Banks seem to have woken up to the idea that litigators are better together and have been reorganising their legal teams accordingly.
In an era of high-profile bank litigation and squeezed budgets, banks have been bringing their litigation teams into centralised groups.
Gone are the days when litigators were sprinkled among business divisions, reporting to divisional general counsels. Here to stay are streamlined global litigation teams reporting into global litigation heads.
It is a certainly a good time for banks to be worrying about their legal might. The fallout from Libor has continued to rage in the post-recession world and PPI claims are still filtering through. Banks also have a hefty volume of smaller claims on their plates. However legal teams are under pressure to keep costs down and headcounts low.
How to respond? By reorganising litigation teams to take back control, better monitor legal spend and establish clearer reporting lines, it seems.
Barclays was the most recent to join the trend last week, overhauling its legal function to create a global litigation group reporting directly to new general counsel, Bob Hoyt (30 May 2014).
The new structure was unveiled as part of a bank-wide strategy towards more vertical reporting. The bank has been moving away from HR, IT and legal functions for each of its divisions and geographies over the past two years into global groups.
Hoyt revealed the new look litigation unit along with the launch of a beefed up financial crime team in an internal email seen by The Lawyer this month.
Corporate and investment bank litigation head Stephanie Pagni has taken charge of litigators previously reporting into general counsels for the bank’s business teams. As global litigation head Stephanie Pagni will now report directly to general counsel Bob Hoyt.
Current managing director of litigation and special investigations Jonathan Peddie has been placed at the helm of the beefed up financial crime unit. His mandate has been expanded to tackle bribery and corruption and sanctions and money laundering.
Across the group the bank claims creating single global groups for its operational function cuts costs and makes it easier to spot opportunities for automation.
It is the second big-name bank to have brought together its litigators in a year. Lloyds Banking Group has also undergone a mass reorganisation of its legal team and tightened the reigns on legal spend and control of external firms.
The litigation group previously organised under business lines was brought into a single group last year and put under the aegis of new general counsel Michael Hartridge (11 November 2013).
In an ongoing restructure, all litigators sitting within the bank’s group, retail and wealth, commercial banking and asset finance divisions were brought together.
As part of that shift, sources say the in-house team has been able to take better control of litigation, dealing with as much of the high-end claims in-house as possible.
It is all change for the bank’s high-volume litigation team too. Debate is ongoing within the team over which firm to hand its retail and asset finance litigation teams to. DWF, Irwin Mitchell or Shoosmiths will walk away with the mandate to take on around 70 lawyers in the near future under ‘Project Canberra’.
IT is the latest outsourcing arrangement for the bank, which has already handed its PI work to Berrymans Lace Mawer, which opened a Lloyds of London desk last year.
Both banks have followed in the footsteps of the Royal Bank of Scotland, which has boasted a centrally organised litigation team for a number of years. With an expected £42m legal costs bill over shareholder action looming and £3.1bn set aside for litigation and conduct-related matters, being in control of legal issues is paramount.
For banking litigators then together seems definitely better.