What Is Corporate Finance Law?

Find out how legal and financial matters overlap in the business world.

Corporate businesses tend to have various roles and departments to serve the corporate needs. One department that most large corporations need is a legal department and a finance department. A legal department may have several different types of lawyers on staff and one of these may be one that specializes in corporate finance law. Corporate finance law may require several attorneys to be on staff for a corporation that specifically deals with the finance industry.

Function

The role of a corporate finance law professional may be responsible for a myriad of legal issues that pertain to financial situations. Some of these financial situations include negotiating merger and acquisition agreements, preparation for an appraisal hearing, litigation for a securities class action suit, the issuance of corporate stock or securities or taking a company public. In essence, the function of corporate finance law is to deal with any financial legal matters that pertain to the corporation or business.

Types

Some corporate finance law professionals never see the inside of a courtroom, so they do not necessarily deal with litigation and court proceedings. Other types of corporate finance law may bring professionals inside of the courtroom to cross-examine financial expert witnesses.

Corporate finance law combines the principles of finance with the legalities of a company's financial and capital structure. Typically, this includes the debt and preferred stock instruments of the company and concepts such as the time value of money; the relation between risk and return; valuing corporate securities (stocks, bonds and options); optimal capital structure and dividend policies; basic financial accounting; forensic finance and how these principles are applied in the practical practice of law; and the judicial interpretation of bond covenants and preferred stock preferences.

Benefits

The main benefits of having a corporate finance law division or professional working for a company is that the company can save time and money when it comes to making business decisions and when facing business challenges. Rather than make uneducated financial legal decisions, company executives and owners can obtain professional legal advice.

Misconceptions

Many confuse the role of an investment with a corporate finance law professional. While some of the work is similar with these two positions, the main difference is that a corporate finance law professional is typically a lawyer that has obtained a legal degree and specializes in law as it relates to corporate finance. While both an investment banker and a corporate finance attorney can negotiate a merger and acquisition, only a corporate finance law attorney is equipped to litigate a court proceeding involving the company or to cross-examine a professional witness.

Solutions

Corporate finance law is an area that provides real-world solutions to company issues and challenges. A corporate finance law attorney, for example, understands corporate policies and contracts, which allows the corporation to capitalize on the relationship. This type of relationship allows the company to function and grow effectively and efficiently and helps to intervene in legal financial matters before it becomes a problem.

References

• CorporateFinanceLaw.Org
• Duke Law: Corporate Finance