[Update, September 2018: See the new article, The Value of an LL.M. in Financial Regulation in a Post-Financial Crisis World]
The recent global financial crisis has been mostly bad news for lawyers. Thousands have lost their jobs, and economic recovery has been painfully slow. But one of the biggest impacts of the crisis has been a major reform of financial regulation policies, and this could be a glimmer of good news for lawyers working in this field.
This is because lawyers will be needed to shape, implement, and adapt to regulation, such as the sweeping Dodd-Frank Act or Basel III accord.
So far, lingering uncertainty about global markets and politics has prevented this need for lawyers from translating into real hiring in North America and Europe. Nevertheless, lawyers from around the world have been joining the handful of specialized financial regulation LL.M. programs for a deeper understanding of this rapidly evolving field.
The Securities & Financial Regulation LL.M. program at Georgetown Law, for example, is focused on US financial regulation, but over half the program’s students come from abroad. Many have worked at the securities ministries in their countries, and come to Washington for a comparative perspective.
“With Sarbanes-Oxley and Dodd-Frank, it's perceived that our securities laws are moving in a progressive direction, and the rest of the world is watching,” says Albert G. Lauber, the director of the Georgetown program.
“I think many students want to see how it is evolving with a view to what is happening in their countries, and the comparison could be interesting,” says Lauber.
Foreign students can also benefit from Georgetown’s classes focused on specific financial products, which deliver insight they can use on the job, regardless of where they end up working after the LL.M.
“A lot of the knowledge in things like derivatives, swaps, and hedge funds is literally transferable across borders,” says Lauber. “It's not a matter of how we regulate these things; it's what these things are, and the global risks they can create.”
Lauber says that the domestic US students on the program generally come in “two flavors”: students coming in right after their JD and lawyers who have been practicing for a while, and are seeking a new direction.
“They might not want to make a U-Turn in their career, but maybe a 45-degree turn,” says Lauber.
“Often we have people doing plaintiff- or defendant-side litigation, and they just don't like the life of a litigator, and want to get into a more transactional, planning process, where it's not just constant fighting,” says Lauber.
Across the Atlantic, the London School of Economics and Political Science (LSE) also offers an LL.M. program focused on financial regulation, albeit one with a more UK and European focus.
According to David Kershaw, a law professor at LSE, students come to understand “the principles and policy issues surrounding the problems we face in financial regulation, and the different ways that different jurisdictions are trying to tackle these problems.”
Kershaw says this “principled framework” that a specialized LL.M. delivers will be valuable for lawyers regardless of where they work after the program.
Other law schools that offer financial regulation-focused LL.M. programs include American University’s Washington College of Law, Queen Mary, University of London, University of Warwick, University of Reading, and Brunel University.
Patrick Kenadjian says lawyers should also consider more general finance LL.M. programs, too; not just those focused on regulation.
Kenadjian is senior counsel at Davis Polk in London, and teaches on the “Finance LL.M.” program at the Institute for Law and Finance (ILF) in Frankfurt. He says that a more interdisciplinary approach to teaching financial law can better prepare lawyers to work for regulators and financial firms.
“There is a great deal of new regulation coming out which must be implemented by people who understand a broader range of issues than has been the case in the past," says Kenadjian.
“The SEC [Securities and Exchange Commission] needs people with much broader finance and economic background in order to understand the context of things that are happening around them,” adds Kenadjian. “I think that a program that focuses solely on regulation and law is not going to prepare people as well for this new world of regulation.”
Hiring for financial regulation jobs has not kept pace with government activity and excitement around the field.
“It's an incredibly hot area, but unfortunately it has not produced a ton of hiring,” says Albert Lauber at Georgetown. He says that agencies like the SEC in the United States need hundreds of lawyers, but don’t yet have the funding to hire them.
David Kershaw at the LSE says the view from London is similar.
"There is increased demand there, but that is in the context of the job market as a whole,” says Kershaw. “The job market as a whole in the UK, US, and many other jurisdictions is just not great. It's probably going to take some time before it recovers effectively."
Kenadjian suggests any new regulation-driven demand for lawyers will probably mostly come from regulators or financial firms, rather than private law firms.
“Within the financial firms, there is an enormous need to get up to speed on regulation, and to figure out how it is that they are going to adapt their business model to the new regulations,” says Kenadjian.
“There are a very small number of firms that financial institutions feel the need to turn to in order to get advice on these matters,” adds Kenadjian. “Otherwise, they feel that through their in-house staff and their lobbying efforts, their contacts with regulators directly, they are in as good or a better situation than most law firms are.”
Of course, one major benefit of LL.M. programs located in financial hubs like Washington, London, and Frankfurt is that they are close to the action: about 30 Georgetown students get externships at the SEC each year; the LSE is well-known for networking and hosting high-profile guest speakers; and the ILF regularly sends students for two-month internships at the European Central Bank, BaFin, and German Bundesbank.
As with many postgraduate programs, the LL.M. degree alone may not open many career doors; it’s more what students do with the entire year. Whether they take specialized regulation LL.M. or not, lawyers interested in advancing their careers in that area should look closely at the internships, networking events, and other opportunities that law schools offer.
Image: Scott S / Flickr (cropped) - Creative Commons