University: The University of Edinburgh
‘Capital markets’ is the term used for financial markets where debt or equity securities are traded. Capital markets lawyers work primarily with transactions involving the issue of debt or equity securities either to the public or to a group of investors. Capital markets practice is closely connected to derivatives and financial regulation. Capital markets lawyers conduct due diligence review on the issuer of the securities, draft the prospectus and other disclosure documents describing the issuer and its securities to the potential investors, negotiate agreements between the issuer and its advisers and navigate the transaction through regulatory hurdles. London’s pivotal position in the global debt and equity markets makes this a significant element of the City’s legal activity.
Kristian Shearsby began his career as an early adopter of the US law firms that form a major feature of the City landscape, before making the move to leading UK firm Mills & Reeve. He trained at San Francisco-headquartered Morrison & Foerster, before spending nearly eight years at Covington & Burling, another US law firm, where he developed his corporate practice to focus on the tech and life sciences industries. This made a move to Mills & Reeve’s London office in early 2019 the natural next step. “Joining a firm with fantastic clients and offices in a number of strategic sector locations, including Cambridge which is a key UK hub for tech and life sciences companies, enables us to work closely with clients and spend significant time with them, while also having access to the investors and financial markets located in London,” he explains.
He works across M&A, venture capital and equity capital markets, with a particularly strong focus on the latter. “Working out of the London office where you are in proximity to the London Stock Exchange and the City’s financial institutions is ideal for capital markets work,” he observes.
Client and team relationships
The variety of skills involved in being a good capital markets lawyer shows the value of a broad approach. The work can be split into three main types: initial public offerings (IPOs), secondary fundraisings and day-to-day corporate advisory work. An IPO, where a company floats on the stock market, often involves a major reorganisation as the business goes from being a private limited company to a plc. “To guide a client through the process of preparing for a listing requires a broad range of corporate skills,” he explains. “My work involves liaising with the client at an early stage, usually several months before they look to do the IPO. The actual process often then includes the restructuring of the company’s share capital, establishing a plc-ready board of directors, preparing new constitutional documents, drafting legal due diligence reports and verifying the accuracy of admission documents and marketing presentations, and advising the directors of the board on their obligations as a public company and what this will involve.”
As well as client management, the other side of Kristian’s role on a capital markets transaction is “working with the senior associates who are running the day-to-day operations and managing the deal timeline.” From his vantage point, he is also responsible for “looking down the barrel of the transaction, anticipating any roadblocks that could cause delays and ensuring that they are dealt with in advance,” as well as for the pastoral care of his team.
At the junior level, trainees and NQs assist with the drafting of ancillary documents and help coordinate these large and complex transactions by keeping tabs on all the documents and managing the checklists. At the same time, Kristian explains: “These deals involve a huge amount of granular detail, so the due diligence and verification aspects are also important trainee responsibilities. Analytical skills and attention to detail really come into play when working through swathes of information to pick out material issues during the due diligence phase, and then checking all the documentation for accuracy in the verification phase. This often involves trainees working alongside the banks, accountants and financial printers, so it’s also an important time for a junior capital markets lawyer to develop their communication skills – a lot of the best relationships are built at an early stage and you can find that you are working with the same people on transactions 10 years later when your respective roles have developed.”
Developing a sector focus
One of the main documents in a capital markets transaction is the admission document (for an AIM IPO) or prospectus (if the listing is on the main market). “The admission document or prospectus gives the reader a clear picture of the company and what it does, so a lot of diligence and research goes into preparing that document and it requires a high level of commercial understanding,” he continues. “This is partly why capital markets lawyers often develop a particular sector focus as their careers develop. For example, the more you learn and understand about the life sciences industry, the better you become at recognising what needs to go into these key documents to ensure they are completely accurate and provide the reader with all the information necessary to enable investors to make an informed assessment of the company and its business.”
The varied and meaningful nature of capital markets work are key to its appeal. “I enjoy the fact that every day is different; I can start work with a good idea of what I’m going to do that day, then take a call from a client and that goes out the window,” says Kristian. “It’s a double-edged sword, as the need to be flexible and work around the clients’ needs means that it can be hard to make plans. But there is a real sense of satisfaction in helping clients, you can really see the benefits that a transformative corporate action such as an IPO or secondary offering bring to a business.”
Real commercial awareness comes with genuine enthusiasm and interest. That knowledge and passion tie together as you gain experience and it will make you a better lawyer.
The year in capital markets
The corporate world has faced the challenges of covid-19 and political turmoil over Brexit, but Kristian’s team is once again busy. “At the beginning of 2020 the market cleared the hurdle of Brexit uncertainty following the December 2019 General Election,” he explains. “That meant that the start of the year was relatively busy and in January we acted for a client on its IPO on the specialist fund segment of the London Stock Exchange. But then coronavirus hit and inevitably led to an initial lull, before subsequently picking up again. Whilst the IPO market has been relatively quiet, companies who are already listed have been seeking to raise further funds and underpin their balance sheets. For businesses whose income has been hit by the crisis, being listed has provided a market to raise additional funds from existing and new investors, so this element of the market has been quite buoyant.”
His main tip for budding corporate lawyers? “Everyone says this but for good reason – commercial awareness is important on several levels. If you are looking to secure a training contract or NQ position, you must show that you understand both the sector and the practice area you are applying to. At the same time, doing that initial research and developing your understanding of how businesses work will tell you whether this is something you enjoy, which is vital because this career path is a big commitment. Real commercial awareness comes with genuine enthusiasm and interest. That knowledge and passion tie together as you gain experience and it will make you a better lawyer.”