As you might expect, derivatives lawyers specialise in advising clients on derivatives contracts - financial instruments used to manage risk or gain exposure to another asset.
They act for banks, financial institutions and investment firms on a variety of financial transactions which include a derivative element. These can include securitisations, structured products, bespoke funding transactions, and hedging transactions (to hedge currency or interest rate risk, for example).
Many derivatives lawyers will specialise within a particular asset class, such as credit derivatives, equity derivatives or foreign exchange derivatives.
Each asset class has its own complex set of documentation published by ISDA (the trade body that represents the global derivatives industry) which lawyers need to know in order to properly document and interpret transactions. These are known as 'Definitions' and are included by reference in the trade confirmations that set out the terms of each derivative transaction.
Typical tasks for derivatives lawyers include drafting and negotiating ISDA Master Agreements and trade confirmations, advising on complex security arrangements (often cross-border and involving intangible assets like securities), and advising on aspects like close-out netting to ensure the enforceability of the contract in the event of the insolvency of a counterparty.
Derivatives lawyers in most large law firms will sit within the wider capital markets or structured finance department.
Derivatives lawyers at the leading London law firms can expect to earn between £120,000 - £150,000 at the junior end of the associate scale (up to 2/3 years’ PQE).
Mid and senior-level associates can expect to earn north of £200,000.
We have a list of salaries paid by all of the UK’s top law firms here.
Derivatives law is a niche and technical area and only offered by the largest international firms in London.
Firms with derivatives practices often include the practice within their wider capital markets department.
Linklaters and A&O Shearman are generally considered to have the best derivatives practices in London, closely followed by Fieldfisher, Clifford Chance, Mayer Brown, Simmons & Simmons and Ashurst.
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