Banking and finance

Banking and finance

What is banking law?

Banking has been, for the last few years, and remains today, the focus of a great deal of attention, scrutiny and criticism, and is central not just to the British economy but to the global economy. This dramatic backdrop to banking today makes it an exciting, challenging and stimulating area of law to practise. Banking can take the form of lending money to blue-chip companies to finance new business plans, issuing high-yield bonds or helping investors acquire whole businesses.

The lawyer’s role in this field is varied and dynamic, acting both for borrowers and lenders to create, negotiate and deliver a bespoke financing package to suit a myriad of circumstances.

Banking work can involve acting on leveraged buy-outs, whereby a company or business is acquired by a private equity firm using a high level of borrowed funds (debt). The banking lawyer’s role is to negotiate the loan documentation and associated security package on behalf of either the borrower or lender and manage the ongoing relationship between the parties as it develops over the life of the loan.

Banking lawyers not only act on deals where new money is being lent, but on deals to restructure or refinance existing debt, where the borrower may be in financial difficulty and unable to repay their loans, or, may wish to put in place new finance arrangements which are more closely aligned to their new business plan.

At City firms in particular, a banking deal may require the lending of hundreds of millions of pounds by the largest financial institutions to top private equity institutions and it is unusual for a transaction to only involve the UK, as many clients and businesses operate internationally. This gives banking lawyers the opportunity to work with clients and lawyers from countries across the globe, especially in places where a firm has international offices. Frequently, this process is co-ordinated and driven by the team in the UK, which can be very rewarding.

One of the most interesting elements of a banking transaction is working with the clients to structure the financing. In the past few years traditional European banks have taken a more conservative view on lending, which in turn has led private equity institutions to explore other avenues of financing and innovative ways of structuring deals. This is always with a view to obtaining the best pricing and greatest flexibility for the business that is being financed. Financing options in Europe range from traditional European loans, to high-yield bonds, to accessing the US loan market.

Another interesting feature of banking work, which is virtually unique to the discipline, is the requirement to understand the business of the borrower, and this is true regardless of whether you represent the borrower or the lender on any given matter. This is because a loan agreement lasts for several years, unlike many other complex commercial contracts which seek to address one specific event (for example a sale and purchase agreement). During the life of a loan, a business is developing, and therefore the loan agreement should aim to contemplate as many of those business changes as possible. This is fascinating and the result is that banking lawyers develop strong commercial awareness and business acumen.

Working culture and life

Due to the nature of banking and finance transactions, both in terms of complexity and timing, trainees and junior lawyers have the opportunity to take on a high level of responsibility and get involved as an active part of the deal team. This may involve drafting documentation, dealing directly with the lawyers representing the other parties, instructing overseas counsel and significant client contact from day one.

One of the best things about being a banking lawyer is that there is no such thing as a typical day: you could find yourself attending a kick-off meeting to discuss a new deal with a client, drafting documents and participating in conference calls with local and overseas lawyers on an ongoing matter, heading to a client’s offices to obtain signatures to close a deal, researching a point of law to address a particularly complex or new legal problem, or preparing a client pitch for new business for the firm – the list is endless! The work is very varied and therefore a flexible attitude, willingness to learn and enthusiasm for participating are absolutely essential in order to thrive in an area of law that can require long and intense but rewarding hours.

Banking lawyers are typically sociable individuals due to the high level of teamwork and client contact involved in their work and they need to have the confidence to take on early responsibility, a good head for business and a keen eye for detail. Common sense is also a must, as well as excellent transaction management skills and a high level of ambition and drive to get a deal completed successfully and secure the best outcome for your client. Since the lender/borrower relationship exists beyond the original deal and survives for several years, it is essential to maintain a good relationship with the other parties to a transaction and their counsel, so excellent negotiation and persuasion skills are vital.