06 Jun Is venture capital challenging, or challenged by legal recruitment?
Sameer Chauhan specialises in recruiting in-house lawyers into financial sponsors and buy side financial institutions. He works across the globe with private equity houses, venture capital funds, alternative investment managers, state backed/sovereign investment funds, hedge funds, asset managers and credit/debt funds. Moreover, he also works closely with their portfolio companies to help build and scale up their legal functions. We spoke to him about some of the trends he’s noticing in the financial services sector, and how Marsden is advising clients to respond to change and help them find outstanding in-house legal candidates.
There are three key trends Marsden’s clients are currently focused on:
The rapidly evolving technology associated with Web 3.0 and cryptocurrency.
“For several years this was seen as a wave of innovation that would soon crash,” said Sameer. “However, interest in investing in this area just seems to be increasing, which means that there is a subsequent need for in-house legal professionals that really understand this type of business.”
There has been an increase in the number of venture capital clients wanting to recruit lawyers that understand and have a demonstrable interest in the area. This is not necessarily legal knowledge, since the law has been slow to catch up with this rapid growth; but there is a need for professionals that are interested in the evolving technology and culture behind Web 3.0 and cryptocurrency.
“We’re working with funds who are investing in blockchain technology, the architecture around blockchain/cryptocurrency and tokenization, as well as Web 3.0 more broadly,” said Sameer. “They’re coming to us because they need professionals with the right investment skill set but also understand how to work with founders in the industries. They no longer want lawyers that just get the deal done. There’s been a real shift towards recruiting legal professionals with a thirst for knowledge and understanding as well as a proven track record in investment. There’s also a demand for in-house legal recruits that are rapid growth specialists, as many funds are trying to get into earlier stage investing. All of this needs a special kind of lawyer.”
Financial services clients—especially in venture capital—want to develop a more diverse workforce by changing recruitment practices.
This isn’t a new challenge, but it is a major and important one. As Sameer explained:
“Venture capital is increasingly being seen as a more community-focused, human field within financial services. Our clients need lawyers that reflect this, with tact and an ability to work with people. It’s no longer just about being a fantastic lawyer, it’s about being more than this – people with an added level of sophistication, self-awareness and insight. Partly because of this we’re seeing an increasing number of women getting the top in-house legal roles within venture capital and investment management. I’m proud to have played a part in this development.”
There is still a huge bridge to cross in the wider diversity question. Sameer is asked daily to provide candidates from more diverse backgrounds – racial, social, cultural, educational, regional and gender-based. But this isn’t always possible, despite the demand. “There might be the desire to recruit in a more diverse way, but if there aren’t the candidates going into the sector at the start of the process, they don’t progress to a point where they can be added to a shortlist for an in-house role.”
The challenge to recruit more diverse candidates isn’t just affecting the financial services in-house sector. It has long been discussed as a need for private practice, which often feeds and influences the in-house legal world. “With the length of training required and the subsequent significant student debt, it’s always going to be a challenge to develop a more diverse legal profession. Those from less affluent backgrounds or with a cultural responsibility to support their families often feel the system is broken.
“The financial services sector is clamouring for a more diverse workforce, but they still need lawyers to be trained properly. In the longer term, financial services companies—and especially those in venture capital—are looking to train their own lawyers and attract individuals from a more diverse range of backgrounds. But funds can only do so much when law firms are generally the ones training and getting people started on their careers.”
The shared responsibility between industry and private practice law firms.
At Marsden we are seeing an increasing number of law firms asking us for good in-house candidates that might want to go back into private practice, to share their expertise and experience of working in the venture capital world. They recognise the value that an in-house career provides in terms of sector insight, practical skills and technological understanding. However, many of these lawyers left private practice to achieve a more commercially minded role, as well as more control over their time and do not want to return to it.
“We’re responding to this by building networks between law firms, industry specialists, and in-house lawyers and senior decision-makers within venture capital organisations. We want to help bridge the gap and expand understanding,” said Sameer.
“One of strengths we have at Marsden that our clients truly value is our active role within the sector. We not only understand their businesses but we’re able to connect them with other professionals – lead investors and founders, in-house or private practice lawyers. Our networks are extremely diverse and deep and we’re proud of the many trusted relationships we have built. This allows us to work proactively with law firms and investment contacts to raise awareness of issues such as access to legal training, diversity and the need to respond to emerging technologies. This level of insight, integration and collaboration is rare within the legal recruitment world.”