A rise in post-credit crunch litigation has left investment banks struggling to man their in-house teams with enough lawyers to handle the upsurge in intra-bank disputes.
Law firms’ litigation departments are so busy that they are knocking back all requests for secondees from banks such as Barclays Capital, Credit Suisse and Goldman Sachs.
A Credit Suisse source told The Lawyer his bank had filled its normal secondee slots, but due to the credit crunch it has been looking for four or five more litigators to come on board.
“We approached Allen & Overy [A&O], one of our core firms, and even offered to pay the secondees’ salaries, but they turned us down,” said the insider. “The firm simply couldn’t spare any lawyers of the level we were looking for.”
A&O’s workload includes acting on the Office of Fair Trading’s bank charges case. The quick turnaround needed on the case not only meant all hands on deck for A&O, but also for seven other firms, cutting dozens of litigators out of the equation.
DLA Piper has found itself snowed under with cases such as BSkyB’s £400m suit against computer software company Electronic Data Systems. The?case?started?last October and is due to run until this June, tying up a substantial proportion of the firm’s resources.
One DLA Piper partner confirmed that the firm has had to turn away secondment requests for litigation and restructuring lawyers from Barclays Capital.
“Although we’ve had to say no on occasions, it’s absolutely the last resort. If the appropriate level of lawyers are all tied up we try our best to come up with a solution, but sometimes there isn’t an answer,” said the partner.
A Barclays insider said that for all the financial institution’s various legal groups there is a marked change in the personnel landscape.
“There’s definitely been a noticeable difference in the number of secondees law firms can provide,” said the source. “Whether this is credit crunch-related is another matter, but it’s possible that it’s putting an extra strain on firms.”