James Donovan, Goldman Sachs managing director and adjunct professor at the University of Virginia School of Law, often draws on his own business experience when speaking to his students.
In an Outside the Box Lunch lecture, Donovan explained that many bankers and lawyers make the mistake of approaching their clients with a very limited perspective. Though these professionals can offer outstanding support in specific areas, they are more likely to be impacted by market shifts and economic changes.
That is why it is best not to specialize, according to Jim Donovan. Goldman Sachs presented him with an opportunity to broaden his horizons and become a generalist. He explained that instead of focusing on specific services, he focused on managing all of his clients’ needs. If a global firm hoped to expand in Japan, he put together a cross-border merger team. If a client needed financing, he set up an equity capital markets team.
During his lecture he said: “If they think of you as your trusted financial advisor, they’re going to call you when they need help instead of going piecemeal to different bankers, or different people, or different firms. It allowed me to box out competition.”
He added, “By practicing as a generalist, you have a much more steady stream of revenue associated with your clients and it helps smooth out the cyclicality of any one product or business offering that you might have. So, it was selfish, but it allowed me to be one of the largest revenue producers at the firm over the course of my career and it allowed me to predict the revenue I could earn from clients in a much more steady, organized fashion.”
Donovan offered another tip to his students as well: learn the language of business.
“Business people speak in terms of ‘comparable merger analysis’, ‘discounted cash flows’, and unless you’ve taken classes or spoken in those terms, you can be intimidated by them” he said. “I’ve seen lawyers who are practicing law day in and day out, case in and case out, shut down and become intimidated in a room where people start throwing around business terms. The fact is, the language of business is simple.”