General Interview Questions Flashcards
What is commercial awareness and why is it important?
Commercial awareness can be split into three strands:
1) Commercial: involves having a comprehensive understanding of the commercial objectives of clients, markets, economy and sectors operate in
2) Awareness: understanding how all of this affects clients and the business to better advise on the capitalisation of opportunities and mitigation of risks
3) Legal: identifying the risks and advising clients on how to mitigate those risks to better achieve their commercial objectives
It is important for three reasons:
1) As a commercial lawyer, one is effectively a business advisor that needs to know more than just the law
2) It enables one to provide a tailored and bespoke advice to business clients
3) Clients except it that is why it is such a highly rewarding career
What do clients look for in a law firm?
Different clients look for different things, but the 5 main things that I think clients look for in firms are:
1) Recent and relevant expertise in similar transactions
- My time at TP ICAP Group showed me that clients can often pick and choose law firms so it crucial that they understand the client’s business and provide specific advice to achieve their commercial objectives
2) International law firm for cross border transactions
- In terms of MH it has its partner firm networks and Primerus network
3) Competitive pricing - may even be a fixed fee
- Its competitive market have to compete competitors
- Can’t charge if not competitive
4) Capacity to have time for their transaction
- Who is going to be in the team?
- Who are the partners, senior associates and associates - need their contact details - do they get along with the client and are easy to work with?
- Does the law firm understand my business, do they speak my language, are they commercially aware?
5) Professional negligence insurance?
- Certain law firms need professional negligence insurance - is it more of a checklist for a law firm or is it a negotiating point? My mentor told me about this
Introduce us to a new story that has interested you.
Intro - Given my interest in capital markets and private capital (VC, PE and funds), the proposals for a restructured UK capital markets regime have caught my attention recently.
C - The UK market has struggled to attract companies. The FT, for instance, reported that London contributed only 5% to global IPOs from 2015-2020. This has also been made worse after Brexit cut off the City from the EU and a recent decision by ARM to float in New York and others to delist from the LSE. Further, London has witnessed several PE-backed take-private deals, such as CD&R’s acquisition of Morrisons.
D - In response, the FCA published its Primary Markets Effectiveness Review in May last year following Lord Hill’s UK Listing Review, outlining multiple proposals to enhance London’s appeal to prospective issuers. Yet, the proposals may overlook competitive issues and inadvertently discourage smaller companies from listing.
FCA main proposal: streamline existing bifurcated structure of premium and standard listing segments by establishing a single listing category with a unified set of obligations.
Advocates a more flexible approach to listings: removing financial eligibility requirements currently applicable to premium segment such as three-year historical financial requirement and need to provide a clean working capital statement
However, in establishing single listing category, some obligations currently applicable to premium segment will carry over, such as significant transactions and sponsor regimes.
Consequently, smaller issues that might have listed on standard segment will face higher regulatory burdens and subject to greater disclosures.
Therefore, whilst proposals may simplify the IPO process and make London more attractive, the overall burden on less mature companies may deter them from floating on single listing category.
Moreover, the UK is less liquid and offers lower valuations that competitor jurisdictions, namely the US. As such, a broader approach targeting cultural change to UK capital raising is perhaps warranted alongside deregulation.
For instance, it may be appropriate to incentivise institutional funds to invest in more illiquid assets and fast-growing British companies to inject liquidity into UK markets.
Moreover, the stamp duty tax applicable to UK equities should perhaps be removed to incentivise investors.
And finally, a push to retail participation is crucial. Japan is a great example of this. The increase in young Japanese investors was a big factor in the Nikkei passing a record high at the end of February. Likewise, more than 30% of households in Britain hold assets in cash or deposits compared to 13% in America. So increasing retail participation will undeniably help boost liquidity.
