In this article, Ramanuj Mukherjee, Co-Founder & CEO at iPleaders discusses how to become a banking lawyer and what are the opportunities.

Indian banking sector survived many global disturbances. It is now under unprecedented stress due to recovery problems, low demand for loans and capitalization issues. Still, it is one of the fastest growing and highly critical sector of the economy. In recent past, RBI received many accolades for being a good and effective regulator though things are not quite the same right now. However, banking stands out as a major employer in the country as a source of well paid white collar jobs. Especially for lawyers, it is a top sector and very attractive for lawyers even when it is not doing well. When banks do well they need many lawyers, when they do badly even more lawyers are required! In fact lawyers make more money when banks are not doing well, assets are distressed and clients default on payments. It is a truly recession proof sector as far as lawyers are concerned.

Here are 5 reasons why banking has very high demand for well qualified lawyers

1. It is a very technical and highly regulated sector that requires highly specialized legal expertise. Regulations are frequently changed and practices are constantly evolving.
2. Any major lending transactions require lawyers, both on the side of the lender and borrower, creating one of the largest markets for transactional lawyers (also called corporate lawyer in common parlance)
3. Banking and finance is a highly innovative sector, constantly introducing new products and services into the market. Lawyers are required to vet and tweak these innovative products before they hit the market. These innovations almost always bring new sets of legal, regulatory and taxation challenges which often have to be settled through litigation and creation of precedence over time in which lawyers play a critical role.
4. A good legal team that can protect the return on loans given out by the bank provides a huge competitive advantage to the bank. It is a question of survival for the bank. During recessions, or when the bank is under stress due to many defaults, the lawyers are the busiest. Hence, banks do not try to cut cost on lawyers as compared to, say, a manufacturing company, for which legal is not as critical a function. Apart from banks, Non Banking Financial Companies (NBFCs) are also highly dependant on lawyers for the same reasons. If lending increases (which happens when the economy booms), more lawyers are needed to do due diligence on collaterals and businesses, apart from running the transactions themselves.
5. Frauds, cyber-attacks and crimes related to banking has been on the rise, and banks have been facing claims regarding the same in large volumes. Consumer disputes involving banks are also very high in number. All of these make it necessary for banks and NBFCs to engage armies of lawyers.

Banking practice involves some of the largest and complex transactions, requiring exhaustive knowledge of the Indian finance market and the ever evolving regulatory framework. Cross-border transactions are also frequent and requires international expertise.

Basic role of Baking Lawyer

The most lucrative and major work in banking practice is negotiating loan agreements, which is comparable to negotiating investment or acquisition agreements, except that banking team deals not with equity but debt.

• Ensuring compliance with rules and regulations of the regulator that is., RBI.
• Framing legal documents needed for the various processes followed by banks
• Acts as the legal representative of the bank for the filing of suits and cases against borrowers, fraudsters etc. and defend the bank against legal actions
• Acts as legal counsel for the bank whenever any legal opinion is regarding any procedural lapse or operational flaw

However, note that a banking lawyer as practicing in a large law firm does not do all these things. They mostly help clients (banks and their borrowers) to negotiate loan agreements, and sometimes to enforce those agreements.

Some important services rendered by banking lawyers

• Restructuring a business
• Restructuring loans
• Handling relationship between multiple lenders
• Drafting or negotiating loan agreements
• Vetting legal documents
• Settling Recovery issues
• Global Commercial Issues (ADR/ GDR etc)
• Dispute Resolution
• Fund Development
• Preparing pleadings and drafts
• Replying to queries and complaints
• Review and preparation of policies
• Research on RBI policies and statutory provisions,
• Ensuring legal compliance,
• Advising on leveraged financing
• Handling Bankruptcy litigation
• Handling deferred payment issues
• Settlement of NPA (Non-performing assets)
• Managing issues regarding Securitizations and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act)
• Settling cases relating to Negotiable Instruments Act
• Appear before Debt Recovery Tribunal

What are the 5 most critical skills required by banking lawyers?

• Financial acumen – banking lawyers must have high level of understanding of complex accounting, ability to analyze balance sheets, judge asset quality and many other complex banking concepts. They don’t only have to know a lot of technical things and apply in day to day work, they must also constantly update themselves with the latest regulatory developments. A mastery of numbers is an asset here and if you are not good with numbers, it will be a definite handicap.
• Drafting skills – ability to understand convoluted situations, predict risks and rewards and ability to draft them into a contract is a critical skill for banking lawyers.
• Negotiation skills – top banking lawyers are almost without any exception amazing negotiators.
• Ability to deliver under high pressure – banking lawyers work with highly demanding clients under short deadlines and with massive stakes. It is not everybody’s cup of tea to work in such environments.
• Eye for details – imagine reading thousands of pages without missing the minute details that you need to vet and based on which fortunes can be made or lost. That is the job of banking lawyers. They can’t miss even the tiniest detail. Those who cannot master above average patience and have keen eye for details cannot survive as a lawyer in the banking industry.

How much do banking lawyers get paid?

Through a survey conducted in 2014 by the Legal Search firm Vahura following observations were made about :

In 2017, you can expect that these number have gone up by about 10-15%.

If you work as a banking lawyer in a large or tier 2 law firm, you could earn much more. Our internal research revealed the following numbers:

The figures given in the table above is based on information provided by lawyers working for tier 1 and tier 2 firms in India. We have taken the lowest and highest salaries disclosed to us to indicate the range as given in the table.

A lawyer who was an Associate Counsel at ICICI Bank till 2016, and requested anonymity for legal reasons, confirmed that the above figures are more or less correct based on his understanding of the market. When he joined ICICI in the year 2010, his starting package was 8 lakhs and now it has increased to 10-12 lakhs per annum. This is another major trend that cannot be missed. The packages that the banks, law firms and financial services firms are offering to new recruits have been steadily increasing despite global economic turbulence and poor performance in banking sector at home. It is matter of imagination how fast it may grow once the sector recovers and economy picks up more pace as expected in India.

Job Opportunities

When a person hears the word “Banking Lawyer”, the first image that comes to the mind is that of a lawyer working at a bank. But that’s only a myth. I had the opportunity to speak with a graduate of National Law Institute University, Bhopal who is currently working at Citibank as an Associate Counsel. During our conversation she revealed that lawyers who have banking law as their area of expertise can score jobs at banks as well as investment firms, micro-financing firms and various leading global financial services firm providing investment banking, securities, wealth management and investment management services. She also said that a person’s command over various acts and laws like SARFAESI, Negotiable Instruments Act, Indian Contracts Act, Specific Relief Act, etc. have the upper hand during job interviews.

Some of the notable recruiters of banking lawyers

Indian banks – ICICI, HDFC, YES Bank, SBI, PNB are some of the major recruiters of lawyers and almost all of them have established massive legal teams over the years.

Foreign banks –  Citigroup, Standard Chartered, ING, Bank of America, Barclays and every other foreign bank with presence in India have been hiring Indian counsels. These are attractive especially for those wanting to develop a niche in cross-border transactions.

Investment banks – Morgan Stanley, Goldman Sachs, JP Morgan, Credit Suisse and dozens of others – they all require capable banking lawyers.

NBFCs –  Aditya Birla Finance Ltd., LIC Housing Finance Ltd., Bajaj Finserv., Indiabulls Housing Finance Ltd., and thousands of other NBFCs hire thousands of lawyers every year.

Large law firms – AZB & Partners, CAM, SAM, JSA, Khaitan, Trilegal, Luthra & Luthra, NDA – there is no large law firm, or a tier 2 law firm that does not have a large banking team and a respectable list of banking clients. Over time, banking has delivered major growth for these firms and have become bread and butter work though margins have taken a nosedive over time as banks took away more and more work from them by increasing the number and variety of expertise in in-house legal teams. However, good expertise in banking work is an amazing asset if you want to work in a large law firm.

Tier 2 law firms and boutique banking law firms – Banking work is indispensable for those who want to create a full service law firm. There are many boutique law firms that do only banking work. Some of the most reputed in this category are Phoenix Legal, DSK Legal, JurisCorp, Bharucha & Partners.

Fintech companies – This is the age of fintech. Some of India’s fastest growing companies come from this sector. Good examples will be PayTM, PayU, Mobikwik, Paypal, Ezetap, LendingKart, CCAvenue, Chillr, Capital Float etc. who are increasingly needing to hire lawyers or foot bigger bills with law firms.

Banking BPOs – Many foreign banks have been opening captive BPOs to handle their routine legal work and relocating such jobs in India. These are fairly well paid jobs but require lower skill levels. Good examples will be UBS, Danske, Bank of America, ING and Deutsche Bank. We can expect a large number of such jobs to be created over time as political situation over outsourcing in the USA and Europe stabilizes.

According to top job websites like Naukri.com and Indeed.co.in, as of now there are more than 800 jobs for banking lawyers, waiting for suitable and eligible candidates. Moreover, the number of non-performing assets (NPA) has increased marginally post demonetisation and now the total amount of gross non-performing assets 614,872 crores in rupees. Therefore, the workload on the banks has increased exponentially too and consequently the number of jobs for lawyers with the knowledge of banking law has increased too.

Is it wise to opt for a career in Banking Law?

Banking law is an evergreen career. For an industrious and talented lawyer, sky is the limit. It is a very good time to learn the ropes at this point, as demand is expected to skyrocket in years to come. Leading global banks like Bank of America and Citigroup, firms and enterprises like Goldman Sachs and Federal National Mortgage Association, and even startups like CCAvenue and Paypal had lawyers as their CEOs. This shows how well established this career option has become for lawyers who know their way around in banking law sector.

Our verdict: Go for it if you have an eye for details and have some knack for numbers.

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