One of the most important things a company needs to keep in mind when preparing its Form S-1 is who is sitting on which side of the table. Many parties are involved in preparing the S-1, including two law firms, but they represent different clients and protect different interests. Once this difference is clear, the comments and discussions that arise during the drafting process become easy to understand.
The Confusion Point
Why do two law firms reviewing the same Form S-1 sometimes ask for different things?
This happens because they represent different clients. One law firm represents your company, and the other represents the investment banks underwriting the offering. Both teams review the S-1 from different perspectives, discuss changes, and join the same calls.
For a first-time issuer, knowing this distinction can make the IPO process easier to execute. Understanding this distinction helps you know who is responsible for which part of the process and why the S-1 goes through multiple rounds of comments before the offering is priced.
Issuer’s Counsel: Representing the Company
Who they represent: The company going public, its management, its board, and, by extension, its existing shareholders.
Issuer’s counsel is often the law firm your company has worked with for years before the IPO. They already know your business; they understand your cap table, major contracts, and governance. That familiarity gives them a head start and helps them move through the S-1 process more efficiently.
Their core responsibilities include:
- Drafting the bulk of the S-1 narrative – the Prospectus Summary, Business section, and MD&A since they know the company’s operations and financials best.
- Structuring public-company governance: independent board committees, charters, and D&O questionnaires.
- Coordinating the company’s own due diligence response, assembling the data room, contracts, and disclosure backup underwriters will scrutinize.
- Delivering a Rule 10b-5 “negative assurance” letter at closing, confirming nothing has come to their attention suggesting the registration statement contains a material misstatement.
- Issuing a legal validity opinion (Exhibit 5.1), confirming the shares being registered are duly authorized and, when issued and paid for, will be legally issued, fully paid, and non-assessable
Issuer’s Counsel usually takes the lead in preparing the prospectus, which means they handle a large share of the drafting work on each IPO. Underwriter’s Counsel may work on more IPOs over time, but Issuer’s Counsel generally takes on the larger drafting role within each individual transaction.
Underwriter’s Counsel: Representing the Banks
Who they represent: The investment banks underwriting the offering, not the company.
One of the most important things a first-time issuer needs to understand is that Underwriter’s Counsel works for the investment banks, not for the company. Their job is to protect the interests of the banks. When banks sell your shares to the public, they take on legal and reputational risk. If your S-1 contains a material misstatement, the underwriters can face liability under the Securities Act. That is why Underwriter’s Counsel may challenge or question parts of the S-1 that could create risk for the banks.
According to Latham & Watkins’ IPO guidance, Underwriter’s Counsel runs a comprehensive review of the company’s business plans, corporate records, material contracts, litigation history, and intellectual property and expects supporting evidence to be assembled in a data room well before drafting sessions begin, since compiling it late in the process slows the entire deal down.
Their core responsibilities include:
- Leading due diligence on the company issuing the due diligence request list and interviewing management, auditors, and counsel.
- Drafting and negotiating the underwriting agreement, including the Greenshoe (over-allotment) option and lock-up terms.
- Preparing the FINRA Rule 5110 filing on underwriting compensation, without which the deal cannot legally price.
- Delivering their own Rule 10b-5 letter and legal opinion at closing, on behalf of the underwriters.
Where the Two Collide and Why That’s a Good Thing
The Risk Factors section is one of the best places to see the two legal teams working from different perspectives. Issuer’s Counsel writes this section based on the risks that management thinks the company may face. Underwriter’s Counsel then reviews it carefully and may ask the company to explain or disclose more.
Underwriters’ Counsel takes this approach because the banks also face legal risk. If the S-1 contains a material misstatement, the underwriters may face liability under Section 11. Their lawyers therefore look closely for missing information or weak disclosure.
The two teams also give separate 10b-5 negative assurance letters at closing. This reflects the fact that each team performs its review for its own client.
For a first-time issuer, this is worth remembering: if Underwriter’s Counsel pushes back on something your lawyers have already approved, do not assume the deal has stalled. That extra scrutiny is a normal part of building a stronger S-1.
Who Owns What
| S-1 Section / Deal Task | Issuer’s Counsel | Underwriter’s Counsel |
| Prospectus Summary & Business section | Drafts | Reviews/diligences |
| Risk Factors | Drafts | Stress-tests, expands |
| MD&A | Drafts | Reviews for consistency |
| Corporate governance & board charters | Owns | Not involved |
| Due diligence request list | Responds to | Issues, leads |
| Underwriting agreement | Reviews | Drafts |
| FINRA Rule 5110 filing | Not involved | Owns |
| 10b-5 negative assurance letter | Delivers (for Underwriters) | Delivers (for underwriters) |
| Lock-up agreement | Reviews on behalf of the company | Drafts |
What This Means If You’re the One Going Public
Understanding what each counsel does is one thing.
Understanding what it means for your company, your costs, your liability, and your timeline is another. Here’s what first-time issuers most often get caught off guard by.
You likely pay for Underwriter’s Counsel too — even though they don’t represent you.
Underwriting fees typically run 4% to 7% of gross IPO proceeds, and the cost of Underwriter’s Counsel is usually folded into that expense, effectively paid by the company through the underwriting discount. In other words, you’re funding a law firm with no obligation to protect your interests. That’s precisely why strong, assertive Issuer’s Counsel matters: they’re the only advocate you have at the table.
The underwriting agreement starts out favouring the underwriters, not you.
Because Underwriter’s Counsel drafts the first version for their own client, expect early terms that lean toward protecting the banks: broad walk-away conditions, expense reimbursement clauses, and indemnification provisions written in the underwriters’ favour. Negotiating these down to reasonable terms is a normal, expected part of the process, not a sign something has gone wrong.
Indemnification is mutual, but lopsided: you carry most of the exposure.
Standard underwriting agreements have the company indemnify the underwriters if the S-1 later turns out to contain a misstatement, and underwriters indemnify the company back, but only for the narrow slice of content they supplied (such as underwriting discount figures). Many first-time issuers don’t fully register how one-sided this is until they see the clause in writing. It’s one of the most consequential terms in the whole agreement, and worth understanding well before signing.
The two counsels are engaged on different timelines.
Issuer’s Counsel typically comes on board months, sometimes a year, before the IPO officially kicks off, cleaning up governance, the cap table, and stock plans. Underwriter’s Counsel isn’t engaged until the underwriting banks are selected, which happens later. Delaying your own counsel because “the deal hasn’t started yet” is a common and costly mistake.
Choosing the right Issuer’s Counsel is a strategic decision, not an administrative one.
Look for a firm with recent IPO experience in your specific industry and a track record of moving efficiently through SEC review. Underwriters pay attention to this too; a firm they don’t trust to move quickly can itself become a source of delay.
The SEC is a third, independent party; neither counsel controls the outcome.
Both firms agreeing on the draft doesn’t mean you’re done. The SEC reviews the S-1 on its own track and can issue comment letters demanding changes regardless of what your lawyers have already signed off on. Build that uncertainty into your timeline expectations from the start.
The relationship isn’t symmetric after closing.
Issuer’s Counsel typically stays on as your ongoing securities counsel handling 10-Ks, 10-Qs, and future offerings. Underwriter’s Counsel’s role generally ends at closing. If you’re thinking beyond the IPO itself, the relationship with your own counsel is the one built to last.
What This Means for Disclosure Management
Here is what the IPO process looks like in practice: two law firms, two sets of responsibilities, and two different clients may work on the same 200-plus-page S-1 at the same time. Bankers, auditors, and the company executives may also review the same document. With so many people making changes, everyone needs to know which version is the latest.
This becomes difficult when teams exchange Word files by email. Issuer’s Counsel may update the Risk Factors section while Underwriter’s Counsel makes changes to the same section. If someone opens an older file, the teams can spend hours comparing versions and fixing conflicting edits.
A centralized disclosure management platform like IRIS CARBON® gives everyone one up-to-date version of the document. Counsel, bankers, and executives can work from the same source, track changes automatically, and see who made each change and when. With everyone working from the same version, teams can spend less time managing documents and more time moving the IPO forward.
