Legal Innovation Within Financial Services Firms Presents Unique Challenges, Panel Says (Part 1)

Topics: Client Relations, Corporate Legal, Cybersecurity, Legal Managed Services, Litigation, Q&A Interviews, risk management, Thomson Reuters

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At a recent roundtable event hosted by Thomson Reuters entitled Evolution of the Legal Department in Financial Services, panel participants, including legal department officers from Barclays, Clifford Chance and Thomson Reuters, discussed the unique challenges of legal innovation within financial services companies.

Dave Curran from Thomson Reuters’ Legal Managed Services moderated the discussion and then sat down with Legal Executive Institute to explain how the evolution of legal departments within financial services firms is taking shape.

Legal Executive Institute: Why is the evolution of the legal departments in financial services companies any different than what’s going on at other companies?

Dave Curran: If you look at compliance-related issues that banks have to deal with in money laundering, knowing your customer rules, background information in third-party transactions — those are sort of peculiar to banks, and they have specific requirements. Also, the Dodd-Frank Act is a massive piece of legislation that, while it applies to some other institutions, it mainly just applies to banks.


We find that all companies have these themes in common — they have to do more with less; they have tremendous pressure from media and government regulators to have better operating systems; and their compliance technologies and other technologies are expensive, but not necessarily getting the job done.


But beyond those differences, I’d say it’s probably 80% the same for any sizeable in-house group at a complex, global organization.

Thomson Reuters’ Dave Curran

The second part is related to technology. And even there, the people processing technology issues are almost identical. If you have a litigation, the components of that litigation aren’t that different if you’re a bank; and they’re pretty much the same in contracts and things like that.

We find that all companies have these themes in common — they have to do more with less; they have tremendous pressure from media and government regulators to have better operating systems; and their compliance technologies and other technologies are expensive, but not necessarily getting the job done. So, the themes are quite common.

Legal Executive Institute: It sounds like in the financial service sector there’s a larger impetus on compliance issues.

Dave Curran: In-house banking groups are huge, and on the compliance side, there are tens of thousands of people involved that are lawyers. One of the things we talked about was the changing role for compliance functions, who still are mainly staffed with lawyers. And we found from the panel that one of the biggest changes — not just in financial services but in legal functions — is the use of people who are not lawyers to manage those organizations and those functions.


Project management and the skill sets associated with linking milestones and budgets have been a big topic of conversations in meetings like these. You must have subject matter experts — the lawyers who are still the advisors and the people who are reviewing the legal requirements together with the technology and the process.


That role is growing very rapidly because lawyers tend not to be great at process or budgeting organizational dynamics, so companies are hiring people who are expert in those areas; but who also have an affinity for lawyers and can help the lawyers do a better job of streamlining or efficiently using outsource resources. They’re hiring more of the people to lead these — they call them Chief Operating Officers or Chief Legal Officer, all sorts of titles, and many of them are not lawyers.

Legal Executive Institute: Did the panel also discuss the need for new skills with these new roles within corporate legal departments?

Dave Curran: Absolutely! Project management and the skill sets associated with linking milestones and budgets have been a big topic of conversations in meetings like these. You must have subject matter experts — the lawyers who are still the advisors and the people who are reviewing the legal requirements together with the technology and the process. These in-house technology experts are assigned to legal departments specifically, and that’s become another functional role that has evolved. It was non-existent 10 years ago.

With another person having that knowledge and affinity, it helps the lawyers who are trying to understand the technology and work more efficiently with it. In fact, one of the issues that comes out is that lawyers are embarrassed to actually admit that they don’t know things. If somebody’s part of their department, it’ll be easier than if somebody’s an outsider from the IT group.


Read Part 2 of this discussion to learn more about the legal trends impacting financial services companies.