“Those law firms that have better
processes for managing workflow
. . . will be able to rise above the
firms resistant to change. These
firms will be able to offer a more
competitive price and not need to
ROSE BATTAGLIA, Chief Operating Officer of Legal Department
What do you do as Chief Operating Officer (COO)?
My role as COO in the legal department at Deutsche Bank is similar to the role of an executive director in a law firm. I’m involved in budgeting, hiring, cost management, technology planning, and department strategy. I support the general counsel, and the department supports the business and senior executive committee of the Bank. The lawyers do the legal thinking, and my team gives them the tools to do what they do best.
If you think about the amount of legal and regulatory change going on globally, it’s impossible for one general counsel to know it all; he relies on his regional general counsels and the senior partners at our preferred law firms. So having a structured legal department to support him is critical.
How long have you been the COO?
I’ve been the global COO for the legal department here since 2003. Prior to that, I was the global chief administrative officer at another investment bank. And from 1992 to 1999, I was at an international law firm supporting the global head of litigation.
What’s changed in your COO role?
The role of COO has become more prominent in the legal department. The trend started in 1999. Since then, the COO has become more of a strategic partner to the general counsel. We work together to become more effective and efficient in how we deal with our projects and outside counsel.
At Credit Suisse, I was the chief administrative officer, and my focus was on ensuring we had the right technology, the right head count, followed the cost policies, and could report our law-firm spending. We were looking at how we charged the business. Like a law firm, we charge our clients, except internally. We were the service provider to the business in an investment bank. At that time, number crunching was more critical than thinking about strategic partnership. We weren’t thinking about streamlining. We were figuring out how much we cost, since law departments were growing, almost to the size of mid-size law firms.
The shift came from market pressure. The business
also became more sophisticated, and they realized
they needed more legal support. We created more
documentation teams to address drafting and
negotiation. Paralegals were doing more analytics. Legal
departments kept growing, adding more non-lawyer
staff to support the larger number of lawyers. Ten years ago, the legal departments of investment banks were half
the size and mostly lawyers. Now some banks have over
800 people, with forty percent non-lawyer staff
How has the recent financial crisis affected you and your legal department?
The volume of business has gone down. Price has become key. We’re doing more competitive tendering. That’s never happened before. There was a time it was viewed as an insult to call and ask a law-firm partner if they could provide a quote for the services prior to seeing the invoice for time and materials. It’s no longer an insult. It’s become common. If there’s more than one firm that can do the work, we request a quote from each. We then look for the best quote and hold them to it. They can’t just throw us a low number to get the deal and then deliver a higher bill.
Law firms have responded, “If you get a better quote, call us back,” because they don’t know the right quote. This is a symptom of the failure of an industry to change. Those law firms that have better processes for managing workflow and have standardized templates for documents, for example, will be able to rise above the firms resistant to change. These firms will be able to offer a more competitive price and not need to compromise quality. And this creates opportunities for all firms, not just the big firms. They also need to start offshoring and nearshoring. They need to find creative ways to use their resources more efficiently and effectively.
How have you been improving the efficiency of certain legal functions?
In the last five years, we’ve entered a world of process improvement for legal departments. Teams of project managers have been hired to look at current process. In the heat of litigation, while cases like Enron and WorldCom were taking place, there was so much documentation to review that neither in-house departments nor law firms could handle it with their current staff. Document reviews were being handled by third parties, and not by firm associates but by temporary staff to save costs. The quality was all over the place. So I became a price junkie with temps. Companies in India were hiring people with a more strategic vision. They hired smart lawyers, trained them on discovery, and even trained them on our own process of document review. We were able to easily see quality and could review the work ourselves through the extensive MIS (Management Information System) they produced.
We went down the road with a few pilot programs, and now we have a robust process within Deutsche Bank. If you want to outsource a function, you need the right operating procedures and documentation. And now, two years later, we have all our major document reviews done offshore. Even lawyers on smaller reviews prefer to use offshore vendors. In many cases, we do this in conjunction with our outside law firms. The law firms do a quality review on top of what the vendor does. So outsourcing is controlled by the law firm and us, the client. The cost is less, the turnaround is quicker, and the work product is of high quality.How are you using performance metrics to evaluate your vendors?