The legal department at State Street Corp. employs a small army of lawyers, and with good reason. The Boston-based financial services holding company employs about 30,000 people and earns revenue in the billions. To keep its edge in an ever-changing industry, State Street leverages the latest technology to provide services to its clients.
Leading the charge is Jeffrey Carp, executive vice president and chief legal officer. Carp oversees about 600 employees, 190 of them lawyers. The attorneys handle everything from internal investigations to network security.
"Internally, we have a medium-size law firm," Carp said. The attorneys that State Street employs came from the corporate departments of some of the best law firms in the country. "I would put our senior teams up against any company," he said.
The vast majority of the attorneys — 115 — reside in the Boston area. There are also modest spreadings of attorneys in Toronto and Kansas City, Mo. Carp oversees the areas of legal, compliance, security and regulatory affairs.
"We're a global company," Carp said. "Our revenues are about 60 percent domestic and 40 percent foreign. Our headcount is roughly the same."
Carp joined State Street in 2006, having previously been general counsel at MFS Investment Management. Before that, he worked in the corporate department of Hale & Dorr, one of the predecessor firms to Wilmer Cutler Pickering Hale and Dorr.
State Street serves as a custodian bank, meaning it holds the assets of other financial institutions rather than handle traditional transactions for everyday consumers. The bank holds about $25 trillion as a custodian and $2 trillion in assets under direct management.
"The thing that has made it the most challenging is that everything is changing so quickly," Carp said. "I would say that we're always trying to better ourselves in the technology area. We filed for a patent for business process in the way we employ stack and cloud technology. At a core, we are a technology company. We are sinking a fortune into technology to make our business better for our customers."
State Street is also working to expand its data warehouse, which provides up-to-date data and metrics to clients. "We are trying to help our customers get real-time access to their data and analyze it in ways they can't today," Carp said.
The financial crisis of 2008 fundamentally changed the legal landscape as well as the financial one. When times were good, clients didn't balk at high law firm rates and billable hours. Following the crash, clients became shrewder about farming out legal work and adopted increasingly competitive models for services.
But for Carp, the crisis changed little in the way State Street handles outside work with law firms. The company generally will seek outside counsel in legal areas that are developing rapidly or occupy unfamiliar legal turf.
"For the most part, we farm out litigation," Carp said. "The cost of our in-house legal workforce dwarfs what we pay outside. We'll send stuff outside when we see it so infrequently or, alternatively, when things are changing so quickly or complex that we can't feel comfortable we are on top of it."
The financial crisis affected all sectors, forcing companies to seek ways to cut cost without sacrificing quality. State Street was one of the first financial services companies to outsource part of its back-office workforce, Carp said.
The company was both criticized and praised for its use of outsourcing. Carp said State Street has been able to maintain the same quality while cutting cost.
"Getting through the crisis with products that are stressed and customers that were stressed was a huge accomplishment," he said.
The bank also grew and expanded its capabilities through strategic acquisitions.
In 2003, State Street became the largest security services firm with its $1.5 billion acquisition of the securities services division of Deutsche Bank. Two years later, State Street acquired the parent company of Investors Bank & Trust, another custodian bank, for $4.5 billion. The acquisition made State Street the second largest custodian bank in the world.
But State Street is perhaps best known for its case involving the patentability of a business method. In 1996, the firm sued Signature Financial Group Inc. for allegedly violating its hub-and-spoke data-processing patent. Two years later, State Street won the case when the U.S. Court of Appeals for the Federal Circuit ruled that the company could patent a method for doing business. The method provided a "useful, concrete, and tangible result."
That led to a dramatic increase in the number of patents it filed for business methods — and its competitors, as well.
Mark Borden, a Boston-based Wilmer Cutler partner and chairman of the corporate practice, called the legal department at State Street "first rate."
"Because they live in such a highly regulated world, it means they have to be a step ahead," Borden said. "They are highly scrutinized and that means you have to check off many more boxes."
KEYS TO SUCCESS
• Take pride in your work. It needs to be a given that you are providing the highest quality legal work and the best possible client service.
• Be a mentor or a mentee or both. There is nobody that you can't learn something from and nobody that cannot benefit from your experience.
• Earn trust. Only by listening and continuously demonstrating your dependability and value do you earn the right to become a trusted advisor.
• Stay relevant. This means anticipating needs and staying ahead of the continuously evolving laws governing financial services.
• Set a tone from the top. Lead by example and always demonstrate the highest standards of ethics and integrity.
— Jeffrey Carp, chief legal officer and executive vice president