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A Beginner's Guide for Bankers: How to Use Lawyers More Effectively
The document outlines challenges faced by clients and their lawyers, including complex legal structures and high legal expenses. It discusses effective management strategies for legal matters and expenses, emphasizing the importance of preventing legal issues, understanding billing structures, and wisely utilizing legal resources. Additionally, it explores the evolving relationship between banks and lawyers amidst regulatory changes and competition in the legal industry.
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A Beginner's Guide for Bankers: How to Use Lawyers More Effectively
- 1. You’ve Been Served* * B UT YO UR L AWY E RS CO UL D S E RV E YO U B E T T E R… H E RE ’ S H OW…
- 2. Do you loveyour lawyer…?
- 3. Many people don’t… • Because of: • (Unbudgeted) Expenses • Difficult Situations • Distraction from Core Business • Painful Legalese
- 4. So Let’s Makeit Better! Today we will talk about: How law firms are structured The relationship between banks and lawyers Why and when to use lawyers How to manage legal matters How to manage legal expenses
- 5. Background on LawFirms Apprenticeship Model (1776 – 1900s) The “Cravath Model” (1900-1960s)
- 6. Background on LawFirms Post 1960: ◦ Assembly Line Processes ◦ Creation of the Billable Hour ◦ Pre-1960s attorneys billed for “Services Rendered” ◦ 1300 Hours v. 2400+ Hours Post 1990: ◦ AmLaw 100 ◦ Revenues ◦ Profits per Partner ◦ Limited Liability Partnerships
- 7. Background on Firms Major Retrenchment since 2008 Mergers Rise of Global Firms/Megafirms Entrants in New Markets Non-Lawyer Competition Industry Focused Practice Groups
- 8. Background on LawFirms What Goes into a Billable Hour? Overhead Technology Law Library Online Databases Support Staff Paralegals Librarians Legal Assistants Associates ($150K+ in graduate student loans)
- 9. Background on LawFirms What Goes into a Billable Hour? Reductions for: Write Offs Uncollectable Time Discounted Rates Training Supervision Ongoing Costs: License Fees Pro Bono CLE
- 10.
- 11. Banks & Lawyers Banking Products ◦ Loans ◦ Mortgages ◦ Collateral ◦ Control Agreements ◦ Deposits ◦ Demand Deposits ◦ NOW Accounts ◦ Certificates of Deposit ◦ Money Market Accounts Banking Products ◦ Commercial Banking Services ◦ Treasury Management ◦ Positive Pay ◦ RDC ◦ Payroll ◦ Consumer Banking Services ◦ Mobile Banking ◦ EFTs ◦ Credit, Debit, Prepaid Cards
- 12. Banks & Lawyers Highly Regulated ◦ State laws ◦ UCC ◦ Consumer Protection ◦ Trust Deeds/Mortgages ◦ Federal ◦ Primary Federal Regulator ◦ Alphabet Soup ◦ Dodd-Frank ◦ UDAAP ◦ TPSP Oversight Highly Documented ◦ Notes ◦ Agreements ◦ T&Cs
- 13. Banks & Lawyers Regulatory Problems ◦ Regulatory inquiries ◦ Safety & Soundness ◦ Holding company structure ◦ Insiders Documentation Problems ◦ Product T&Cs ◦ Loan Agreements ◦ Service Agreements Collection Problems ◦ Enforcement ◦ Special Assets ◦ OREO Customer Problems ◦ Lawsuits ◦ Class Actions Employee Problems ◦ Discrimination/Harassment ◦ Employment Agreements ◦ Severance
- 14. Why and Whento Use Lawyers
- 15. Why and Whento Use Lawyers
- 16. Why and Whento Use Lawyers Preemptive Lawyering ◦ Loan Documentation ◦ Complex Loans ◦ Cross Collateralizations ◦ Cross Defaults ◦ Multiple Liens ◦ Complex Syndications/Participations ◦ Acquisitions ◦ Real Estate ◦ Leased Property ◦ Branch Acquisition ◦ Whole Bank ◦ P&A ◦ Merger Preemptive Lawyering ◦ Regulatory Matters & Compliance ◦ Changes to Rules ◦ New Products ◦ New Tech ◦ TPSP Oversight ◦ Due Diligence ◦ Contracts ◦ Standards ◦ PCI ◦ Servicing ◦ UDAAP ◦ Marketing ◦ Complex Products
- 17. Why and Whento Use Lawyers Lawsuits Creditors Rights
- 18. How to ManageLegal Matters 1st Principle: AVOID THEM! ◦ Adopt Best Practices to Prevent Claims ◦ Policies ◦ Training & Oversight ◦ Standardization of Documents ◦ Severance Agreements ◦ Establish Internal Controls ◦ Continuous Improvement ◦ Culture of Compliance
- 19. How to ManageLegal Matters 2nd Principle: Is it a “legal” problem? ◦ Non-Legal Matters ◦ Non-Legal Service Providers ◦ Accountants ◦ Compliance Experts ◦ Consultants
- 20. How to ManageLegal Matters 3rd Principle: Does the firm “get” my business? ◦ In-House Counsel ◦ Commodity Work ◦ Routine Collections ◦ Local Real Estate ◦ Specialized Matters ◦ Regulatory ◦ Employment ◦ Big Loans ◦ Bet the Bank
- 21. How to ManageLegal Matters 4th Principle: Use Trusted Advisers; Assemble the Team ◦ Solo Practitioner ◦ Small Firm ◦ Larger Firms: Moniter Appropriate Staffing ◦ Sr. Partner v. Jr. Partner ◦ Associates ◦ Paralegals
- 22. How to ManageLegal Matters 5th Principle: Remove the Emotion ◦ Assess Business Case ◦ Obtain Budgets for Cost/Benefit Analysis ◦ Assess Potential Exposure ◦ Assess Precedential Value ◦ Fit with Strategic Plan ◦ Growth Targets ◦ Shareholder Value ◦ Risk/Reward
- 23. How to ManageLegal Matters 6th Principle: Provide Access ◦ Provide Timely Background ◦ Basic Factual Information ◦ Data ◦ Provide Multiple Points of Contacts ◦ Information “Chokepoints” ◦ Other Service Providers ◦ Accountants ◦ Valuation firms ◦ Experts
- 24. How to ManageLegal Matters 7th Principle: Time Management ◦ Lawyer as Counselor ◦ Legal Matters ◦ Strategic Advice ◦ Fixer ◦ Lawyer as Something Else ◦ Shrink ◦ Buddy ◦ Sounding Board ◦ Yes Man
- 25. How to ManageLegal Matters 8th Principle: Let the Lawyer do the Lawyering ◦ Involve Lawyer in Strategy/Structure ◦ But lawyers do not determine settlement/deal terms ◦ Don’t Reinvent the Wheel ◦ Advantages to Traditional Structures ◦ Familiarity with Document ◦ Proven Track Record ◦ Leverage Previous Customization
- 26. How to ManageLegal Matters 9th Principle: Get what you paid for… Advice! ◦ Lawyers are risk adverse, but… ◦ “It Depends…” is not advice. ◦ Ask “What have you seen…” ◦ In similar situations? ◦ Your other clients do? ◦ As recent trends in this area?
- 27. How to ManageLegal Matters 10th Principle: Terms of Engagement ◦ Lawyers will define scope of matter – make sure it’s right ◦ Review bills for accuracy, validity ◦ Request clarifications ◦ Revisit terms of engagement from time to time ◦ Competitiveness ◦ Value ◦ For ongoing/recurring matters, assess how to make more efficient
- 28. How to ManageLegal Expenses
- 29. How to ManageLegal Expenses Staffing the Matter ◦ Partners ◦ Broader Experience ◦ Subject Matter Expertise ◦ Associates ◦ Value Play ◦ Mentorship v. Pay to Train ◦ Doubling Up ◦ Sometimes Preferable
- 30. How to ManageLegal Expenses Staffing the Matter ◦ Subject Matter Experts ◦ IP/Privacy ◦ Tax ◦ ERISA ◦ Labor ◦ Healthcare ◦ Paralegals ◦ Filings ◦ Commodity Docs
- 31. How to ManageLegal Expenses Reducing Outside Legal Spending ◦ In-House Counsel ◦ Knowledge Dilemma ◦ Geographic/Socioeconomic Differentiation ◦ Billing Software ◦ Serengeti ◦ MyCase
- 33. How to ManageLegal Expenses Reducing Outside Legal Spending ◦ Alternative Billing Practices ◦ Hourly Rate with Cap ◦ Blended Rate ◦ Fixed Fee ◦ Contingent Fee ◦ Retainer-based Discounts ◦ Volume Discounts ◦ Holdback with Success Fee/Premium
- 35. About this Lawyer http://www.slideshare.net/jonathanwegner/ https://www.linkedin.com/in/jonathanwegner jonathanwegner@bairdholm.com