JIM DONOVAN: The topic today
is, are you destined to deal? And I'm going to
talk about what it's like to work as a lawyer,
or an investment banker, on transactions,
corporate transactions. And I'm going to split the
talk into two parts, mainly the second part. The first part, I'll
spend a little bit of time on why it's exciting to
work on transactions, why it's exciting to do deals. And then the second part
will be on the skills that I think are necessary
to do this job well. OK? So first part, why I think
it's exciting to work on transactions. There are three
reasons, I think. The first is what you're
working on is important. So you're hired by
the CEO of a company to advise them on taking
the company public or on selling the company
or on buying another company or merging their company
with another company. That is, by definition,
very important to the CEO. It's probably the most important
matter the CEO has ever come across professionally. So it's important. And secondly, you can help. You're being hired because
you have some expertise, because you know something that
the CEO doesn't know or doesn't have. He does not have the
expertise that you have. So I think it's exciting
because it's important and because you can
make a difference. The second reason I
think the job is exciting is because it's dynamic. Every deal is different. Even within a deal,
the deal changes. It morphs over time as
the deal progresses. So when you work
on a transaction, you're constantly confronted
with new challenges, with new issues. And then from deal to deal,
they're entirely different. The people are different. The companies are different. So it never gets old. It never gets boring. I think that's fun. So it's exciting
because it's dynamic. Every transaction is different. That's atypical for jobs. Typically, a job becomes
somewhat routine over time and can become somewhat boring. Not true on deals because
every deal is so different. Third reason I
think it's exciting is because it's intense. You are going to
spend a lot of time and a lot of energy
working on transactions, if you become an investment
banker or a corporate lawyer. You're going to be sequestered
in conference rooms with your clients. And you're going to get
to know them very well. And you're going
to work very hard. And that's not always fun. But it's mostly fun, I think. And in hindsight, when
you look back on it, you'll appreciate that it's fun. But it's exciting
because it's so intense. So I think the job is exciting
because it's important. What you're working
on is important. And you can make a difference. Because it's dynamic. It changes from deal to
deal and even within a deal. And because it's very intense. So what skills do I think are
necessary to do the job well? I think there are
six tangible skills that I believe are
necessary, and then four intangible skills. The six tangible skills start
with interpersonal skills. You need to have strong
interpersonal skills. Now, I don't mean that in
the sense that some of you may think in this room or people
outside of this room may think. I don't mean
interpersonal skills in the sense of sort of slap
you on the back salesman or saleswoman types of skills. I don't mean schmoozing skills. I mean the ability to
convey to the client that they should have confidence
in you, that you are competent. And that they should
have confidence in you. Secondly, quantitative skills. Quantitative skills
are important if you're going to work on transactions. Now, you do not need to have
been a math major or a physics major or an engineer
in college to have the prerequisite
quantitative skills. But you need to be
facile with numbers. You need to be
comfortable with numbers. Because much of what you
do as a transaction lawyer and definitely as an
investment banker will involve numbers and numerical analysis. So you need to be comfortable
working with numbers. Thirdly, you have to have
an interest in business. You do not, contrary
to popular belief, need to have a
business background. You do not need to have worked
in business for four, five, or three, or two, or one year. But you should have an
interest in business. And the way I would say you
could manifest that interest now, or what you might
want to be doing now at this stage of
your careers, is just The Wall Street Journal
a couple of times a week, not even everyday, just
a couple of times a week, just the front page,
just the front page. So take 10 minutes,
that's all it takes to read the front page
of The Wall Street Journal two or three days a week. And you'll become familiar with
what's going on economically around the world
and what's going on among some of the leading
companies around the world. So develop an interest,
acquire an interest, fake an interest in business. But you know, have an interest,
at least, in business. Fourthly, you need
to be discreet. You will be entrusted with
confidential information that's very, very valuable. And you don't want to
be the person who's talking about the transaction
upon which they are working when they're on a train,
or in an elevator, or at a restaurant. You do not want to be divulging
this confidential information. You need to be discreet. You need to treat
it with discretion. And you need to
exercise good judgment. Next, you need to be
OK with confrontation. A popular misconception that
some people in law school have is they think of litigators
as sort of conflict seekers. And they think of transactional
lawyers, or corporate lawyers, as the people who want
to avoid conflict. You do not get to avoid conflict
by becoming a corporate lawyer or an investment banker. You're going to work
on a transaction. The people sitting on the other
side of the table from you have adverse interests
to those of your client. And you're going to have to
conflict with that person. You're going to have to
negotiate against that person. And you're going
to have conflict. So you have to be OK with that. You have to be OK with conflict. Last tangible skill
is you need to be able to put the client first. A lot of people say that. What does that really mean? It means that you need to
be there for the client whenever they need you. You need to respond to
their emails immediately. You need to call them back
immediately when they call you. One, you want to really be
responsive to the client. But two, you want to
just as importantly, convey to the client
that they are a priority. So you're going to get calls at
2:00, 3:00 4:00 in the morning. You got to return emails 2:00,
3:00, 4:00 in the morning. You got to return
them really fast. You're going to spend
all-nighters with the client. You're going to work very hard. You want to do, on
top of that, whatever you can to make the client
feel comfortable that they are a priority for you. So those are the
six tangible skills that I would say are
necessary to do deals or to work on
corporate transactions. Four intangible
skills, the first is it's helpful to be an
open book, or a blank sheet of paper, whatever analogy you
want to use to convey what I'm trying to convey, which is that
you want to be a student when you first start
out on this career as a transactional lawyer
or an investment banker. You want to find somebody who
does this job really well. And you want to
study that person. Put your ego aside and
learn as much as you can from that person. You need to be a
student of the business for the first couple of years. I can't tell you how many
people make this mistake. They come in with
preconceived notions of what will make them
good or bad at doing deals. And they're usually wrong. And you can't do that. You need to put aside
any preconceived notions that you might have and be
willing to learn from people who are really good at
doing what you're hopefully going to do. So be a student. That's very, very important. Secondly, have a system. The best transactional
lawyers and investment bankers have a system that they
use for covering clients for doing deals. And it involves everything
from mundane things to more sophisticated things. They don't just wing it. They actually have a system that
they've put together over time. And they follow that system
throughout the course of the deal, from the time they
make the pitch to the client to try and convince them to hire
them to the time they attend the closing dinner and toast
the client for the transaction being completed. Have a system. Third intangible
skill is take control. Most clients, in fact
I think every client, wants you to take control. They're hiring you because
you have expertise that they don't have, as I mentioned. They want you to
tell them what to do. So tell them. Tell them. Don't hem and haw. Don't sort of equivocate. Say, here's what you should do. And if you do it, this is how
things are going to turn out. And if you don't, this is how
things are going to turn out. But take control,
take control and don't be afraid to give the
client advice right up front in a confident manner,
as I said earlier, by conveying to the client
you know what you're doing. You're very competent
and that they should have confidence in you. The last intangible skill that
I think is very important, and maybe the most
important of all the skills, is empathy, which is the
ability to put yourself in someone else's shoes. And too many advisors
on transactions, too many deal lawyers and deal
bankers don't do this. Take some time and think
about what the CEO, or what your client, is going through. Think about what is probably
important to that person across a spectrum of things,
from emotional to professional. And articulate those concerns to
the client as you advise them. Say I understand. You know, I bet you are
under enormous pressure. This is your company
that you started. And we're taking it public. You're about to take it
public and sell a big portion. Your name is on the sign,
is on the billboard, is on the company letterhead. This is a big deal for
you and your family. We got to get it right. Things like that. Have empathy for the client. Put yourself in their shoes. Advise them accordingly. And make them understand that
you appreciate the position that they're in emotionally,
professionally, and all across that spectrum. OK, so those are why I
think the job is exciting. Those are the six
tangible skills I would advise people
to work on and to have, if you're going to be
successful in advising clients on corporate transactions. And then those are the
four intangible skills that I think are necessary. I'll open it up
for questions now. I could take questions
for about 15 or 20 minutes if people would like. AUDIENCE: When you
said, have a system that works for you
from the danger that there's too many things. Do you have any
experience as to how you would build up that system? Do you just kind of
borrow it from whoever you're learning from? Or how do you kind
of figure that? JIM DONOVAN: Yeah, that's
a very good question. I think the best way to do it
is to borrow it, as much of it as you can, from someone else. Because it's very hard
to recreate the wheel. It's say, it's inefficient to
recreate the wheel if somebody has already created it. And so what I did
for my system is I found somebody who is really
good, objectively really good, I just didn't think
they were really good, they had done very
well at my firm. And I like to say
about 80% of what I use in my system I copied,
plagiarized with his consent from him. And then I added my own 20% over
the years by bumping into walls and making mistakes
and learning. But 80% I got from this person. So I didn't have to
start from scratch. If I had I would have probably
been delayed five years in terms of my success. Because that was able to really
help me jumpstart my ability to advise clients and
to do it effectively, not only advise them,
but bring new clients in. Good question. AUDIENCE: You said that
you should confidently give an answer to your clients
and tell them what to do. What do you do if aren't
confident in your answer or you don't know the answer? JIM DONOVAN: I'd say two things. First of all, the best way to
convey a sense of confidence to the client is
to be competent. And when I started in my job, I
had these preconceived notions about-- you know, I looked around the
room at the other 500 people who were in my new associate
class at Goldman Sachs. I looked around the room. And over the course
of two months I thought, well, that person
is going to be really good. And that person is
going to be really good. And that person is
going to be terrible. And that person's going to be--
and I was completely wrong. Like 10 years later,
all of who I thought were going to be really good,
I don't know where they are. They're no longer
at Goldman Sachs. And some of the people I thought
were going to be really bad turned out to be really good. Because what really
mattered most was not how charismatic
they were at that time or what business background
they had or experience. It was how competent they
became over the next two to three years. So two answers to your question. First is hopefully,
if you're competent, you'll never be in
a position where you don't know the answer. But if you don't,
don't give the answer. Don't fake it. Because there's no better way
to lose the client's confidence than to give an uninformed
answer or not well thought out answer. A corollary to that is that
more about this than the client does, no matter
how smart they are. You've been doing this
for some number of years or months or weeks. They've never done it before. And you have the
entire firm behind you that you're bringing to
bear for this transaction. So the client may
know a heck of a lot more about manufacturing pieces
of chalk or desks or computer equipment. Because that's what they do. But they don't
know nearly as much as you do, even as a
first year associate, about finance or
about corporate law, depending on what
you're advising them on. So you will be more
competent than they are. Don't forget that. And give them the
advice that makes sense. If you don't know, try and
put the question of until you can become confident. And you can get the answer. You just have to
work hard to get it. And if it's a judgment call,
give them your judgment. And tell them it's
your judgment. Lucas. AUDIENCE: I was just
wondering how you-- I mean, you obvious
said it's very intense. How do you keep a balance with
keeping it being very intense and you enjoying that, but
also having time to release and relax without going crazy? JIM DONOVAN: Yeah,
that's a good question. And I've got three of
my four children here. So they have
different perspectives on this for different reasons. But the short answer is for the
first 10 years of my career-- my oldest daughter is 16. She's sitting there. The first 10 years of my
career, I had no balance. So Emily didn't see a lot
of me from age one to six. And after that, I
achieved balance by becoming senior
enough at the firm and developing other interests
and sort of partially transitioning out of the
firm and doing things like teaching at UVA
and other things. But what I did during the
first 10 years of my career, when I was really,
really killing myself, pulling all-nighters, not
coming home, all over the world, is I picked one thing that
was really special to me. And I protected that one thing. And some of you who have
been my students know this. But it can be anything. So you pick this one thing
that's really special to you. For some people it's
reading a book, right? And you protect that. You read that book
for half an hour. And that's your release. And you don't ever
give it up every day. Because if you give
it up for one or two days, all of a sudden,
it's three years later. And you haven't read anything. Right? Pick the one thing, if it's
cooking, cook for half an hour. If it's wine, don't
drink for half an hour, but study wine for half an hour. Whatever it might be,
do that and protect it at the expense of anything else. Because you need that
to do the job well. And you need that release. For me, I had to do a run. I did a run every day. I ran every day for 35
minutes, same run every day no matter what. You know, wherever I was, I had
a pair of sneakers and shorts and a t-shirt, sometimes
a hat and gloves depending on where I was. And I would just run outside. And for me, I protected that. It didn't matter
what time of day. It didn't matter how sleepy
I was, how little or no sleep I had gotten. I did that no matter what. And that kept me grounded. And it gave me the perspective. Now, some people would
say that's not really balanced, right? That's the one thing I did. But that was the
one thing I did. And then I achieved
balance over time later. As my boys will tell you, I
spent a decent amount of time, sometimes more time than
they would like, with them. And I did that by
just really working very hard at the beginning
and building up enough of a reputation and enough
confidence in my peers and being senior enough
that I could do that. AUDIENCE: So my question kind of
combines two comments you made. One was where you
talked about how there's bound to be conflict
when you're negotiating with counter parties
of transactions. And then your other comment
was empathy for your client. Do you think the
empathy could also apply to empathy towards
the counter party? Because if you understand
where they're coming from, why they're pushing
a point, it might be able to help you navigate
those tense moments. JIM DONOVAN: Absolutely. Absolutely. So if you can put yourself
in the counter party's shoes, it can help in a couple
of different ways. Substantively, it can help
you come to an agreement. Because you kind of understand
what their priorities are. And you see where there's
maybe some overlap between your client's
priorities and theirs. And secondly, it can help you
from a foreign perspective. Because it can just make you
appear to be more conciliatory. Now, the thing you have to
be a little careful about is sometimes your
client doesn't want you to appear conciliatory. Right? Because he's very upset
or she's very upset with the party on
the other side. And sometimes, by
the way, conciliatory can be viewed as weak. And so you have to
know when to do that and when not to do that. But no matter what,
having empathy does allow you to find common ground. Even if you're not
acting empathetic, you can find the
areas where there's some way for you to give. And then a deal can get done. But you have to be
careful not to-- it depends on the situation-- appear too empathetic
or conciliatory. AUDIENCE: I was wondering if you
had any advice for someone who is going to be a corporate
lawyer at a firm focusing on finance on the
legal side who might be interested in switching
over to the business side of finance? JIM DONOVAN: Yes, I
have advice on that. So poor Kevin here, I
am hesitant to answer this question in
too much detail. I'll tell you a story at first. And then I'll
answer the question. So Paul Mahoney, who was
the Dean for most the time when I was here teaching,
used to say to me, Jim, why is it that after your
class, all these kids come out of the class and don't
want to practice law? What are you doing in there? What are you telling them? Right? And so I told him I'm just
telling them there's options. Right? That you have options. You don't have to practice law. You can also become an
investor banker, consultant, public defender,
whatever you want. So for people who are interested
in going into let's say investment banking or working in
private equity, or consulting, or whatever it might be,
I'd say two things to you. One thing, which may
not be that helpful, but I'll say it anyway. And then the second
will be helpful. The first is that statistically
speaking, if you're not going to practice law,
if you're a law student and you're not going
to practice law, statistically speaking you're
most likely not to practice law if you do it right
out of law school. So the people who
have law degrees, but are not practicing
law, like me, statistically there
are more of them, a greater percentage of
them who never practice law. And that makes sense. Because if you start practicing
law, you kind of like it. It feels comfortable. You have a salary. It's paying off
your student loans. You have an assistant. You're at a firm. And things feel OK. So you're not likely to leave. So if you're going
to not practice law, statistically, you're most
likely to make that move at the very
beginning, not later. However, that's
not that helpful. Second point though,
more to your question was, OK, if you're
going to practice law, how is the best way
or what is the best way to make a transition
into a different career, whether it's investment
banking or consulting or private equity,
whatever it might be. I have a very strong
opinion on this. And it's also backed
up by statistics. The best thing you can do is
you can practice law in the area that you think you might want
to work in outside of the law. So let's say you
are interested in-- I'll take investment
banking out of it-- let's say you're
interested in working in private equity,
not as a lawyer, but as a private equity
partner investor. What you would want to
do is work at a law firm where you cover
private equity firms. And you would specialize in
covering those private equity firms for a couple of years. And that's helpful
for two reasons. One is obvious. The other is not. And the other is more
important than the first. The first is it helps you
understand the business. Right? The lingo, you understand
what's going on. You get educated in the
business of private equity. That's not the most important. The most important,
the more important are the two by far is
you develop relationships in the private equity space. Because nine times out
of 10, and it's actually more like 95 times
out of 100, when a firm, whether it be a private
equity firm or an investment bank, hire someone out of a
law firm to come in and work, not as a lawyer, but as a banker
or as a private equity person, they are hired because they
knew somebody at the firm. Not they schmooze with
them or took them to lunch or played tennis
or golf with them. They had worked with the
firm on transactions. So you're a second
year associate at a law firm at Sherman
and Sterling in New York. You're covering private equity
firm X, Y, and Z. You're going to be sequestered
in conference rooms with those private
equity folks a lot. You're going to spend a
lot of time with them. Remember it's intense? You're going to
get to know them. After the transactions over,
keep that relationship going. Because a year later, you can
call up your peer at that firm. And you can say,
you know, I'm really interested in potentially
working in private equity. I like what you do. And I'd love to have
lunch and talk about it. And that person will say, great. You know, it's not a cold call. It's very warm. You've stayed in
touch with them. And they'll say, not only
should you come over, but here's the group that's
actually hiring at our firm. Here are the people
you'd interview with. Let me talk to him first. Oh, this guy here
is really mean. Stay away from this topic. This woman over
here is really nice. Focus on this with her. They'll coach you
through the whole thing. It's like you can't lose. Right? So you get hired. That's the best way to
make the transition. Focus on the relationships
that you make with the firms you cover, the
people at those firms you cover, if you want
to make that switch. Much easier to go that way
than through some headhunter. That's very rare that
that route works. Long answer to your question. Kevin. AUDIENCE: So I have
a question about you talked about the dynamism
as one of the things that attracted you to practice. JIM DONOVAN: Yes. AUDIENCE: In my
experience, dynamism is a two way street, right? I mean, there's the ups. And there are the downs. And I do think that like getting
to the point in your career where you embrace the
dynamism and start to enjoy the dynamism is a
really key part. It strikes me from
listening to you talk over the
years, that happened fairly early in your career. And I was just
curious if you could talk about how you
came to embrace the dynamism of the work. JIM DONOVAN: Yeah,
that's a very good point. Because what will often
happen is the changes will-- I mean, they can either
perceived and embraced as fun. Or they can be stress-invoking,
stress-inducing. Right? You can say, oh my god,
everything I just worked on is now thrown it away. I got to start from scratch. This is a disaster. And by the way,
the CEO just left. I got a new CEO. I don't even know this person. All the time I spent with
the CFO, whatever it is-- the people can change
in the middle of a deal. The deal can change. You can view that curveball as
a positive or a negative thing. You can either embrace it. Or you can become
intimidated by it. And so I'd say a
couple of things. The first is I early on-- I think it's
helpful, by the way, to work on more transactions,
rather than less. So if you're going to
work as a corporate lawyer or as an investment banker,
put yourself in a position where you're working on many
deals, not just one or two. Because one, it gives you
the experience earlier to deal with curveballs. Because if you're five
years into your career and you've never had a deal
blow up, on the one hand, that's really lucky for you. On the other hand, you
haven't faced that adversity. And when one does blow
up-- and it will-- you're going to freak out. Right? So the more transactions
you work on at the beginning early on, the more
likely you're going to be able to deal with any
curveball that your thrown. I was fortunate in
that I got to work on a lot of different things
my first couple of years, because of the way
my firm operates. And so in the first
couple of years, I probably got 10 years worth
of curveballs thrown at me. And after the first couple,
I realized actually, these can be good. And you can learn from them. And it didn't ruin me. I didn't die. I wasn't, you know, fired. The deal went on. You pick yourself up. And you proceed. So one of the best ways
to deal with that issue is to try and work
on many deals. So that you experience
it as early on as you can in your career. And you realize it's not career
ending when that happens. Secondly, is you just have
to have the right attitude. You have to realize that
along with this being a dynamic job and
a dynamic process, comes the fact that
it is exactly that. It changes. And so you can't get wedded
to a particular ending to the transaction. So if you're working
on an exclusive sale, don't pick a buyer who
you think, OK, this is the perfect buyer
for my client's company. We're going that way. Because chances are it's
not going to end up there. So don't become intellectually
wedded to a certain outcome early on in a transaction. By the way, don't even
become intellectually wedded to the
transaction occurring. Because the best advice you
can often give to the client is don't do this deal. Don't do this deal. Talk about trying to establish
credibility with a client, right? You're advising them to do
something that is directly opposed to your own interests. You don't get paid
if this stops, right? Your mandate is over. You're no longer being paid. And you advise the client to
say, no, don't do this deal. And by the way, terminate me. That's basically
what you're saying, terminate our relationship. That's a great way to
establish credibility. But also, another way to
deal with the ups and downs of the dynamism
of the business is to not get wedded to a
certain outcome right away. If you do, you'll
probably be disappointed. If not on that deal, you will
be at least 50% of the time. Because the deals never end
up ending the way you think they're going to end,
or usually don't. Actually 60%, 70%
of the time they don't end the way that you-- that answer your question? What else? Time for maybe one or two more. Anything else? AUDIENCE: How do you deal
with like, an unreasonable demand from a client, maybe
in terms of like a deadline that they want something done or
if you're doing a certain deal and they want
something that's sort of a provision in the agreement
that's very unreasonable? How do you balance that
between explaining to them that it's like not possible? JIM DONOVAN: Yes, that's
a very good question. Because you will get that. You will confront that often. I believe the best
way to do that gets to my intangible skill number
three, which is take control. So what I would do in
that situation, what I've done thousands of times,
is I will say to the client, no, not in your interest to do this. And I'm sorry. My job is to protect you. I can't do it. It doesn't matter to me. I'm happy to put
this provision in. I'm happy to accept
this deadline. If I put this provision
in, it's going to be terrible for
you and your company. I'm not going to do it. If you give me this
deadline, I will not be able to achieve
the product, the work product, that you want me-- I will not be able to
deliver the work product that you want me to deliver. I will not do a good job. I'm not going to do
that to you, client. So you turn it around on them. You don't say-- you never say,
well, that's unreasonable. I can't work that hard. I can't make that deadline. No, no, no. That's not what you say. You say, I'm not going
to do that to you. You want me to finish
this in two weeks? No. I won't. I'm sorry. I won't do that to you. You're too important
to me for me to do that to you and your company. Because if I do
meet that deadline, it will be bad for you. Because I will have
not have done the work that's necessary
for this transaction to complete in the way
that it should be completed for you and your company. That works most of the time. If it doesn't work, then
they're not a good client. Right? Because I mean, you
really don't care about the provision
for yourself, that they're asking you to
do something unreasonable. You know it's
objectively unreasonable. And it's not going
to go anywhere. Right? So you tell them, I'm not going
to let you do that to yourself. I'm not going to do it to you. I won't be part of that. I care too much about you. Right? Sometimes I say similar
things to my kids. They're here. So I can't elaborate
more than that. But I'm not going
to let you do that. Because it's bad for you. Right? No, you can't have 17
somethings, you know, candies. It's not good for you. Not going to let you do it. What else? Anything? OK. No? OK, great. Well, thank you, everyone. And have a nice break. Thank you for sitting here on
a Friday and listening to me talk. [APPLAUSE]
