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====Docile ruminating masters of the universe. Yes.==== | ====Docile ruminating masters of the universe. Yes.==== | ||
{{drop|T|he image of investment}} banks as docile, harnessed sauropods, munching stupidly away in the unwitting service of a higher caste of pan-dimensional superbeings seems far-fetched. But so does the idea of wheat bending | {{drop|T|he image of investment}} banks as docile, harnessed sauropods, munching stupidly away in the unwitting service of a higher caste of pan-dimensional superbeings seems far-fetched. But so does the idea of wheat bending humankind’s staggering intellect to its merest biological ends, and that is what evolutionists would have us believe it does.<ref>Others are still offering odds that this is a deterministic crock, but that is another story.</ref> | ||
Could | Could the masters of the universe really be so fecklessly in thrall to mere [[legal eagles]]? | ||
This would not be the strangest thing. Banking is riven with contradiction: that a calling so devoted to the tenets of laissez-faire should self-organise into lumbering technocratic dictatorships should tell us something is not right. | |||
The law firm panel, we submit, is another. | The overwhelming power of law firm panel, we submit, is another. | ||
What looks like | What looks like the ''übermenschen'' taming, husbanding and cultivating a bunch of mealy draftspeople to their own savage ends — penning them in, fattening them up, maximising their worth and wringing from their tired marrow an extract of wisdom out of all proportion its paltry cost — is a wishful picture. | ||
It | It seems that way for wheat, too. Only no-one, as far as JC knows, ever hired wheat to run the harvesting operation. | ||
Yet this is just what corporations have done. | Yet this is just what banking corporations have done. Thirty years ago these enterprises barely ''had'' a legal department.<ref>Our [[history of in-house legal]] refers.</ref> What started out as a guy in a cardigan filling [[slavenburg]]s and punching out [[powers of attorney]] grew. One became five became, by the financial crisis, five ''hundred''. | ||
Legal departments, originally conceived as a means of operational control over these deferential paper-fanciers, began needing operational control themselves. In-house departments acted like a fifth column for the firms they were meant to be managing. The firms affected dismay at the mass defection of their mid ranking “talent” to their clients, but privately regarded it as long range strategic infiltration. | |||
American firms were more brazen yet, managing to parachute equity partners directly into [[general counsel]] roles assuring their clients’ ongoing loyalty. | |||
====Turbulent priests==== | |||
But every now and then an upstart banker would ask an impertinent question: | |||
{{Quote| | {{Quote| | ||
{{drop|“W|}}e have a legal department numbering twelve hundred. That is about the size of Herbert Smith. All told it costs us half a billion. Yet we | {{drop|“W|}}e have a legal department numbering twelve hundred. That is about half the size of Herbert Smith. All told, it costs us half a billion. Yet we still blow ten figures a year on external legal spend. Could someone walk me through this?”}} | ||
So was born the idea of a law firm “panel”. It springs from that observation — investment banks spend an awful lot of money of lawyers — and overlays it with that unavoidable trope of modern commerce — ''scale is everything'' — as concludes that by accommodating a few favourite firms at the expense of a lot more mere acquaintances, this can somehow work to our advantage. | |||
Picture the scene: an enterprising fellow in the [[Legal operations|legal COO]] team | ====A-ha moment==== | ||
Picture the scene: an enterprising fellow in the [[Legal operations|legal COO]] team pulls 5 years’ of legal spend, totals it, and with the AVERAGE function in Excel generates this no-brainer: | |||
{{Quote| | {{Quote| | ||
“We spend £750m a year on external legal across 1,500 firms at an average run rate of half a million quid each firm.<ref>Do not for a moment think this is an exaggeration.</ref> ''This is insane''. If we concentrated that on say ten firms — even a hundred — we could | “We spend £750m a year on external legal across 1,500 firms at an average run rate of half a million quid each firm.<ref>Do not for a moment think this is an exaggeration.</ref> ''This is insane''. If we concentrated that on say ten firms — even a hundred — we could drastically reduce our administrative costs ''and'' goose our scale. | ||
If we guarantee firms £50 ''million'' in billings we can push down their hourly rates, commit them to a programme of rolling [[secondee]]s and have them run our annual training programme. That way we could cut our overall spend by 30% and get more [[legal value]] than we get right now.}} | |||
This logic being unimpeachable, it is actioned without ado. The institution’s inexplicable impulse to shower good money over a myriad of random law firms will be controlled. ''Order will be restored.'' | |||
There will be a colossal, nine-month multilateral negotiation with those ten firms where all this is hashed out. Once completed the triumphant legal coo team will present it to the department as a fait accompli, where it was be greeted as a fart in a lift. | |||
Any deviation from these arrangements will require GC signoff following a bureaucratic skulling designed to deter would be dissenters. | |||
Now, had our fellow used a pivot chart he might have told a different story. For these firms span for 150 different jurisdictions, for a start. The mean may have been half a million, but the ''median'' spend was £10,000. | Now, had our fellow used a pivot chart he might have told a different story. For these firms span for 150 different jurisdictions, for a start. The mean may have been half a million, but the ''median'' spend was £10,000. | ||
Five hundred of them billed less than £5,000 each. That third of the group account for just 2m of the total spend. | Five hundred of them billed less than £5,000 each. That third of the group account for just 2m of the total spend. |