In the world of M&A, you need a financial adviser (an investment bank)
and you need a legal adviser (a law firm). Legal advisers make lots of money.
Financial advisors make much, much more – despite the fact that senior
partners at law firms are often much wiser, and taken more seriously, than their
opposite numbers on Wall Street.
Larry Ribstein today draws the obvious conclusion: Goldman
Sachs should buy Simpson Thacher!
This would require some legislation – but given the clout of Goldman
Sachs in the government, that should hardly be insurmountable. And just think
of what would result – a one-stop corporate-advisory shop, without lawyers
and bankers squabbling and blaming each other for delays and problems. Lawyers
would make much more money, while bankers would no longer be at the mercy of
their outside counsel. Everyone wins!
The problem, of course, is that lawyers’ paramount duty is to the law, not
to their employer or even to their clients. There’s also a natural conflict
between the transparency required by regulators of investment banks, on the
one hand, and attorney-client privilege, on the other. In any case, lawyers
are free to go work for investment banks if they like: they’re well aware that
what they gain in salary they lose in job security.
But from a client’s point of view, I think this idea does make a tiny amount
of sense.