10 Things To Know About Securities Litigation And Enforcement
A good overview of what it's like to work as a lawyer in securities litigation and enforcement.
Ed. note: Welcome to the second installment of Better Know A Practice Area, a new series introducing readers to different practice areas. Each post is written by an editor at Practical Law who previously practiced in that area and currently writes about it. In case you missed it, you can read the first installment here (discussing capital markets and corporate governance practice).
Today’s topic: securities litigation and enforcement.
- What do you do in a typical day?
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A typical day of a securities litigation and enforcement associate might involve:
- Interviewing custodians of documents potentially responsive to a Financial Industry Regulatory Authority (FINRA) request for information.
- Meeting with a client to prepare her for upcoming testimony before the Securities and Exchange Commission (SEC) or the Department of Justice.
- Conducting review of a client’s potentially privileged documents, preparing a privilege log, and coordinating production to the SEC.
- Drafting a portion of the brief in support of a motion dismissing a securities fraud complaint against a client.
- Strategizing with a joint defense group on coordinated discovery and oral argument on a motion in a case asserting claims under the federal securities laws.
- Preparing a deposition outline for a witness in a securities fraud case.
- Who do you work with?
Junior associates mostly work with senior associates and sometimes partners. As associates grow more senior, responsibilities increase and associates have more direct contact with clients and the opposite side. In the securities litigation and enforcement practice, the opponents include plaintiffs’ lawyers, enforcement counsel of securities regulators, such as the SEC and FINRA, and often prosecutors from the U.S. Attorney’s Office or the DOJ.
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Associates in this area are often tasked with coordinating collection, review, and production of documents, which usually requires collaborating with e-discovery vendors and the clients’ IT and legal departments and working with the opposite side. Associates may also be tasked with preparing witnesses for depositions or meetings with regulators, which usually requires multiple meetings or teleconferences with client representatives.
- What does a common career path look like?
It’s common knowledge that there is a revolving door between the government and private practice for securities litigation and enforcement lawyers. With increased regulatory oversight in recent years, this is now as true as ever. Lawyers practicing in this area often move to the government after a few years in private practice. The most common government positions are state and federal prosecutors or enforcement counsel at the SEC, CFTC, or FINRA (a non-governmental securities industry regulator). Some lawyers make a career in the government, and others return to private practice as counsel or partner.
Besides government, lawyers in this practice often move to the financial institutions’ in-house litigation teams or compliance departments, or pursue judicial clerkships. Securities litigation and enforcement lawyers are mostly based in major financial centers, such as New York, Chicago or San Francisco.
- If variety is the spice of life, how spicy is this practice area?
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This practice area offers a good degree of variety. Regulatory matters can concern different subject matters, from compliance with securities laws’ technical requirements, such as retention of electronic communications, to propriety of corporate disclosures, to allegations of securities fraud. Lawyers involved in these matters often conduct investigations of alleged misconduct, which is perhaps the most dynamic aspect of the practice. Investigations include review of electronic communication, witness interviews, communication with the government, and presentation of findings to the board of directors.
Handling private securities lawsuits most often involves motion practice and voluminous document discovery and depositions. Motions frequently filed in these cases include motion to dismiss, motion to decertify class, and motion for summary judgment.
- How much wear and tear?
The work is fast-paced and demanding because the stakes can be high, involving large fines or settlements, industry suspensions and bars, and possibly criminal convictions. Associates are expected to be able to master large amounts of facts quickly and think strategically. Partners are not always able to commit enough time to learning all the facts and regularly rely on associates to supply details and recommendations, especially in large and complex matters.
Associates also invariably review very large amounts of documents and are expected to do so thoroughly and accurately because mistakes can be costly. For instance, making an incorrect privilege call and including a privileged document in the production can result in the assertion of a privilege waiver and have a dramatically negative effect on the case.
- Of the people in this practice group who hate it, what exactly do they hate about it?
Lawyers practicing securities litigation and enforcement tend to like the practice. That said, handling matters involving some of the securities laws’ more technical aspects may be a less than exciting experience. As for most litigators, coordinating and conducting the review and production of large amounts of documents is probably the most tedious part of the job. Most securities litigators also don’t enjoy having to become familiar with the fine print in the documentation supporting fraud claims, such as the often massive offering documentation for a security or a company’s annual filings.
- Of the people in this practice group who love it, what exactly do they love about it?
Most lawyers practicing in this area enjoy being involved in cases with high stakes, often accompanied by media coverage and publicity. Some of the most exciting parts of the practice are conducting internal investigations to uncover potential wrongdoing and battling prosecutors on the admissibility of wiretap evidence, propriety of search warrants and other devices available to the government.
Lawyers in this area also tend to be smart and competent. So, whether an attorney is on a joint defense team or across the table from them, working with good lawyers is a privilege. In addition, the world of securities litigation and enforcement lawyers is relatively small, so people are mostly courteous and professional because they know that they will likely meet again.
- Are there common avenues out of this practice area?
Securities litigation and enforcement lawyers who don’t want to continue practicing in this area often make a move to securities regulatory agencies, or become federal or state prosecutors or in-house compliance officers.
- What are some market trends that impact this practice area?
Volatility of financial markets has a great impact on securities regulation and litigation. On the one hand, financial crises bring about litigation and increased regulatory oversight. On the other, bull markets result in increased transactional activity (mergers, IPOs, etc.), which give rise to litigation and changes in regulatory landscape. In general, the more market activity, the more work for securities litigators and enforcement lawyers.
Currently, the legal matters concerning the 2008 mortgage crisis are winding down and markets have largely recovered. Many practitioners think that the next wave of work in the securities litigation and enforcement area will be in lawsuits concerning a large number of IPOs that took place during the last several years. In addition, the securities regulators and the DOJ appear increasingly focused on enforcing compliance with securities laws and holding individuals responsible for misconduct, which will likely result in an uptick in the enforcement matters.
- If you had to recommend one candidate from a room crowded with recent bar exam graduates, what specific qualities would he or she have that would ensure success in this practice area?
Beside genuine, demonstrated interest in financial markets, a good candidate would have all the usual qualities of a good litigator: thoroughness, attention to detail, good judgment, and ability to express herself clearly both orally and in writing.
Also, handling a large regulatory matter or representing a defendant in a securities class action can be a protracted and often frustrating experience. So, patience and an even-keeled demeanor will also be helpful to attorneys practicing in this area.
Earlier: 10 Things To Know About Capital Markets And Corporate Governance Practice
Vlad Pavlovic is a senior legal editor on Practical Law’s Litigation team. He focuses on securities litigation and enforcement. Prior to joining Practical Law, Vlad practiced in New York with Morgan Lewis and Allen & Overy.
