Thomas Trujillo, the Associate General Counsel and Director of Operations for Bank of America, participated in a recent Legal Executive Institute panel on “The Changing Nature of the Legal Process”. LEI sat down with Mr. Trujillo afterward and asked him about how this change was reshaping the relationship between law firms and their corporate clients.
LEI: How is the Corporate side looking at the market for legal services now?
Trujillo: Obviously, there are more alternatives to traditional law firms now, and while law firms will remain very important partners to us going forward, we recognize there are new or emerging options for certain needs. At Bank of America, for example, we’ve outsourced e-discovery to select vendors, and as a result we don’t have law firms doing that for us anymore. That’s a huge swing.
In addition, more companies are bringing things in-house, and we’ve done some of that too, hiring internally instead of continuing to farm it out. Also, the use of supplemental labor, with legal providers like Axiom, and other contractors, is also outside the law firm model. We even will use the Big 4 Accounting firms for projects, often those that involve heavy documentation where they have certain expertise.
So it becomes then, how are the law firms evolving? What and how are they delivering services to us?
That’s a good question. What are you doing with the law firms now?
Certainly, they are getting the things you can only hire a law firm to do—litigation, case work and the courts, for example. And some firms do consider other work, like e-discovery, to be low-margin and may not be too worried about its loss. However, whether that is low-margin depends on how they do it, and strategically, there is still value in doing those things. You can make it profitable, and, more importantly, it can also give you additional tie-ins with the clients.
But then the question gets to be, what does the firm want to focus on—what is it that they want to do? You can’t be everything to everybody, so what is it that law firm wants to do?
That is something they are going to have to each answer for themselves.
What about internally in Bank of America’s legal department, has there been growth there?
We have grown, in certain spaces—our Global General Counsel Gary Lynch is very good about seeing where it makes sense to do that, because it doesn’t always make sense. You don’t want to staff up for a short-term problem—that doesn’t ever end well.
If you see a longer-term need, however, and you’re asking whether you should hire a law firm or use outside contractor labor, you might want to consider—if you think this is sustainable—bringing it in internally, and get some efficiencies, get some consistencies and develop the expertise. And we have done it at Bank of America. In strategic areas, for example, where instead of just continuing to use law firms, we converted some spots to full-time positions.
So, I agree with what has been said that the demand for law services isn’t going down, it’s just the amount companies are sending to law firms that is going down, because they are in-housing some of that.
How long has this sea change been going on?
A lot of people point to the financial crisis, but I don’t think that was the start point, rather it was the accelerant. It had been going on, but it was spotty and there wasn’t a lot of momentum—but necessity breeds invention. Suddenly, you have the crisis and every dollar becomes that much more important. Companies really put their foot on the accelerator as far as moving along these types of cost-cutting programs. We did it, because it was critically important for us at that time and strategically the right thing to do.
So, where do these trends take the legal industry?
I’d agree with what’s been said, that it’s not that Big Law is dead, but it is that not every law firm is going to be here. But what’s refreshing is that with a lot of law firms—and those run by folks who have been around a long time—is that they get it. They realize this change is here to stay, and that they have to change their model. The firms that will be around are the ones thinking three, five or 10 years down the road and asking where do we need to be?
I mean, if we’re changing how we pay for legal services, law firms are going to have to change how they deliver it. From our end, we have to be aggressive in pushing for change, and let the law firms figure out how they are going to deliver it efficiently.