ACC Value Challenge

Bank of America

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Ed O'Keefe, COO of Bank of America's legal department, on being an ACC Value Champion

Litigation Roundtable: On Budget, and On Top of All Costs

By Jennifer J. Salopek

In 2010, Bank of America began its legal value journey with the creation of the Litigation Roundtable, tapping Marcy Hingst and hiring Lani Quarmby, both experienced litigators, to oversee outside counsel management. In the two-plus years since, that journey has continued toward convergence across multiple lines of business, resulting in close coordination with external legal service providers, increased efficiencies, and cost savings for the company.

Quarmby credits the innovative leadership of General Counsel Gary Lynch and Director of Litigation Jana Litsey for the success of the Roundtable, an innovative partnering and convergence model focused on reducing legal costs while delivering high-quality legal product. Bank of America selected member firms that had a shared understanding of the company’s goals and its desire for collaboration, teamwork, open communication and best practices.

“We reduced the number of external firms we worked with from around 700 to 30,” Quarmby explains. “The Litigation Roundtable comprises Bank of America’s go-to firms for all defensive litigation.”

Regular evaluations assess law firm performance and efficiencies. Tracking and reporting are essential for transparency and vendor management. The department tracks and compiles such data as law firm spend, hours billed, number of matters, resolution cycle time, cost per case, budget to actual, savings, volume discounts, discovery and expert spend and diversity metrics. These metrics, along with several others, align with the Bank’s comprehensive vendor management program, including management of the Bank’s external counsel and third-party vendors.

Member firms are encouraged to work together and share information; this leads to greater efficiency, according to Quarmby. Bank of America conducts an annual Litigation Roundtable Summit for all 30 of the firms and in-house litigators, providing an in-person opportunity for interaction and collaboration between Roundtable firms. “The Summit is an opportunity to share best practices, subject matter expertise, coming litigation trends and other effective case management skills and objectives,” she says.

Quarmby cites Bank of America’s Enterprise Litigation Team (ELT) as one of the Roundtable innovations. The ELT consists of a team of in-house counsel and 13 firms that were selected based on subject matter expertise and geographic reach; they handle all of BoA’s high-volume, single-plaintiff litigation (mortgage and consumer-related claims) on a fixed-fee basis.

“This approach has improved resolution cycle times and decreased settlement amounts,” she says. “It avoids duplication of effort and allows the firms to become experts in their areas.” Sixty-seven percent of BoA litigation matters are now handled by the team.

“Know your spend,” is a favorite mantra of General Counsel Gary Lynch. To add controls and accountability, the in-house legal department instituted three other innovations: a detailed budget template, a commitment to the use of fixed fees and the creation of a civil litigation project management support team for e-discovery.

All litigation matters with more than $250,000 of anticipated annual spend require a detailed budget template. Budgets are developed based on phases and sub-phases of a case by timekeeper, but are not limited to outside counsel spend; they must include an estimate of all expenses and fees, including third-party vendors and experts. “We look at firms’ staffing models—an appropriate mix of partners and associates, provide training, and ask the firms for detailed expectations,” Quarmby says. “The Roundtable firms really work with us as partners.” The budgeting process is the starting point for fixed-fee negotiations and a commitment from the law firms to control spend.

The template approach has brought greatly increased predictability to Bank of America’s legal budget. In fact, 2012 spend was within 1 percent of forecast. The approach is being broadened to include other lines of business across the company.

“We obviously have not been immune to the critical legal issues that have confronted the global financial services industry,” says Lynch. “We require the highest-quality legal work, but that can be delivered even while financial efficiencies are realized. Pursuing each without sacrificing the other has been our focus.”

E-discovery and discovery-related vendor fees continued to be a significant driver of litigation spend and an area for more efficiency. To that end, BoA is reinvigorating and enhancing its e-discovery team, a working group of designated in-house and external subject matter experts, one at each Litigation Roundtable firm. The group operates as an adaptive, highly integrated network, continuously reviewing best practices, improving the accuracy of vendor budgets and law firm performance. In addition, other important novel operational changes are being made to the Bank’s e-discovery process to enhance the scalability and flexibility of resources.

In 2012, Bank of America decreased its legal expenditures by more than 10 percent over 2011; more than 80 percent of litigation matters are now on alternative arrangements.

“We believe that we have developed highly innovative approaches to convergence, budgeting, vendor management and relationship-based fixed-fee negotiations,” Lynch says. “Although we’re pleased, we’re not satisfied. We remain fully committed to seeking additional means of managing expenses while providing superior legal services.”

From the Judges

This example evidences a commitment to pursue the journey toward a more effective internal legal department and relationship with external counsel.  It also demonstrates the extent to which having external firms understand the need to partner for common clients is valuable and creates efficiencies for the firms and their client.  

Strong, robust, across-the-board outside counsel management.

Gary Lynch - BoA - Large

          Gary Lynch

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