Big Deals & Big Law
When most people think about law, they tend to imagine a courtroom with a judge, a jury, and a potential jail sentence. The judge is probably wearing a black robe, and a lawyer is shouting 'objection!' After intense deliberations, the head juror holds up a piece of paper to deliver the dramatic statement: 'Your Honor, we find the defendant...'
The scene above would fall under the category of criminal law, a branch of law that deals with the punishment of individuals who commit crimes. Today though, we're going to be talking about corporate law, a branch of law that governs businesses and banks as large as Google and Chase.
The world of corporate law is high stakes and cutthroat. To learn more, I sat down with a corporate tax lawyer to discuss various aspects of the practice of corporate law, as well as what their experience was like working as an associate at a very large corporate law firm.
HB: What is corporate law?
Lawyer: Corporate law is law that affects corporations. Corporations are their own legal entities, so each state has its own body of laws that dictate and govern how these entities must be conducted in order to be treated as a corporation.
HB: What kinds of things are corporate lawyers needed for?
Lawyer: Many things, but almost all of those things involve either transactions or litigation regarding those transactions.
HB: What's the difference between the practice of transactional law and litigation?
Lawyer: Transactional lawyers deal with things like mergers and acquisitions, any kind of sale of stock, or any kind of change in corporate form. So, if you're changing from a corporation to a partnership or vice versa, this is something that would involve transactional law. Transactional lawyers do other things as well, but it is effectively a practice that deals with anything a corporation needs to do.
On the litigation side, that would be mostly white collar defense. Corporations get sued all the time. Corporate law firms, law firms like mine, are the ones that defend those corporations. This can be third party litigation, where they're getting sued by outsiders. Sometimes though, there are activist investors that sue for mismanagement or other kinds of things. It can also be internal. It can be sexual harassment stuff, you know, employment stuff. It can be breach of contract related, meaning litigation over the contracts that you got the corporation into. Things along those lines.
HB: Which of those two areas did you specialize in?
HB: What did your 'typical' day look like?
Lawyer: Well it would vary, but first I would get in, have some coffee, check emails, etc. As a lawyer, you have to be up on the news, especially whatever news pertains to your specialty. I was a tax lawyer, so I would get a handful of newsletters every day that would have the major headlines for my area of law as well as cases that would be affecting the way that certain laws and rules were being interpreted. That was part of my day. If you want to be good at your job, you have to keep up on that stuff.
There were lots of meetings too!
But it was also a lot of reading contracts. When you're a corporate lawyer, almost everything you're doing is based on contracts. So you're reading tons of contracts and trying to understand them, and then also trying to help the client understand them. A lot of time is spent writing out bulleted lists of high level issues within the contract to help the client understand it. Then you might have to make changes and negotiate those changes. That's one aspect of the job. The other aspect is research. Lots of research.
HB: What is the scale of the transactions you dealt with?
Lawyer: Massive. Off the top of my head, I can think of a $20 billion deal and a $50 billion deal that I worked on.
HB: What were some of the most common questions clients would ask you as their tax lawyer?
Lawyer: When you're doing a corporate deal, you're always looking for tax ‘leakage’. Clients are trying to make it so that they can do a deal without having to lose money to taxes. That can happen in a variety of places, one example being tax on the deal itself, like capital gains for instance. But I would say for my situation, as a tax lawyer, it was always just about 'how can we make this deal as tax efficient as possible?'
HB: Do you have any examples of times where you thought: 'This is the law? That's genius!'
Lawyer: There is something called FATCA, which stands for the Foreign Account Tax Compliance Act. It basically requires foreign financial institutions and some other non-financial foreign entities to report on the foreign assets held by their U.S. account holders. If they don’t comply, they are then subject to withholding. So, the idea that the IRS can get a company, a bank, or an investment fund that is not in any way, shape, or form connected to the U.S., other than having some U.S. account holders, to follow U.S. tax laws is pretty impressive.
HB: What was your proudest moment?
Lawyer: It was different than the work I normally did, but I had a pro bono client that was part of a program where we helped indigent women who were immigrants seeking to become legal permanent residents (in other words, green card holders) and were also in abusive relationships. My client needed to leave her abusive partner who was initially the U.S. sponsor for her green card. Under the Violence Against Women Act, there's a process that allows women to continue to go through the process of getting their green card without the sponsorship of the abusive partner. I was proud to work on that, but I was also nervous because, you know, if I screwed up, like, if I missed a deadline or something, she could potentially get deported.
HB: What was the biggest inefficiency you had to deal with on a regular basis?
Lawyer: Scheduling meetings
HB: If you had the power to change one thing about big corporate law firms in terms of process what would it be?
Lawyer: I mean, one piece of feedback that you get from people when you work at a big law firm is that there are too many cooks in the kitchen. Everybody who touches a document has some billable hour on it. So maybe the junior associate is spending 10 hours on something, but the mid-level also spends some time looking over it. Then the senior associate spends time on it. Finally, the partner has to sign off on it, and so they're looking at it for 15 minutes. Clients don't like that. That's why our clients are the biggest companies in the world, because other companies are not putting up with that. They don't want to pay for that.
HB: If you had the power to change one tax law what would it be?
Lawyer: I would undo the Tax Cuts and Jobs Act of 2017. It basically was just a boon to corporations. It hurt individual taxpayers.
HB: What's one piece of legal advice you think every person would benefit from having?
Lawyer: This is a piece of advice that I give any time somebody asks me, “can you look at this thing that somebody wants me to sign?” It’s that contracts are all about risk allocation. There is no real magic language in them. For most basic contracts, you read it and you try to understand it. If there's anything that you don't understand or that doesn't make sense, you ask the person who drafted the contract, “why is this provision here?”
Every word in the contract is there for a reason, and every provision is friendly to one side or the other. So all you're doing is trying to allocate the risk in a way that is more favorable to you than to the other person. The best way to be able to do that is to have a sense of the market, to know how much leverage you have based on how these things usually go. That is the reason why you really need a lawyer. You need somebody who has seen a hundred of these situations to know whether you're getting a good deal or a bad deal.
If you don't have a lawyer though, it's a very simple situation: All you're doing is going through the contract and saying, 'what is the risk that is being dealt with here? Is that an acceptable level of risk for me in this situation based on what I'm getting out of it?' If it isn’t, then the whole point is to negotiate. You can try to change the terms.
HB: In your opinion, what makes a good corporate lawyer?
Lawyer: You have to be somebody who is competitive, who has a drive to win, even when the stakes don't affect you personally. It's very abstract because you're fighting over something that may never come to pass. A contract is set up to deal with eventualities, things that might happen. So unless litigation occurs because there has been a breach of the contract, what you're fighting over might not mean anything.
HB: What advice do you have for any future corporate lawyers?
Lawyer: When you go into corporate law, when you go into a big law firm, you are not necessarily getting the best training because it is all kind of an apprenticeship. Also, you don't really learn that much in school, frankly, about being a lawyer. No matter where you end up working, you're going to be learning on the job. But if you're at a very big law firm, and you're doing general corporate law or you're a junior litigation associate, you're mostly just doing document review or you're doing some form of project management for the first couple of years. You're not learning a whole lot about how to really be a lawyer. Eventually you will get to that point, so if you think you're going to be a ‘lifer’, and you think you're going to make partner, and you really love that lifestyle, then by all means, stay. You will get to a point where you are doing the actual work of a lawyer.
But most people's advice is if you are not going to make partner, if you think that’s not the lifestyle for you, then you should either not do it in the first place or you should get out very early and go to a smaller firm where you're really going to be doing more substantive work and have a better chance at becoming partner and having a little bit more longevity to your career.
Read other great interviews in the 'Questions With' series
- Harry W. Brodsky
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