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Do lawyers make good bankers?

Not according to Prince Alwaleed bin Talal bin Abdul Aziz al Saud. He’s had enough of them.

Prince AbTbAAaS, the biggest single shareholder in Citigroup, confided to Fortune magazine that whoever replaces Chuck Prince, it most certainly, not in a thousand years of cloudless Sundays, won’t be another lawyer.

According to the The Prince, he’s told those tasked with choosing Chuck’s replacement that “…they don’t hire anyone unless this guy has expertise in banking. I told them, next time no lawyer, please.”

From this we deduce that either AbTbAAaS doesn’t like the fact that Chuck Prince was once a laywer, that he doesn’t rate lawyers who become bankers, or both.

But is it really fair to write off all those legal types who’ve quit their chosen profession for the infinitely higher rewards on offer in banks (we spoke to one lawyer turned banker who revealed he left his magic circle employer after he was paid a ‘humiliating’ neutrino-sized 4k bonus)?

Even while AbTbAAaS has been denigrating lawyerly types in Fortune, the Telegraph has been lauding them on its own pages. Last weekend, the paper ran a profile of Amelia Fawcett, the ex-lawyer turned Morgan Stanley vice-chairman, turned farmer, sailor and chairman of a new company to buy out pensions.

Fawcett started out in Morgan Stanley’s legal department before moving on to bigger and better things at the US bank. By steering clear of lawyers The Prince might miss out on similar repositories of banking talent. And what about all those US lawyers who move into M&A?

Will anyone speak out in their favour (please)? Obviously, you are also free to condemn legal types to a life of lock step compensation, billable hours and being several notches further down the financial food chain.

Comments (19)

  1. In my opinion, with all our respect to all qualified lawyers and thier very important and critical roles in the banking industry, they are not the people who should take the responsibility of making a banking/investment discision from an “other than legal” point of view. This is the era of specilization. The right man in the right place. You can’t make a banker for example take IT Networking soultion decision.

  2. What’s clear is that Saudi princes shouldn’t make investment decisions. He’s only got himself to blame. Farm out those decisions to a specialist and spend time contemplating democracy (what’s that word?).

  3. All that said, what are the chances of a 2 year qualified M&A lawyer (good New York firm, London Office) hopping into Investment Banking ie for an M&A, non-legal role. I’ve heard it happens-does it?

  4. You are out of context, we are not talking about the Prince but whether or not a lawyer could be a good CEO. Did you read the article?

  5. Regulation, Red Tape, Compliance & the infamous 5-point plan may work for a law firm but not a global investment back. I’m with the Saudi Prince. Please no more lawyers next time!

  6. Who calls him AbTbAAaS? Are you trying to be cool and complex? Just call him by his name, Prince Alwaleed, like everyone does! I also agree with the Prince, lawyers should not run banks, they have the wrong type of arrogance!

  7. Yes I DID read the article and it questions whether lawyers can be trusted to make decisions outside their specialism, in the context that Prince etc etc no longer thinks they can. Hence my comment on said Prince’s decision to buy his Citibank stake in the first place. I now pose a further question, do anonymous venture capitalists often miss the point?

  8. Just thought I’d point out that Blankfein, CEO of Goldman Sachs and Rubin, Chairman of Citigroup, used to be lawyers.

  9. That would not be wrong to have lawyers in that field but they are not easy to convince since they stop on futilities (i.e. more work for us!). But I have to admit that I do sometimes appreciate the way they assess and perceive risk. However I’d pefer to see them in the Board or in Credit Committees and not in the decision making process (anyway most of the time its hard to get a straight answer from them).
    By the way what does democracy have to do with the topic?!?! ignorant!

  10. Ignorant says as ignorant does as my mother used to say. Obviously a banker!

  11. Exactly, so was Wasserstein and many more high-profiles successful types. I don’t think it matters, but i suppose Prince knows it better from his level of experience,etc.

  12. Mr. Not a lawyer

    I think you’ll find the Prince has a pretty good record as a professional investor – in particular his citi stake continues to be worth about 7-8x what he paid for it even after the near-halving in the stock price.

    In any case, I don’t fully agree with him. The problem with Chucky was not just that he was a lawyer but that unlike Blankfein and Rubin he had no direct experience of running a business before getting the CEO job.

  13. It doesn’t take a genious to know that i’m a banker. I guess it’s very well witten. So don’t give yourself too much credit! even with your mum’s saying which you BADLY misused. Illiterate?!?!

  14. A CEO is a leadership position, not a technical job. I think the background is less relevant than the quality of the person’s leadership.

    Also perhaps a lawyer would concentrate on legal and regulatory risks while a seasoned banker would look at mostly credit risks.

    Often a successful corporate banker is promoted to become the CEO and he/she would lack a good sense of market risks. Nowadays banks go bankrupt because of misjudgement of market risks.

    Traders do not generally become CEO’s because they often lack communication finesse.

    Well, you can’t really win everything.

  15. Jean A not only is it obvious you are a banker (a complete one at that) but also that English is not your first language. But whatever universe you hail from (or are master of), is it really literate, clever or even acceptable behaviour to hurl unwarranted insults (“ignorant”) at someone just because you disagree with their views. It’s hardly intelligent debate is it? Which was the point of my “badly” misued mother’s quotation. The contributer who says the prince still is sitting on 7-8X his cost has made a far more worthwhile point and I retract my comments about the prince making investment decisions. I still feel the same about democracy though. Do they not have it in your country?

  16. If the prince really said that, it’s just an overreaction to how bad his trading strategy was on citigroup.

    CEO types are from a wide variety of backgrounds.

  17. Although,law as a discipline is a strong career in its own right but, their training does not equip them to have the capacity to make investment decisions.if this happen, one is putting a round peg in a square hole or vice versa.

  18. When it comes to the role of CEO there are so few people who can actually do the job really well – regardless of whether they be a former lawyer, investment banker or pig farmer.

    What is important is the person, their experience and the team they have around them. I think a former lawyer has just as good a chance at making a good CEO as anyone else – so long as they have more to their CV than just law.

  19. Investment Banks and Consulting Firms look at J.D./M.B.A.’s above and beyond typical Business or Law Grads.

    Business Grads have the knowledge, Law Grads have the logic and analytical skills required to perform at top performance, now combine both with a J.D./M.B.A. and you have a new breed of candidate.

    Just because of Lawyer screwed up doesn’t mean they are bad workers, many of the F500 CEOs are Lawyers and i know far more Business grads who screwed up than any Lawyer to date.

    PS: If i replied to an old blog.

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