Joaquín Valenzuela, head of legal at Banco Sabadell, explains how he believes that law firms can benefit from working more closely with in-house legal teams.
Since its foundation in 1881, Banco Sabadell has been at the forefront of change, introducing telephone and computer banking in the 1980s and then, in 1998, launching Spain’s first internet banking service.
Joaquín Valenzuela, Director jurídico del Banco Sabadell, considera que los despachos de abogados podrían beneficiarse en gran medida si trabajaran más estrechamente con los asesores jurídicos de empresa. Valenzuela sugiere un cambio en el planteamiento de los honorarios y anima a los despachos a compartir los riesgos y éxitos de las transacciones con los clientes. En principio, lo ideal para Valenzuela sería reducir gradualmente la cantidad de gastos destinados a abogados externos; con todo, la variedad de jurisdicciones en las que el banco trabaja, sobre todo internacionales, y el continuo crecimiento de la entidad convierten su ideal en algo difícil de conseguir. The bank floated in 2001, two years later acquiring Banco Atlántico to become Spain’s fourth largest bank.
The bank would be a prestigious client for any lawyer, but how can a law firm develop better relations with such a large, and increasingly international, organisation?
A law firm may already have a large number of contacts with the bank, either with the business heads, who have traditionally decided on which lawyers to use, or with the legal team who share the same culture and approach as themselves.
But Joaquín Valenzuela, head of legal at Banco Sabadell, is among the new generation of in-house legal advisers who are seeking to make life easier for their external lawyers. His message is simple, in-house lawyers should be more closely involved in the day-to-day running of their organisation. He also believes they are also best placed to coordinate central decisions regarding the use of external legal advisers.
Living with change
Joaquín Valenzuela heads a team of nine in-house lawyers and, after 14 years at the bank, he has a clear idea of what the business expects from the in-house team. ‘I see the main role of my team as resolving conflicting situations at both a national and international level,’ he says.
But Valenzuela believes that the banking sector is constantly evolving. Dealing with new challenges is, therefore, a key element of his work. ‘We are living in a very dynamic market with lots of change and Banco Sabadell has been historically very sensitive to changes and innovation,’ he says. ‘Particularly when it is looking to improve its competitive edge and its service to clients.’
He also sees his role as a manager, overseeing the team’s development, as crucial. By developing and investing in each lawyer’s skills, he hopes to get the best possible results for the business as a whole. As well as legal training, team members are encouraged to specialise in the diverse areas that make up the bank’s business.
‘In this ever-changing environment, my team needs to be ready to face these challenges and to help the bank achieve the levels of excellence it expects,’ he says.
Keeping on top of developments is also a major task for Valenzuela himself. ‘As I am ultimately responsible for advising the bank on potential risks and liabilities within its day-to-day business, I need to keep up-to-date with changes to the law and their potential impact on the business.’
He believes that the legal function needs to ensure that others in the business understand how the lawyers in his team add value and why their input is essential to the success of the business.
‘Our main challenge is to make sure that the rest of the company perceives the real importance of following the instructions, analysis and recommendations put forward by the internal lawyers,’ he says.
‘It is important that the heads of legal are involved in the decision making process – their understanding of the business and the legal risks will enable us to protect the business from potential liabilities in the future.’
Valenzuela uses a range of external legal advisers, although he says that the nature of the bank’s work means often using smaller firms who have specialist knowledge of the country or region where a deal is taking place.
He has developed a rigorous selection process and structured approach to feedback on each matter which ensures that, for the most part, he is satisfied with the work of the external firms he uses.
But when outsourcing work, cost is one of the most significant factors and an area where Valenzuela feels that law firms need to modernise their practices. ‘I feel that the invoicing system is not very flexible and does not reflect the final results of the work done,’ he explains.
He would also welcome a change in approach to billing. ‘If firms were willing to share the risk or success of a deal with the client, even if only partially, it would help us, in this competitive market, to regard the external lawyer as a natural extension to our own team.’
But above all, Valenzuela believes strongly in the benefits of external lawyers working more closely with their in-house counterparts to provide the best solution for a business.
‘External lawyers can feel frustrated by the need to constantly go through the in-house department, but it is the inhouse team which can provide the detailed information about the business and its aims which is crucial for the deal’s success,’ he says.
‘When an external lawyer works with a company through an in-house lawyer, the resulting combination can be very powerful as the client expects higher and faster levels of service which can speed up the decision making process.’
A final area where external firms could improve their performance is by offering more pragmatic and clear-cut advice. Too often he feels that the action points or recommendations coming out of the legal opinions are too vague for the needs of the modern business.
Banco Sabadell is increasingly international with branches in France, the UK and the US, and subsidiaries and representative offices in a further 20 locations. The bank is, therefore, increasingly involved in more complex deals which require a global legal understanding. In these circumstances, Valenzuela says he might use an Anglo- Saxon firm, although he sees the gap between the service levels provided by Anglo-Saxon and local firms as getting smaller.
‘The presence of Anglo-Saxon firms in Spain with their partnerships and the systems of ‘up or out’, and their model of invoicing, has been embraced by local firms,’ he says, ‘levelling the market and making differences less obvious as they grow more and more similar in the way they run client relationships.’
Looking to the future, the Banco Sabadell is aiming to consolidate its position. Its most recent three-year plan, entitled ‘value and growth’ will see it secure its place as a leading domestic commercial bank both in the business and personal banking sectors while at the same time focusing on the creation of value and better service delivery.
Infact, Valenzuela would like to gradually decrease the amount he spends on law firms. ‘The ideal situation for us would be to reduce the budget due to a better capability of our in-house team, hoping that the internal structure would improve being able to deal with any case presented,’ he says.
Although he does, however, provide some good news for international lawyers, ”¦ nevertheless, the variety of legal jurisdictions on the international deals and the growth of Banco Sadadell will make this objective almost impossible to achieve – I can still see us using external lawyers on international deals because of our need for specialist expertise.’