“We Do Not Expect To Bear The Costs” – Banks Warns Law Firms Over Excessive Compensation
From 2010-2015, Bank of America has racked up an absolutely stunning $51.6 billion in litigation expense, placing the bank head and shoulders above its peers.
Which is why when the law firm of Cravath, Swaine & Moore LLP announced that it was boosting starting pay for its junior-most lawyers to $180k, causing many other law firms to do the same, BAC’s global general counsel David Leitch took action.
Upon learning of the news, Leitch sent an email to law firms which according to the WSJ, handle the bank’s litigation. In short, Leitch said that if any any firm expects to be passing on costs due to wage increases, they can forget about it because the bank isn’t paying.
Here is some of what Leitch wrote per the WSJ
“While we respect the firms’ judgment about what best serves their long-term competitive interests, we are aware of no market-driven basis for such an increase and do not expect to bear the costs of the firms’ decisions”The note ended Leitch saying that BAC entrusts those receiving the email with its work because of their “legal expertise and entrepreneurial instinct”, and that he looks forward to continuing to partner with them.
“We value the work performed by our Litigation Roundtable firms and seek to maintain a true partnership that meets our reciprocal needs—thoughtful, strategic, and cost-competitive representation at rates and alternative billing arrangements that are attractive to our counsel”
BAC spent $1.2 billion on litigation in 2015 alone, and has trimmed the number of firms it hires to defend it in litigation to 30 from around 700.
Perhaps instead of bullying law firms around regarding how they choose to compensate employees, Leitch should spend more time on helping the his employer avoid getting into legal messes in the first place. Also, it is unclear whether or not any law firms wrote back to Leitch letting BAC know that they wouldn’t be paying for Brian Moynihan’s 23% raise in 2015 as a result of any business that is done with the bank.