Is it time for banks to take greater control of their legal spend?
Legal fees incurred by banks can have a huge impact on profits. Deutsche Bank provides a prime example of this; according to data from Bloomberg, they have spent more than any other European financial institution due to a combination of regulatory fines and litigation costs. Around 1.2 billion euros were earmarked for litigation. These legal costs have, in part, led to the bank reporting a 2.1 billion euro loss in the fourth quarter with the bank’s stock falling to the lowest value since 2009. In contrast, Bank of America’s profits rose by 10%, in part due to a reduction in spending on legal fees.
This leaves in-house lawyers in an awkward position when regulatory scrutiny and in-progress litigation cases are unavoidable but they are facing more pressure to cut cost.
The first port of call for any in-house counsel managing regulatory investigations is usually a trusted law firm, Yet, with the culture of billable hours being so prevalent, are law firms in the best position to provide the improved efficiencies and reduced costs in-house counsel are seeking?
Indeed, such is the concern about spiralling legal costs that the Competitions and Markets Authority, an organisation more associated with causing legal fees, recently announced that plans to investigate law firms in light the following concerns:
- Whether clients can drive effective competition by making informed purchasing decisions;
- Whether clients are adequately protected from potential harm or can obtain satisfactory redress if legal services go wrong;
- How regulation and the regulatory framework impact on competition for the supply of legal services.
Kroll Ontrack is hosting a seminar discussing this difficult topic, with speakers from leading banks (Lloyds, Barclays) and top law firms (Dentons and Humphries Kerstetter). In what will no doubt be a fiery debate, the panel will discuss:
- How recent ‘big ticket’ regulatory investigations have affected the banking world
- Using new technology to reduce expenditure
- Leveraging buying power when using law firms and other professional service providers
- Discussing the relative merits of fixed fee vs billable hour pricing structures
- Examining the pros and cons of unbundling legal services
To register for the event, please click here.