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Legal Field Trips: Securities Law

Many law students and applicants generally profess a desire to “be a lawyer” but have no real understanding of what practice area they want to work in. We’re going to kickoff a new series that provides a quick primer on certain fields of law. Naturally, this isn’t going to be an exhaustive study of life as an “x” lawyer, but it’ll help give you some insight into how the actual practice of law works.

To begin this series, we’re going to talk about securities litigation. When I was applying to schools and jobs, I often told people that I was interested in securities law. I had some nebulous idea about how it worked and it seemed kind of interesting, so I used it as a talking point, throwing in some vague references to white collar criminal work (we’ll discuss that later).

Securities litigation, as the name implies, relates to the buying and selling of securities. Generally, it consists of litigating issues pertaining to insider trading or securities fraud. For example, the shareholders of Company X might say that the directors of Company X made material misrepresentations (i.e., lied) about the company’s outlook in order to inflate the price of the stock. As you might imagine, there are a variety of reasons the directors might want to do that — either to retain control of the corporation in the face of a hostile takeover bid or to sell their stock at an artificially inflated price.

So, how does this get litigated? In general, securities litigation involves a ton of discovery. Junior associates will sift through countless shareholder presentation documents, SEC-required filings, accounting sheets, and the like, either to argue that the company’s statements were false or that the allegedly false information was elsewhere disclosed, thereby freeing the company from any liability. Securities litigation, in other words, is a lot less sexy than it sounds. Sure, you might be involved in internal investigations for a Fortune 500 company that makes the headlines all the time, but odds are you’ll be combing through thousands of documents full of boring information and vacuous statements.

Of course, if you have an interest in the field, and you go in with full awareness of what to expect, the work is interesting. Putting together the pieces and, eventually, getting to draft briefing on the guilt or innocence of corporate officers is exciting. But you shouldn’t expect it to be all glamor all the time, especially not in the beginning.

Securities litigation is a mainstay of the litigation departments in large, major market firms. If you go into litigation in New York, Chicago, Los Angeles, or San Francisco, odds are you’ll end up doing document review or more substantive work on a securities case. In some cases, the litigation might proceed to court, in other cases, you’ll be performing an internal investigation for potential liability that never sees the light of day. These cases take years, they’re very complicated, and no one attorney is likely to be in charge of more than a piece of the litigation.

So, there you have it. Securities litigation doesn’t look like it does on Suits, but it can be an interesting and engaging experience, albeit one that involves the killing of many, many trees.