October 05, 2011

Remarks Of Steven Alan Bennett

Former General Counsel Of Banc One Corporation

November 13, 1998

My name is Steven Bennett. For most of the past ten years I have been an attorney and manager for one of the nation's ten largest bank holding companies, Banc One Corporation. I began as Divisional General Counsel of the company's largest bank subsidiary and directed a staff of approximately 30 lawyers and 50 non-lawyers. Thereafter, I became General Counsel of the holding company and directed a staff of almost 700, including over 100 lawyers. Prior to joining Banc One, I was a partner and practice group head in a law firm in Dallas, Texas.

Over the past decade, I have had the opportunity to observe and participate first hand in the solution of many corporate problems. And, because of overlap of these problems with those of third parties, I have also observed the way in which other corporations have approached similar challenges. Observations from my experience may shed some light on the issues you are considering. In sharing these with you, I do not offer these remarks on behalf of either Banc One Corporation or its successor. The comments are solely my own.

First, "pure" legal problems no longer exist, yet the number of problems with legal aspects is increasing.

When I first became an in-house practitioner, I often heard managers say, "That's a legal problem, just send it to the lawyers." Today, this just doesn't happen very much. Why? Because the problems are bigger and the various aspects are inextricably tied together. There are no "pure" legal problems today because legal solutions cannot be arrived at in a vacuum. The solution of the legal aspect of a problem invariably necessitates that other aspects of the problem be adjusted as well. If one "just sends it to the lawyers," without input from the other disciplines, the problem just can't get solved.

An example of these complexities is demonstrated by changes in the banking industry. Fifteen years ago, we identified a smaller bank merger partner, arrived at a cash price, then had the lawyers do the paperwork, which was relatively straightforward. Today, the transactions require numerous multidisciplinary teams because the deals are in the billions of dollars, are usually stock for stock, have as many as seven or eight interested regulators at the state and federal level and are accounted for as poolings of interests. I will come back to this point in a moment.

The legalization of virtually everything, either as a result of legislation, regulation or the risk of litigation, has caused every problem to have a legal face that in simpler times it did not have. The garden variety discharge, the marketing and promotion of the business, the development of intellectual property, the creation of risk control mechanisms, all require an interdisciplinary approach that includes a variety of problem solvers, lawyers among them. It is to be noted however that while lawyers need to be present, they do not necessarily drive the solution.

This point does not merely counsel in favor of closer relations between lawyers and clients. Rather it suggests that while legal aspects are now a part of virtually every serious business problem, they are but a facet of a complicated mix of differing considerations, all of which must be taken up early in the process, and taken up together, if an appropriate outcome is to be achieved.

Second, many problems having significant legal aspects cannot be handled by lawyers alone, or maybe even at all, because lawyers are not the source of the necessary expertise.

In banking today, some of the most significant challenges are presented by fair lending, i.e. ensuring that ethnic persons receive the same treatment and access to products and services as their white counterparts. While this area is replete with legal concepts and sometimes requires involvement by lawyers, many of the experts in this area do not have traditional legal backgrounds or training. Frequently, these non-lawyers, either from within or outside the corporation, head teams comprised of customer service personnel, managers of branch facilities, and auditors, as well as lawyers, and in many instances they fashion solutions that have legal implications and components, among many others.

Historically, the handling of fair lending problems has resided with specialized non-lawyers having substantial familiarity with the Community Reinvestment Act. While there certainly are lawyers who understand fair lending or CRA, for the bank client, lawyers may not be either the first, or the best, place to look for such expertise. Indeed, substantial expertise in the interpretation and implementation of the Community Reinvestment Act, by lawyers or otherwise, today resides in accounting firms or their subsidiaries.

Third, the size or character of many problems facing American business demands a multidisciplinary approach.

As a result of the increasing size and complexity of business problems, the multidisciplinary team, of which lawyers are but a part, is becoming the standard structure for corporate problem solving. An example helps illustrate this point.

In today's highly acquisitive environment, pooling of interests is often the preferred method of accounting for merger transactions. Because the questions that arise in this area are complex and reside at the intersection of securities law, merger law, the rules of the Securities and Exchange Commission and the pronouncements of the Financial Accounting Standards Board, corporations generally do not approach pooling of interests issues with lawyers alone. Rather, a multidisciplinary team, in which accountants might outnumber lawyers, deals with the issues. When such teams meet, whether the non-lawyer accountants or the non-accountant lawyers are practicing the other's profession at any given moment can be impossible to discern.

In solving problems such as pooling of interests questions or fair lending, businesses must necessarily look not only to lawyers but also to non-lawyers for expertise. The diverse character of these problems necessitates that a multidisciplinary team, of which lawyers are but a part, address the issues.

Fourth, American businesses to an ever greater extent are seeking comprehensive solutions from their professional advisors.

American accounting firms have seized upon this reality to create broad based consultancies that span a variety of areas. In doing so, they have come much closer to offering comprehensive solutions to their clients than law firms. Because of prevailing rules, however, they have not been able to add, in the fullest and most overt sense, the legal portion of the solution. While this can be seen as preserving the vitality and independence of the legal profession, it also has the potential to result in its ossification.

The current rules, rather than permitting law firms to become the purveyors of comprehensive, multidisciplinary solutions to the great business problems of our age, not only inhibit the accounting firms from achieving this end, they even more thoroughly restrict law firms from doing so. While the accountants have come to provide diverse services ranging from computer systems and Year 2000 consulting to litigation support and expert witness assistance, private law practitioners have been hobbled by the limitations created by fee sharing restrictions, unauthorized practice rules and the like. As a result, when contrasted with the dazzling array of services and convenient delivery of the accounting firms, law firms have one note product offerings that are inconvenient to obtain and difficult to integrate.

Finally, the focus of the legal profession ought to be on how it can expand its scope to better serve its clients.

To conceptualize the problem as whether we should allow accounting firms to offer legal services as in the European model is too narrow. Rather, I would suggest that we focus on how the rules might be changed to enlarge the ability of lawyers, with or without accountants, to deliver diverse and comprehensive solutions to business problems in a fashion that runs parallel to what other non-lawyer consultancies have already done. We must recognize that to do this will entail the inclusion of and partnership with non-lawyer professionals, as well as changes in the rules respecting the way in which the attorney-client privilege is articulated, fees are shared, the practice is governed, and the public is protected. I assume that if these issues can be dealt with successfully by other licensed professionals, there is the creativity and wherewithal within the legal community to do likewise.

In conclusion, I would suggest that corporate businesses are demanding comprehensive, integrated solutions that frequently cannot be optimally delivered by the classic law firm structure. In the current environment, law firms run the risk of becoming specialized providers, giving service that is limited in its subject matter and difficult to integrate. Meanwhile, the international community abroad and the corporate community at home have been fashioning "work arounds" in the form of broadened product offerings or in house teams, solutions that effectively foreclose outside counsel from the big picture projects that are the most interesting and the most profitable. These efforts by corporate purchasers of services to obtain optimal, comprehensive solutions carry with them the real possibility that, in the absence of change, lawyers practicing in traditional law firms in the coming century might find themselves all dressed up with no place to go.