When I first started researching about commercial law, I heard a lot about how lawyers in different practice areas collaborate with one another when working on a transaction.

However, it took me a while to understand that lawyers don't just collaborate amongst themselves.

Actually, as a commercial lawyer, you will be working alongside a variety of experts to help your client achieve their desired goals, including investment bankers.

In some cases, you may even be advising clients that are investment banks themselves.

Before we start discussing what investment bankers do, it might be helpful for us to take a look at what an investment bank even is, and how it differs from a commercial/retail bank. 

Commercial Banks vs. Investment Banks

Let’s start with Commercial Banks.

These are the sort of institutions that you and I interact with on a daily basis.

These are the banks that take deposits, make loans, and offer checking accounts, savings accounts and payment services. In the UK, key examples would be Lloyds and NatWest. 

Investment Banks, while also banks, have a completely different business model.

These banks act as intermediaries in financial markets for their clients. To understand what this means, I think it helps to consider the three main services offered by an investment bank: 

1) Trading in financial securities: Bankers that work in this kind of department generally act as brokers and provide access to trading in fixed incomes, commodities, etc. 

2) Raising capital for clients: Capital markets bankers advise on how to raise equity and how to raise debt.

3) Providing corporate advice: Bankers here advise clients on M&A transactions or the right financial structure to follow, for example.

The goal of an investment bank is to tie all of these services together because their clients often require advice on all of them during a single transaction. 

Another thing to note is that a majority of investment banks also offer most services that commercial banks offer. 

Examples of investments would be HSBC and Barclays in the UK, and Goldman Sachs in the US. 

How Do Investment Banks Make Money?

You might have noticed that I mentioned above that investment banks and commercial banks have very different business models. In other words, they have distinct business plans for making a profit.

Essentially, commercial banks make money by taking a spread between the income they receive on loans and what they charge in deposits and other forms of borrowing. 

Meanwhile, investment banks take a fee for the advice they offer and, most importantly, by bearing the risk to facilitate certain transactions.

The Role of an Investment Banker

After all of this, you're probably still wondering... okay, but what does an investment banker actually do?

Well, investment bankers spend most of their time pitching and acting as a trusted advisor to their client.

To prepare for a pitch, they will often need to conduct analyses of the market to understand the options for the client’s company and think of ideas on acquisition targets, the right capital structure to follow, and how to improve share prices.

If the investment banker convinces the client to take on the deal they pitched to the client, they will then need to work on executing the transaction. 

Most investment bankers are specialised within a certain country and a certain sector.

This enables them to provide valuable advice that takes into consideration clients’ specific circumstances.

What About Commercial Lawyers?

As a commercial lawyer, you will likely interact with investment bankers on a daily basis.

For example, imagine you're working on an acquisition which has been pitched to your client by an investment banker.

In this case, you will likely be expected to draft certain documents to help the client prepare for the transaction.

You may also need to conduct due diligence of the target company, to ensure that the information your client has been provided about it is correct.

You may even help in the process of raising capital to fund the transaction, which the investment banker will also be advising your client on.