What Does an Investment Lawyer Do?
Investment law splits into two branches: venture capital and private equity law on the one hand, and securities or capital markets law on the other.
13:01 02 June 2020
Whether you are thinking of going to law school or your law degree is well underway, there will come a time when you need to decide which area of practice you will specialize in. Are you subscribed to the Financial Times? Have you seen The Wolf of Wall Street too many times to count? If that’s a yes, then you should definitely look into investment law. But what does an investment lawyer do?
Investment law splits into two main branches: venture capital and private equity law on the one hand, and securities or capital markets law on the other.
Securities or Capital Markets Law
What Are Securities?
Security is a catchall for a wide array of financial instruments that include bonds, stocks, options, and commodities. Investors buy securities in the hopes of making a profit further down the line. Usually, they earn money through interest or dividend payments or as a result of an increase in the value of the underlying business.
Securities Law Basics
Securities laws govern the creations, and management of financial instruments. These rules seek to:
- Promote transparency in the industry
- Prevent malpractices such as fraud, market manipulation, and insider trading
The two key pieces of securities legislation are the Securities Act of 1933 and the Securities Act of 1934. In addition, U.S. brokerage firms must adhere to the rules set by the Financial Industry Regulatory Authority (FINRA).
What Does a Securities Attorney Do?
So, what does an investment lawyer do exactly?
Well, securities attorneys typically work in an office setting in a securities law firm. They play a critical role in helping both individual and corporate clients plan and protect their investments by:
- Researching the financial health, legal status, and history of companies
- Providing advice on the legal duties that financial brokers owe investors
- Alerting to red flags and signs of fraud or mismanagement
- Advising investors on the types of claims available to them id they suffer losses
- Helping companies comply with the relevant laws
- Representing investors in litigation, such as class action suits, shareholder derivative actions, or suits against brokers
- Assisting corporate clients in transactional work regarding mergers and acquisitions, issuance of securities, initial public offerings, private sales of securities, and more.
Venture Capital and Private Equity Law
What Is Venture Capital Law?
Venture capital is a type of financing that investors provide to promising small businesses and startups, many of which are not eligible for bank loans. These cash injections help early-stage businesses grow and, ultimately, make a return on the investment. Venture capital law encompasses the rules that govern all those processes.
What Is Private Equity Law?
The term private equity refers to funding provided by large investors to companies that are not publicly traded. In exchange for making a substantial capital contribution to the business, investors often acquire a controlling interest in the company. Private equity law regulates how such investments are carried out, as well as what reports and disclosures must be made.
What Do Venture Capital and Private Equity Law Attorneys Do?
Lawyers that specialize in these fields provide the following services:
- Advising clients on how to structure investment funds
- Ensuring securities compliance
- Explaining the relevant rules to both investors and business owners
- Drafting contracts and other legal documents
- Providing advice on monetization, intellectual property, and personnel issues
- Helping the parties negotiate the terms of investment agreements
- Doing due diligence.
How to Learn Securities Law and Private Equity Law
The ever-changing market realities, the high stakes involved, and the intellectual challenges — to say nothing of the investment lawyer salary — make this job highly attractive to many young people.
To become an investment lawyer in the US, you need:
- A bachelor’s degree
- A Juris Doctor degree from a law school approved by the American Bar Association (ABA)
You will also have to pass a state bar exam to get your practice license. After that, most states will require you to continue your education and enroll in follow-up courses to stay up to date on the latest changes in the law.
In addition, many lawyers choose to pursue a Master of Laws degree to further specialize in their chosen field. You can also earn additional qualifications issued by the American Board of Certification in specific areas, such as bankruptcy.
How Much Do Lawyers Make?
As per the U.S. Bureau of Labor Statistics (BLS), the average annual salary for lawyers was $145,300 as of May 2019. The BLS also expects that the employment of attorneys will increase by 6% or some 50,100 jobs from 2018 to 2028.
What Does an Investment Lawyer Do? The Realities of the Job
Whether they specialize in private equity, venture capital, or securities law, lawyers need to be able to thrive in fast-paced environments and handle heavy workloads and long hours. Excellent attention to detail and emotional intelligence are also a must when negotiating deals. Despite the intensity of the job, however, becoming an investment lawyer can be a highly rewarding career path.