Legal by Design: A New Paradigm for Handling Complexity in Banking Regulation and Elsewhere in Law

20 Pages Posted: 18 Dec 2014 Last revised: 8 Mar 2022

See all articles by Paul Lippe

Paul Lippe

OnRamp Systems

Daniel Martin Katz

Illinois Tech - Chicago Kent College of Law; Bucerius Center for Legal Technology & Data Science; Stanford CodeX - The Center for Legal Informatics; 273 Ventures

Dan Jackson

Northeastern University - NuLawLab; Northeastern University - School of Law

Date Written: December 16, 2014


On August 5, 2014, the Federal Reserve Board and the Federal Deposit Insurance Corporation criticized shortcomings in the Resolution Plans of the first Systematically Important Financial Institution (SIFI) filers. In his public statement, FDIC Vice Chairman Thomas M. Hoenig said “each plan [submitted by the first 11 filers] is deficient and fails to convincingly demonstrate how, in failure, any one of these firms could overcome obstacles to entering bankruptcy without precipitating a financial crisis.”

The first eleven SIFIs — Bank of America, Bank of New York Mellon, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street Corp. and UBS — include some of the largest organizations in the world, with sophisticated internal and external teams of professional advisors. According to Jamie Dimon of JPMorgan Chase in 2013, it took 500 professionals over 1 million hours per year to produce JPMorgan Chase’s annual Resolution plan. With regulatory pressure increasing, that number is likely to be consistent or increasing across first-wave filers, and suggests significant spending by all filers.

So why were the plans criticized despite heavy compliance investment?

The Fed and FDIC identified two common shortcomings across the first 11 SIFI filers: “(i) assumptions that the agencies regard as unrealistic or inadequately supported, such as assumptions about the likely behavior of customers, counterparties, investors, central clearing facilities, and regulators, and (ii) the failure to make, or even to identify, the kinds of changes in firm structure and practices that would be necessary to enhance the prospects for orderly resolution.” We believe this regulatory response highlights, in part, the need for lawyers (and other advisors) to develop approaches that can better manage complexity, encompassing modern notions of design, use of technology, and management of complex systems.

In this paper, we will describe the information mapping aspects of the Resolution Planning challenge as an exemplary “Manhattan Project” of law: a critical enterprise that will require — and trigger — the development of new tools and methods for lawyers to apply in their work handling complex problems without resort to unsustainably swelling workforce, and wasteful diversion of resources. Fortunately, much of this approach has already been developed in innovative Silicon Valley legal departments and has been applied by leading banks. Although much of the focus of the Dodd-Frank Act is on re-organizing and simplifying banks, we will focus here on the information architecture issues which underlie much of what should — and will — change about how law is delivered, not just for Resolution Planning, but more broadly.

Keywords: Legal Complexity, Computable Contracts, Dodd-Frank, Legal Compliance, IBM Watson, Legal Technology, Financial Regulation, Pointable Legal Data Objects, Computational Law

JEL Classification: G20

Suggested Citation

Lippe, Paul and Katz, Daniel Martin and Jackson, Dan, Legal by Design: A New Paradigm for Handling Complexity in Banking Regulation and Elsewhere in Law (December 16, 2014). Oregon Law Review, Vol. 93, No. 4, 2015, Northeastern University School of Law Research Paper No. 215-2015, Available at SSRN: or

Paul Lippe

OnRamp Systems ( email )

Bushnell Rd
Moffett Field, CA 94035
United States

Daniel Martin Katz (Contact Author)

Illinois Tech - Chicago Kent College of Law ( email )

565 W. Adams St.
Chicago, IL 60661-3691
United States


Bucerius Center for Legal Technology & Data Science ( email )

Jungiusstr. 6
Hamburg, 20355


Stanford CodeX - The Center for Legal Informatics ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States


273 Ventures ( email )


Dan Jackson

Northeastern University - NuLawLab ( email )

102 Dockser Hall,
65 Forsyth St.
Boston, MA 02115
United States

Northeastern University - School of Law ( email )

416 Huntington Avenue
Boston, MA 02115
United States

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