Banking and finance is a fast-paced, fiercely competitive environment that services a huge spectrum of financial institutions. Law firms that practice in the area service a wide array of clients, from brand-new start-ups to big fish like Australia’s major retail banks and financial services institutions.

Lawyers have seen the banking and finance sector go through frequent review and regulatory change. It’s a busy landscape with deep, dynamic markets. Clients demand lawyers who are capable of predicting oncoming change but who also have plenty of industry expertise.

Bigger, faster, stronger

Looking back over her 20-year career, Clayton Utz banking and financial service national group leader Fran Rush says that the speed of transactional turnaround has dramatically increased.

“Once upon a time you had months to do things, now everything gets compressed to within a month,” Ms Rush says. “This is not a technology or regulatory response, but the pace of transactions is a lot quicker.”

Unlike the luxury of time afforded to banking and finance lawyers of the past, Ms Rush says conditions have pushed firms to collaborate with their clients more.

“You’ve only got a finite time to do things. You have to harness all of your team in quite an intense period. One of the things that has happened as a result of having less time is a greater level of collaboration with clients.”

According to Ms Rush, her clients’ in-house teams are also growing, partly as a result of the complex regulatory environment. This trend has made a “huge difference” in the way banks instruct external firms, she believes.

“For example, over the last 15 years the big banks have built up their own capacity to generate very good securities and loan documents so a lot of that work is never briefed outside the bank.”

This trend has slightly shifted the dynamic between lawyer and client.

“Growing the team in-house builds a much greater understanding of the bank’s particular business and an easier translation of the risk being taken and managing that risk piece. It also means the business has taken on some of that risk themselves,” she says.

King & Wood Mallesons’ national managing partner for banking and finance, Berkeley Cox, agrees with this assessment. In his experience, a stronger in-house legal force has pushed the standard of work higher and driven the need for better-value services.

“In-house teams are very capable and it requires us to lift the bar on the value we provide,” he says.

“We must ensure that we’re delivering value that they recognise and can use in supporting their internal clients. Our role is to support them in guiding that support function.”

Mark Inston, the banking and finance practice head for mid-tier firm Hall & Wilcox, believes the growth of clients’ in-house teams has also acted as a market changer. Firms are seeing in-house teams tackle a lot of banking and finance work themselves.

“Certainly banks and bank teams have grown in expertise – they are becoming full of experts, which is a good thing,” Mr Inston says.

“More in-house lawyers are a very positive thing for our clients because they can retain their expertise and retain their knowledge, so that’s taken away some of our market.”

Outside the major financial institutions, banking and finance advice is also in high demand among smaller players.

Mr Inston acts for a range of companies, including within the emerging start-up space.

“We’re involved in a number of start-ups, as are a lot of our competitors. Really, they’re all exploratory,” Mr Inston says.

Waves of regulation

According to Mr Cox, regulatory change in Australia poses a challenge for lawyers and firms wanting to keep abreast of market trends.

“The pace of regulatory change in banking and finance continues to run very quickly, so the challenge for law firms in financial services is to have the depth and breadth of capability to ensure that they can keep up with that pace of change and provide meaningful support to their clients,” he says.

Yet despite the shifting regulatory landscape, Mr Cox believes the core functions of banking and finance law remain the same.

“In recent times, the speed of the pace of the regulatory change has increased and regulatory scrutiny has increased, but the fundamentals of practice really haven’t changed,” he explains.

“The importance of understanding the linkages and joining the dots between various components of the market to bring a world view to what we do is important as ever.”

Ms Rush believes that the special scrutiny given to the financial services sector by the regulators makes the advisory role of banking and finance lawyers particularly critical. However, she also observes that banking and finance lawyers are accustomed to the fast-changing nature of regulation.

“One thing about the banking and financial services practice area that is positive from a lawyer’s perspective, is that the rate of change in regulation has been so constant that we are used to it, and therefore when financial services related things are open to discussion in firms, they are certainly very well known.”

Value add

Beyond the regulatory ebbs and flows of banking and finance law, Mr Cox says clients have become far more conscious of budgets.

“We have a clear role to play in assisting them to manage that expense base, so it’s incumbent upon us to undertake our work in a very cost-conscious manner and in a manner which [works] more efficiently for our clients but delivers the same level of value,” he says.

“The outlook for the future of banking and finance law includes continuing to deliver value in more efficient ways and, wherever possible, streamlining and potentially automating our advice to deliver good-quality, steady value-adding advice on a routine basis,” adds Mr Cox.

Mr Inston points to commoditisation as a way that Hall & Wilcox has responded to client cost-consciousness.

“Commoditisation would be the first key issue that we face, starting with the small loans and probably all the way up to the big loans,” Mr Inston says.

“The small loans are so commoditised now that in order for us to make any kind of profit and not make a loss, we have to invest quite heavily in technology.

“Ten or 15 years ago lawyers may have produced documents for clients, but you can’t do that anymore, you need a software system and you need paralegals to support the software system.”

Innovative practice management that focuses on delivering clients more for less is also at the forefront of the Clayton Utz banking and finance practice.

“Practice management, project management and delivering value-added support for clients in big deals is important and imperative,” says Ms Rush.

“It’s certainly an element that I never expected would be part of my practice 20 years ago.”

For all law firms, regardless of their size, harnessing technology is key to delivering better cost-effectiveness to clients.

“Bank clients in particular are advanced in terms of their own innovation strategy, so that’s one thing that we also support and work together on,” Ms Rush says.

Being an attractive option to clients, however, goes beyond price-conscious measures. Firms must be alive to bestpractice, especially fast and thorough client reporting.

“Pricing is sensitive to clients and that’s important too,” Ms Rush says.

“But I think it’s the way costs are managed and how we can report openly and efficiently to a client about how their matter is managed that is important,” Ms Rush adds.

“That’s something that those clients will put on their number one or number two reasons for selecting a panel firm.”

Sector experts

All lawyers who Lawyers Weekly spoke to agreed that chief among their offerings to clients is a deep expertise unique to certain markets within the banking and finance sector.

According to Mr Cox, to stay competitive, a “deep knowledge” of the areas that are most important to KWM’s clients is what counts.

“They won’t come to us unless we’ve got that expertise,” he says.

“Understanding the industry and the best environment within which [clients] operate, so that we can be sensitive to their overall objectives and the challenges and opportunities that exist in the market our clients are looking to deal with, is just as important.”