The Value of an LL.M. in Financial Regulation in a Post-Financial Crisis World

Globalization and the digital revolution have spurred demand for specialist lawyers drafting statutes to prevent another economic meltdown

The Great Recession has been a double-edged sword for lawyers. In the immediate aftermath of the crisis, thousands lost their jobs as companies slashed legal budgets and too many law school graduates hit the jobs market. But the financial industry became highly regulated after the crash, spurring demand for lawyers who specialize in drafting statutes designed to prevent another economic meltdown. 

The more rapid pace of regulatory change since the crisis — from the Basel banking rules to the EU’s MiFID regulation, which covers investment advice — has made those with LL.M.s in Financial Regulation a hot commodity, according to Stavroula Karapapa, director of the Centre of Commercial Law and Financial Regulation at the UK’s University of Reading. 

“The financial services sector is under constant regulatory scrutiny as it’s a key driver of the modern economy,” she says. “There is demand for lawyers with expertise in banking law and financial regulation who can identify and capitalize on new opportunities, while responding quickly to regulatory change.” 

Lukas Köhler, who graduated from Oxford University's Magister Juris (MJur) program in 2016 and currently runs the financial regulation blog Regulation-Y, says that an LL.M. program can help students better understand the drivers behind these big issues. "The financial world is fast-changing and very dynamic, and there are always new problems," Köhler says. "But if you have an understanding of the underlying issues, this would be one great advantage."

To help meet this demand, Reading, like a growing number of universities, created a specialist master’s program in Banking Law and Financial Regulation in collaboration with the International Capital Markets Association Centre, a finance educator, and Henley Business School. 

Course offerings aren't limited to law schools in the UK; an increasing number of law schools worldwide are offering LL.M.s in Financial Regulation and related fields. In the US, for instance, Georgetown Law School runs an LL.M. in Securities and Financial Regulation that is taught online, while the Boston University School of Law offers a certificate in financial services compliance as part of its LL.M. program. In 2016, the University of Hong Kong (HKU) launched an LL.M. in Compliance & Regulation.

The courses are a multidisciplinary blend of law, business and finance — just what the markets are crying out for, according to Dr Andreas Kokkinis, director of LL.M. in International Corporate Governance and Financial Regulation at Warwick Law School, also of the UK. 

“In recent years we are seeing increasing demand for graduates with specialized knowledge in the areas of financial regulation, banking law and corporate governance,” he says. “All large companies are facing increasing disclosure obligations and robust scrutiny by institutional investors, which makes the issues of corporate governance and corporate social responsibility ever more crucial.”

This is a far cry from the financial crisis when demand for trainee solicitors decreased in line with large corporate transactions such as M&As, he adds. “Now the market has stabilized, but obtaining a training [job] contract remains highly competitive.” 

Where Financial Regulation LL.M.s can find jobs

The main employers of Warwick alumni are financial services firms such as banks, insurance companies and investment funds; regulatory authorities such as the Bank of England, Financial Regulation Authority and European bodies; and private law firms that represent the financial services industry and institutional investors.  

Examples of alumni jobs in the private sector include: compliance officer, in-house legal counsel, assistant to the company secretary, risk analyst, corporate governance consultant and human resources manager. When working for regulators, lawyers with specialized LL.M.s are likely to work in strategy-setting or enforcement divisions, Kokkinis says. 

Global venture capital and technology-based companies are also showing considerable interest in hiring skilled lawyers, adds Dr Andrea Miglionico at Reading, who teaches on the International Banking and Finance Law course. “New financial technologies might help correct the evident economic inefficiencies in financial services — high levels of margin and remuneration that were exposed by the financial crisis,” he says. 

But most of the legal work entails advising a firm rather than its clients, to limit exposure to potential lawsuits — are financial regulation lawyers really utilizing all of their lengthy and expensive training? 

“The actual legal content of professional roles in the financial services industry can be very high and highly technical,” says Kokkinis, at Warwick as a riposte. “Also, legal education is not that much about a pool of knowledge as [it is] about a set of skills and a particular mindset focusing on critical thinking, problem solving and very disciplined reasoning. All these qualities are crucial for success.” 

Brunel Law School in London offers an International Financial Regulation and Corporate Law LL.M. that attracts students from 25 countries across the globe including Pakistan and Turkey. One big draw is its proximity to the City of London, home to a myriad of regulators, financial services and law firms.

Dr Stelios Andreadakis, senior lecturer in corporate and financial law, says: “We recognize the benefits of combining academic knowledge with practical experience and we strongly believe in a very close and interactive relationship between academia and industry. 

“The areas of compliance, legal services and financial regulation offer numerous opportunities for collaboration with emphasis on student employability and the creation of strong and competitive graduates for the job market.” 

Demand for the course, like lawyers who specialize in financial regulation, is likely to grow further as rules continue to be made or are enforced, such as the recent introduction of MiFID II or the “ringfencing” of UK retail banks ordered by the BoE’s Prudential Regulation Authority. 

“This is an area that is characterized by harmonization attempts and global regulatory initiatives, not to mention upcoming Brexit and its impact in the corporate world and financial markets,” says Andreadakis. 

In a fast-evolving area, the key skills needed for success in future will be adaptability, the ability to see the big picture and a willingness to stay on top of new developments, he says. 

“Financial regulation is under transformation as it enters the digital era and the challenges are considerably different than 10 years ago,” says Andreadakis. 

“It is not only about globalization and the interconnectedness of the international markets anymore; now the focus is on artificial intelligence, smart contracts, fintech, regtech, blockchains. So the new generation needs to adapt to the new environment and be prepared to think outside the box.”

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