout boom with 97% of North American advisors forecasting an uptick from 2012." It also said advisors were most optimistic about domestic deals in North America, a good sign for U.S. law firms.
More anecdotally, headlines from the business pages this year have already been filled with news about big deals such as the $11 billion American Airlines and US Airways merger, a planned $24 billion buyout of the computer company Dell, and a $23 billion offer from Berkshire Hathaway to takeover the food company H.J. Heinz. According to Dealogic, there was $217 billion in U.S. deal activity in the first six weeks of 2013, more than double the amount seen in the comparable period last year. Although the robust start to the year seems to have slowed due to continuing global economic and political instability, in the United States corporate fundamentals remain strong, suggesting that the resurgence of M&A activity is not over.
M&A activity produces a lot of legal work for a lot of lawyers, especially lawyers in New York. The deals are heavily lawyered in a wide range of specialties, including tax, IP, antitrust, litigation and corporate. Recently, AmLaw Daily reported that almost a dozen AmLaw 100 firms landed lead advisory roles on the American merger with US Airways. Since 90 percent of mergers are challenged in shareholder litigation, often in more than one lawsuit and more than one jurisdiction, litigation practices may also see a sustained caseload uptick from the increase in deal activity.
Corporate compliance departments—in-house teams that oversee a company's compliance with law and regulation—are also booming. The Bureau of Labor Statistics forecasts a 31 percent increase in compliance employment from 2008 to 2018, largely as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and more aggressive enforcement of existing laws by regulators and prosecutors. A November Compliance Exchange article states that every U.S. and many international financial institutions and companies will have to hire internal staff or compliance professionals to address Dodd-Frank issues. According to the article:
Much of the legal profession was decimated by the 2008 financial crisis due to the crisis' effect on law firms' major clients such as banks and corporations.… [N]ow most law firms have financial regulatory practices dedicated to writing briefs explaining the impact of Basel III and Dodd-Frank….
HSBC Bank exemplifies the expansion in compliance. Last year in a memo to employees, HSBC's CEO stated, according to The New York Times, that since 2010 the bank has doubled its annual spending on compliance to $400 million and now has about 3,500 people worldwide working on compliance, about 1,000 of them in the United States.
As signs of growth emerge in the fields of compliance and mergers and acquisitions, law schools are designing new programs to help students take advantage of these opportunities. At Fordham Law School, we are launching the Corporate Compliance Institute, a three-week summer program to introduce the basics of compliance and the role of the corporate compliance office. Another way law schools are improving their offerings in the business law area is by partnering with business schools, through either cross-registration or full JD/MBA dual degree programs. For example, Stanford has one of the nation's longest running dual-degree law and business programs, immersing students in the intellectual cultures of both fields. Fordham, too, offers great cross-registration opportunities in law and business and a strong dual degree program.
How to Maximize Opportunity
So there is evidence that the job market for business lawyers is rebounding strongly. Still, the competition for good jobs will remain fierce. There are several steps students can take to maximize the opportunities available to them.
First, when applying to law schools, it's important to find schools that have a strong focus on business law. The first place to look for this is in the publication record of full-time faculty working in the area. Full-time faculty are the driving force behind the specialized offerings at most schools, and a strong record of interesting publications in the area demonstrates a school's priorities and areas of strength. After that, students should look to see whether the school has a deep bench of adjunct professors connected with the practicing bar. Adjunct faculty provide a valuable, "real world" education that prepares students for what they will encounter when in practice. Strong adjuncts also serve as great contacts when it comes time to get a job. Finally, students should pick a school that feeds a market ripe with opportunities in the specialty they are considering. For example, students seeking work in M&A generally or in compliance work focusing on the financial and pharmaceutical industries might lean toward New York-area schools, while students seeking to specialize in venture capital might consider a school in northern California.
Once students have started their legal education, they should take the basic Corporations Law course as early as possible. Corporations is the foundational course that all of the upper level business law electives are based upon. By taking it as early as possible in their legal education, student will quickly gain an understanding of the law that governs business organizations while gauging their level of interest in business law sub-specialties. They'll also maximize their available time for taking electives that hone skills in key practice areas, all of which build off of the basic Corporations course.
Finally, throughout their legal education, students should focus on developing their professional networks. They should attend events featuring practitioners in their field of interest. Along with lectures and symposia at their own law schools, students can build connections with fellow students and alumni and business school events and through student-level membership in professional bar and business associations. The idea here is for law students to think of themselves as building a practice from the moment that they begin their legal education and to understand that building a practice is part knowledge and expertise and part networking.
The pre-2007 boom years for the legal community might not return for some time. But a small boomlet in certain business law practice areas seems to be underway. Law students who work hard and position themselves intelligently will find many opportunities available to them at graduation, providing that crucial first step in a rewarding, lifelong career.
Sean J. Griffith is the T.J. Maloney Chair and Professor of Law at Fordham Law School and director of the Fordham Corporate Law Center.