What Law Firms Can Learn From Investment Banks

My first job out of undergrad was in a capital markets development program for a Midwest bank. When I tell junior associates at amLaw 200 firms that KeyBank gave me 90 days of training that covered the nuts and bolts needed to be an effective financial analyst, they are shocked.  Comprehensive training seems not to be the norm in the legal field.  Common tales from attorneys are of two day on-boardings dealing with how to use tech systems, what the firm organizational structure is, and how to bill your time.  The following days are marked by little direction from senior attorneys and few hours that will actually be billed to clients. 

The argument made by law firms often comes in the historic narrative of I went through that and they should too. If this sounds familiar it is because it is the battle cry of many a college fraternities. Trust me, despite being trained, the first model I had to build in the wild was still a challenge that I still remember the stress of it to this day.  Due to the crucible of training provided by Training the Street, I was better prepared and made fewer errors.

Some forward thinking law firms, like Drinker Biddel, have recognized how underprepared law school leaves it students for actually practicing law. Instead, the firm provides training that seeks instill lessons from the real world using hands-on classroom training for all first year associates.

Still, many attorneys argue that practice group specialization and the high demands on their time justify abandoning formal training for new hires. The training program I went through provided hands on training in in accounting, financial valuation, credit risk management, and financial modeling, to instill a base level of knowledge amongst their new hires.  In fact, this training was highly valued in the face of practice area specialization—investment banking, corporate bonds, commercial lending, private placements, etc.—as it fostered confidence in the skills of analyst regardless of department. 

Investment bankers experience high demand on their time as well. Even in 2007 when the banks’ employee roles were somewhat bloated, the managing directors down to the vice presidents found themselves too damn busy to spend an afternoon explaining the basis of credit analysis.  The uniform training also laid the ground work for the new hires to add value quicker to the team they inevitably joined. 

Despite the value of corporate training being demonstrated by banks and law firms like Drinker Biddel, the legal profession as a whole continues to lean on this belief that the strong survive and the weak leave the firm.  Survival biases is bound to exist when making partner is the measure of success linked to the lack of formal training.  Let’s look at what happens in practice.

An associate I know that works at a top five law firm by size and revenue, tells me that as part of the litigation practice, they are supposed to be assigned and work across a diverse area of litigation in the first few years at the firm.  The idea being that exposure to multiple practice areas maximizes their on-the-job learning.  They tell me that in reality they receive work from the attorneys that are willing to train a junior associate.  Over time the work flows not from a multitude of sources but from those attorneys that “like” them or find their work to be “agreeable”.  These more senior and specialized attorneys staffing the work find their favorite associates and try to get them to work on their projects the most. As a result, the promise of broad base on the job learning is never fully recognized. The junior attorney’s success becomes based on an ad hoc system of induvial likes and senior attorneys’ quest for consistency rather than a true Darwinian system of survival of the fittest.

The people you find working in the capital markets on average are just as competitive as attorneys and have a strong fondness for Social Darwinism. The training that investment banks offer their junior staff is not about leveling the playing field.  It is about fielding a team of top performers that go on to compete against one another for the betterment of themselves and in return the firm.  In other words, like the number crunchers they are, banker’s looks to maximize ROI on the investment they make in new hires.

With starting salaries in $140,000 to $160,000 range for associates at the large law firms, it is unclear to me why so many managing partners seem content to consistently bet on an ad hoc system of on the job training alone. That is too much green for me to leave to chance, regardless of one’s feeling of Social Darwinism.  On the more immediate side, the hours spent training new associates all at once frees up the hours of senior associates and partners for client billings.  The leverage gets even greater when outside trainers are employed. 

To train the best deal attorneys, bankers, consultants, and aspiring students, Private Equity Primer created industry-leading training that leverages repetition to mastery, case study delivery, and real world simulations.  Please check out our full service offerings and subscribe to our email list for the latest on training, transaction knowledge, and the ever-changing landscape of legal services, investment banking, and accounting. 

How to Hire a Team of Top Performers

Investment bankers experience high demand on their time as well. Even in 2007 when the banks’ employee roles were somewhat bloated, the managing directors down to the vice presidents found themselves too damn busy to spend an afternoon explaining the basis of credit analysis.  The uniform training also laid the ground work for the new hires to add value quicker to the team they inevitably joined. 

Despite the value of corporate training being demonstrated by banks and law firms like Drinker Biddel, the legal profession as a whole continues to lean on this belief that the strong survive and the weak leave the firm.  Survival biases is bound to exist when making partner is the measure of success linked to the lack of formal training.  Let’s look at what happens in practice.

An associate I know that works at a top five law firm by size and revenue, tells me that as part of the litigation practice, they are supposed to be assigned and work across a diverse area of litigation in the first few years at the firm.  The idea being that exposure to multiple practice areas maximizes their on-the-job learning.  They tell me that in reality they receive work from the attorneys that are willing to train a junior associate.  Over time the work flows not from a multitude of sources but from those attorneys that “like” them or find their work to be “agreeable”.  These more senior and specialized attorneys staffing the work find their favorite associates and try to get them to work on their projects the most. As a result, the promise of broad base on the job learning is never fully recognized. The junior attorney’s success becomes based on an ad hoc system of induvial likes and senior attorneys’ quest for consistency rather than a true Darwinian system of survival of the fittest.

The people you find working in the capital markets on average are just as competitive as attorneys and have a strong fondness for Social Darwinism. The training that investment banks offer their junior staff is not about leveling the playing field.  It is about fielding a team of top performers that go on to compete against one another for the betterment of themselves and in return the firm.  In other words, like the number crunchers they are, banker’s looks to maximize ROI on the investment they make in new hires.

With starting salaries in $140,000 to $160,000 range for associates at the large law firms, it is unclear to me why so many managing partners seem content to consistently bet on an ad hoc system of on the job training alone. That is too much green for me to leave to chance, regardless of one’s feeling of Social Darwinism.  On the more immediate side, the hours spent training new associates all at once frees up the hours of senior associates and partners for client billings.  The leverage gets even greater when outside trainers are deployed. 

To train the best deal attorneys, bankers, consultants, and aspiring students, Private Equity Primer created industry-leading training that leverages repetition to mastery, case study delivery, and real world simulations.  Please check outour full service offerings and subscribe to our email list for the latest on training, transaction knowledge, and the ever changing landscape of legal services, investment banking, and accounting.