Chasing IPO riches
The recent opening of the Growth Enterprise Market (GEM) in Shenzhen has grabbed the attention of the investing public. With the listing of the first group of 28 companies, many investors are dreaming of quick riches following a successful IPO.
Some Chinese lawyers are eyeing the high compensation paid to IPO lawyers. Some corporate lawyers stuck in a practice that is slowly improving after the economic crisis are wondering if their own riches may be found with a career move to capital market and IPO practice.
We talked to several lawyers in both practices to gain a clear view of corporate and IPO practice. We begin by looking at the practices generally and comparing the differences.
Legal work 每 Practice & procedure generally
Legal work 每 Comparing the differences
Analysis
Grace Li, a senior corporate lawyer with 9+ years of legal experience (including 4 years in IPO) describes the significant difference between corporate and IPO legal work. ※Corporate work requires a broad knowledge, good understanding and competent application of all laws to meet different kinds of legal problems in company management. IPO requires a detailed knowledge on the listing rules.§ She notes that, ※IPO work seems comparatively tedious because of the regular and routine characteristics.§
Each practice area presents its own unique challenges. ※The most challenging aspect of corporate work has always been how best to achieve a client＊s business needs and objectives in the ever-changing legal climate in China,§ says Ms. Li.
For Linda C, a lawyer with 7+ years of legal experience in both corporate and IPO, ※detailed and considerable legal research in corporate work§ is a challenge because it is always complicated and miscellaneous. With IPO practice, Ms. C notes that the large company size of IPO clients results in a more complicated due diligence and heavier workload. IPO lawyers spend much time on ※deeper search in the target industry while preparing the Prospectus§.
Ms. C says ※the long OT caused by strict timeline§ is a challenge for her. This point is also supported by Ms. Li. Ms. Li adds that, ※the most important aspect is how to ensure that the company is in full compliance with the listing rules before and after IPO. No lawyer wants to be involved in an IPO which is later found out to be fraudulent.§
Working style
Analysis
Corporate lawyers must be flexible since they are involved in various substantive areas of law, including employment, tax, accounting, custom, licensing, etc. This can make for more interesting work. Corporate lawyers ※enjoy the interaction with clients, negotiations with the opposite party and their lawyers, and the dynamic nature of M&A work,§ says Ms. Li. In contrast, IPO practice requires lawyers to be more narrowly focused.
Ms. C says, ※A PRC legal advisor has to coordinate with various parties. Once a PRC issue arises, your answer will have to convince many parties, e.g. Big 4, PE/VE firms, security firms, etc.§ However, compared with a usual corporate deal, the bigger IPO deal size, more time consuming and intense communications make lawyers feel good. ※The personal satisfaction from an IPO case for these lawyers is much stronger than from a corporate case,§ Ms. C notes.
Career development
Analysis
For lawyers considering a move from corporate to IPO, the greatest attraction is the potential for higher compensation. Usually, IPO lawyers enjoy a more generous package because of the larger deals, wealthy clients, and of course, the heavier workload. However, to savor the sweet fruit, it is a challenge finding a new opportunity.
There is more market demand for corporate lawyers. In addition to law firms, middle-to-large-scale enterprises and professional firms, such as PE/VC firms, also need corporate lawyers as in-house counsels. Prospects for IPO lawyers are more limited. Moreover, IPO lawyers are adversely affected more directly during an economic downturn.
Career moves must be carefully considered. Short term gain is not always long term value and satisfaction. Suitable work and practice area differ from individual to individual. Success is achieved by lawyers who develop and demonstrate professionalism. No matter which practice you do, the successful way is ※be patient and demonstrate your excellent performance on every little detail,§ says Ms. C.
Equally important as the practice area is the opportunity for a lawyer to grow his or her skill set. Ms. Li notes that, ※for both corporate and capital markets work, it is also important and lucky to have excellent mentors. A good partner who is patient to teach you the basics will help you a lot.§
