Lloyds Banking Group’s exercise in standardising term sheets and legal opinions
There is an informative article in the Law pages of The Times by Edward Fennell on the work done by in-house counsel at Lloyds Banking Group (LBG) on standardising the term sheets used by their bankers and the legal opinions provided by their external lawyers. LBG used their external lawyers as part of the project to create those standard term sheets and opinions; the article goes into detail about how the lead in-house counsel managed the project and the efficiencies and risk management benefits it has brought. The article can be read here (paywall).
Accompanying that article is a commentary piece by the ubiquitous Richard Susskind, with a familiar description of the three-stage evolution of legal document production, from bespoke drafting to standard documents to systematised document production. Of more interest are Mr Susskind’s observations about how knowledge management is viewed by in-house lawyers:
“Knowledge management is one of the jobs of professional support lawyers, a key group of legal specialists who work in many major UK law firms, but are rarely employed by in-house legal departments.
….It would clearly be in the interests of in-house lawyers to secure the efficiencies that knowledge management would bring. In contrast, for law firms who charge by the hour the incentive to become more efficient through knowledge-recycling is less immediately obvious. Why do in-house lawyers generally hold back from investing in knowledge management whereas law firms are bolder? For in-house lawyers, the deterrence seems to be the expense of having professional support lawyers. As for law firms, they know that clients (in the UK if not the US) expect their external advisers to have substantial bodies of templates and precedents. In summary, it transpires that in-house lawyers like the idea of knowledge management but would prefer law firms to pay for it.”
A reasonable preference. Commenting on the work done by LBG’s in-house counsel, Mr Susskind continues that LBG has been shrewd in involving its external lawyers in the exercise to produce standard documents:
“This is smart not just because they have drawn on the firms’ greater experience of knowledge management. Having standards that are owned by the client is also wise because it discourages law firms from quibbling over whose standards are superior.”
Mr Susskind’s article can be read here (paywall).
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