Category Archives: Legal Careers

Beyond Biglaw: The Dean’s 4-Step Formula For Dealing With Mistakes

By: Gaston Kroub

Show me a lawyer who has not made a mistake in their career, and I will show you a lawyer who has never practiced a single day. Mistakes happen. Lawyers are human, and no matter how well-trained, or how high their billing rate, there will be times when someone screws up. Most of the time, those screwups turn out to be harmless. Other times, they land the unfortunate maker of the mistake in these pages, as an unwilling “news item” of interest.

MistakeAs with many other things related to law practice, younger lawyers are often not taught how to deal with the inevitable mistake when one happens. As a result, easily correctable situations are often made worse, with the “cover-up worse than the crime” an often-seen consequence. In fact, other than being told not to make mistakes, younger lawyers, whether at Biglaw or smaller firms, often receive no training at all with respect to this issue. Making things worse is the tendency of firms to turn partners into demigods, who must have never made a mistake on the way to their current position. And no firm would ever admit that one of its current partners is capable of error. While definitely not true, this aspect of firm “culture” often serves to inculcate in younger lawyers an irrational fear that if they make a single mistake — disaster. Bye-bye to their jobs, at least.

This is a silly state of affairs. And when younger lawyers think that the more senior lawyers they work for are infallible, they are much less likely to come forward to ask for help correcting a mistake. No one wants to be embarrassed and admit they created a problem. But when mistakes are not addressed quickly — ideally with the input of more experienced lawyers who are better positioned to understand the ramifications of both the mistake and the corrective measures necessary — they have a way of festering, making it worse for everyone.

making mistakes

The solution is a simple one: educate younger lawyers, and “remind” more senior ones, about what to do when a mistake happens, as part of trying to minimize the cultural barriers found in law firms that hamper having mistakes addressed quickly and with the input of everyone on the legal team. To start, we can learn from one of the great basketball coaches of all time, the recently deceased Dean Smith — who, despite coaching some of the best players of all-time, definitely saw his share of mistakes perpetrated by his team on the court.

We can use one of the boneheaded mistakes I made as a relatively senior associate as our example.

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6 Personality Traits That Can Make You a More Trusted Entrepreneur

As entrepreneurs, one of our greatest assets is our ability to be trusted.

No one does business with an untrustworthy person. Without trust, you can’t broker deals, close deals, sell stuff, or come out on top. Trust is the one thing you can’t live without.

Trust is hard to gain, though. Many people, especially successful businesspeople are inherently distrustful of others. This is one of the reasons why they’re successful. They have learned not to blindly trust people. By taking this approach toward most people, they have been able to protect themselves from stupid business deals and dangerous partnerships.

If you are an entrepreneur or business person involved in making and closing deals, one of the best things you can do is to build trust. Here are some things to keep in mind.

1. Authenticity — truly being trustworthy.

You can’t fake trust. You are either trustworthy or not. People who are emotionally intelligent and perceptive will be able to tell.

Being authentically trustworthy requires that you be honest in all your dealings — big and small. You must ensure that every area of your life has trustworthiness. That means keeping promises, maintaining relationships, following through on commitments, keeping your word, doing your taxes and following the little laws.

We all make genuine mistakes. You can’t be perfect. But trust isn’t about perfection, nor is it about some legalistic adherence to an arbitrary standard. It’s an approach to life that is characterized by the pursuit of trustworthiness.

Trust Falls

2. Confidence — insisting on your own way.

Ironic as it seems, someone who is trustworthy is someone who insists on his or her own way.

Why is this true? In any relationship, people will trust someone who knows what they are doing. If you behave in such a way that you know what you’re doing, it inspires trust in others.

Obviously, you don’t want to be rude about this. There’s a way to insist on your own way that doesn’t run roughshod over others. Be gentle but firm about the way that you know to be the best, and people will trust you.

3. Humility — asking for feedback.

Another way to create trust in others is to ask for their input.

When someone voices his or her viewpoint on an issue, the person is creating buy-in. The individual feels as if he or she is having a part in the project, thus voluntarily becoming invested in it. As long as someone feels like he or she is a valued part of the project, the person will trust your leadership of that project.

In order for this approach to be successful, you have to really listen and respond. People can tell if you’re merely getting token acceptance, and whether they are being valued and appreciated.

4. Calmness — refusing to panic in stressful situations

As long as you have a sense of calm resoluteness, people will trust you.

Stressful situations are some of the greatest opportunities to create trustworthiness. While everyone else is running around in a panic, you remain confident and unflustered. People gravitate to that kind of approach. They trust you.

Stressful times are going to happen, both in life and business. The calmer you are, the more you will be able to inspire the trust of those around you.

corporate-meditation

5. Experience — trying and failing

You gain trustworthiness by experience. In order to get experience, you have to make bold moves. Yes, you might fail; but even in failure, you earn trust.

Many successful entrepreneurs whom I know are young. I’ve met twenty-somethings who are worth millions of dollars, investing in VC, starting tech companies and disrupting industries. One of the ways that they’ve built their businesses is by experiencing ups and downs, and creating trust in that way.

Experience breeds trust, but you can’t experience anything unless you go for it. You may fail, and that’s OK, because you’ve gained valuable lessons, and you’ve built trust.

6. Honesty — always telling the truth

At its core, trustworthiness is about honesty. People will only trust you if they know you’re telling the truth.

I can’t think of a business situation where it is better to lie than to tell the truth. As cliche as it may be, honesty is the best policy.

Conclusion

In a business environment that is dripping with inauthenticity, artificiality and scam deals, you’ve got to be a person that people can trust.

Trustworthiness creates its own reputation. As you prove your ability to be trusted, other people will trust you. This creates a cascade of trusting relationships, which lead to profitable business deals. You simply can’t go wrong by being trustworthy.

There will be times when you’re tempted to cut corners or do some little under-the-table deals. Avoid it. It can take a lifetime to build trustworthiness, but it can come crumbling down with one wrong move.

What personality traits do you think are important for being a trusted person?

When an Employee Is On Call, Is That Working?

Waiting on Phone

Your employee is on call, but does that mean he or she is on the clock? Jennifer Palagi of Liebert Cassidy Whitmore takes on the issue in a recent post. She says that in some cases, wage-and-hour law requires on-call time to be paid at minimum wage (or more) if it is “controlled.”

The U.S. Court of Appeals for the Ninth Circuit has come up with two predominant factors that must be assessed when determining if the time is compensable: 1) the degree to which the employee is free to engage in personal activities, and 2) the agreements between the parties.

Whether the employee is free during on-call hours depends on if there are restrictions to his or her movement, an on-premises living requirement and whether on-call responsibilities could be easily traded, among other elements. As for the agreement, this could be analyzed by a court to see whether the two parties characterize wait time as work or have decided that the person will be paid only for time spent performing an actual job, explains Palagi. She warns companies to structure on-call assignments effectively with an eye to these laws and also to have a clear on-call policy in place.

Dentons Breaks Down the Glass Wall in China

Dentons

Throughout GLI’s history, we have worked closely with Dentons in order to assist them in growing their national and global presence.  We are proud to see Dentons’ latest merger has topped the legal news charts in recent weeks.  With good reason: the merger will undoubtedly make Dentons the largest firm in the world by head count.  The combined firm will have over 6,500 lawyers and will span across more than 50 countries.  But an equally amazing feat is that Dentons managed to further break the barrier between US and China Law.  It’s no secret American Law firms have been having issues breaking into the Chinese markets, but Dentons has certainly made those issues old news.

Something we notice that makes Dentons successful is the firm’s mastery of the use of the verein structure. This allows the firm to merge much more easily with other firms.  Another great benefit of this structure is the firm does not have to worry should China’s attempts at legal changes not emerge.  This offers Dentons great flexibility in the mergers they choose.

We are proud Dentons is merging with Dacheng as we have noticed a swell in the growth of Tier 2 cities in China and Dacheng has 42 offices in China including plenty in Tier 2 cities.  This merger for Dentons will greatly increase their market share in China from around 50 attorneys practicing in Beijing, Shanghai, and Hong Kong to over 4,000 attorneys throughout China.  It is not likely we will see any other Am Law firm take such rapid strides into the Chinese market with Dacheng and Dentons cornering the market.

Our Top Legal Recruiter, Nancy Grimes, has great relationships with the leaders of Dentons US.  Because of these great relationships, Grimes was able to get further comments from the firms’ leaders: Joe Andrew and Elliott Portnoy.  We are happy to share their opinions regarding what this merger means for the future of Dentons:

Joe Andrew.Dentons

“With more lawyers in more places where our clients do business, this combination is not about being the largest law firm in the world it is about understanding what our clients need and delivering it. As the only big 10 firm not headquartered in the US or UK, our polycentric approach reflects how the global economy has fundamentally changed and the legal profession must change with it.”

-Joe Andrew, Global Chairman of Dentons.

“With the largest and fastest growing economy in the world, the attraction of China to our clients is strong. All of our competitors are looking East. By

Elliot Portnoy.Dentonsuniting East and West in one firm—not merely through a few offices in large cities, but with a deep presence across China—we can provide

Chinese businesses with global ambitions and international clients with interests inside China a reach and depth that simply can’t be found elsewhere.”

-Elliott Portnoy, Global Chief Executive Officer Dentons.

Litchfield Cavo Logo

Litchfield Cavo is Shaking Up the Law Firm Experience

Flexibility is the name of the game for Chicago-based firm, Litchfield Cavo.  In 1998, Litchfield Cavo was formed by a group of attorneys who were frustrated by the structures and policies of the typical American law firm.  The founding partners felt some firms of the time lacked synergy and true ambition for the future.  They sought to create a firm focused solely on client service in the areas of defense litigation, business litigation, and insurance coverage on behalf of the insurers which streamlined the legal process.  They soon realized they had created a firm culture which was highly desired in the legal community.

The firm soon grew from a small group of attorneys with a dream to the National Law Journal ranked firm of today.  The members of the firm grew their ranks by networking with attorneys they believed would thrive in their culture and business model.  Alan Becker, the firm’s Managing Partner, recently told Nancy Grimes, a legal recruiter for GLI, “the type of professional who is often interested in the firm is an up and coming partner in another firm who has begun to develop business but whose firm bases compensation on seniority.”  In situations such as these, attorneys feel undervalued and feel less obligated to perform excellent work.  Often attorneys in situations like this thrive in a business model such as Litchfield Cavo’s because they are able to perform superb work for their clients while they are compensated accordingly.

Litchfield Cavo operates as a meritocracy.  The leaders of the firm value contributions more than the age or reputation of an attorney because they want to see results.  In this firm where partners outweigh associates, the youngest partner can be the highest earning.  Compensation is transparent and determined based on contributions to the firm.  This approach allows the firm to be effectively entrepreneurial and appealing to potential attorneys.

Office Staff

Another characteristic of Litchfield Cavo which goes with their flexibility is their agility and lightning speed reaction time when special circumstances dictate it.  Becker takes pride in the firm’s terrific support staff, which is able to provide quick turn-around.  Just last year, the firm was able to add a team member and provide them with their own email address, office and support staff in just a matter of days.  Becker attributes much of the firm’s flexibility to the office staff who makes it all possible.  Becker says that he is focused on recruiting and developing the best office support possible for his firm.

Apart from the firm’s flexibility, the firm also enjoys stability.  The firm does not try to tempt fate by adding new offices; they simply open new offices as they are needed.  The offices are then built up through networking.  Typically, a chain reaction begins with a new hire: the attorney becomes a part of the firm, is impressed with the firm’s management and culture, calls other attorneys they know to tell them about the firm, and the firm makes another new hire through the networking process.

An additional stabilizing factor is the firm’s lack of debt.  The firm is completely self-capitalized, apart from office lease obligations.  This lack of debt allows its members to have comfort in knowing there is a Litchfield Cavo office today and there will be tomorrow.

Unlike so many other firms where the Managing Partners seem to be viewed as the “Great and Alan BeckerPowerful Oz,” Becker ensures he is personally involved in the decision making for all new employees.  If the recruit is in Chicago, Becker personally does the first interview.  He also participates in a teleconference interview for those who are not local.  Since Becker’s implementation of an electronic voting and partner nomination system, the firm can guarantee quick firm-wide decisions.  The firm’s flexibility also expands into their two-tiered partnership.  The firm is able to quickly bring new members on board who will be participating partners.  Qualified candidates may also come aboard as capital partners, although the interviewing process is more extended.

Becker believes the most challenging part of being a managing partner is maintaining the firm’s overall profitability.  He understands the more the firm makes, the more the firm’s partners will make.  Alan Becker has been the Managing Partner of the firm since its inception in 1998.  On top of managing the firm, Becker also maintains a full case load.  He believes that no matter what other responsibilities he has, his clients always deserve his best service.

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Learning How to Become a Leader

By: Dorie Clark

As we rise into leadership roles, it’s not always easy to walk the talk. Of course, we want to be wise sages, counseling our charges and inspiring them to greatness. But that’s easier said than done. The challenge was particularly acute for Karl Allen, co-founder and CEO of Planet Jockey, a company that creates management courses in the form of online games. He knew it would be a sad irony if the head of a company selling leadership games wasn’t much of a leader, himself. So he vowed to step up – and here are the lessons he learned through playing his company’s games and vowing to become the right kind of CEO.

Recognize where you’re starting. Planet Jockey’s game teaches the principles of “buoyant leadership” – what Allen describes as “a concept whereby, as a leader, you float [on top] because the people you lead believe you deserve it.” (The concept is discussed in depth in a book called The Case of the Missing Cutlery by Kevin Allen, Karl’s partner in business and life.) But Karl recognizes that while buoyancy is the goal, he won’t always be perfect. “I can do it at times,” he says. “But sometimes [negative] instinct takes over, and it takes over really fast.” These days, he can recognize when he feels his temper rising at work, and can guide himself back into a more inspirational mode of leadership.Lets talk

Say what you mean. In evaluating his leadership style, Karl Allen recognized that sometimes in the past, he’s prioritized being ‘nice’ – which has driven him to avoid saying what he really means. That doesn’t serve anyone, he’s concluded. He recalls one incident where he felt one of Planet Jockey’sUdemy classes wasn’t gaining traction fast enough. The best possible reaction, he says, would have been to tell his staffer, “You’re doing an amazing job, and I’ve got a great idea for all the ways we can grow further.” He also could have directly discussed the critiques he had of the marketing. Instead, he recalls, “I phoned her up and said, ‘I think we’re really dropping the ball.’ It’s passive-aggressive, because when I say ‘we,’ I mean ‘you.’ And that’s terrible and destructive.” Planet Jockey’s games have helped him to realize where he went wrong.

Meetings are critical. One of the areas where Allen knows he fell short initially was in running staff meetings. “Before, I’d just get everyone into a meeting and start chatting and people would shout at me and I’d shout back at them,” he recalls. “What I learned after playing the game is that you need some rules. It’s not just about inspiring people; meetings need to be structured. For instance, you need smaller meetings, so you should try to limit it to 6-8 people. That way you know you can get to hear everybody’s point of view and everyone gets a chance to talk.” Overall, he says, “You need to know what needs to come out of the meeting, and have a clear sense of who’s there and why they’re there.magnifying talent

Search for hidden talents. Early on, says Allen, he would sometimes take too narrow a view of what others could contribute. “The game taught me that people within your team have a lot more to offer than sometimes you realize,” he says. As a result, he started a team practice in which staffers sit down and share what they’re doing outside of work. That’s how he learned about one employee’s side calligraphy business, which she was pursuing with a friend who worked at a company Allen was targeting. Allen had always thought of his staffer as being expert in “digital marketing, not face-to-face sales.” But with a little coaching, she was able to persuade her friend to make an introduction at her company. “I realized she has an amazing sales persona,” says Allen. “She built that skill and we got a huge piece of business.”

The conversation is what matters. When it comes to a topic like leadership, there will never be 100% agreement about the best approach to a given situation. That’s how Allen came to realize that the real value of the game is in the conversation it sparks. “The learning from the game wasn’t even so much from the game itself,” he says. “The learning is from the reflection on the game – how well you did, or thought you did…You learn because you have to fight it out and discuss it [with colleagues]. The answers are ambiguous and part of a learning process.”

Becoming a great leader isn’t easy. It’s especially challenging when you’re running a company that’s predicated on teaching others how to lead. As Karl Allen shows, opening up about your mistakes and the learning process along the way is part of what it takes to truly succeed.

Clark, Dorie. “Learning How To Become a Leader.” Forbes. Forbes, 8 Jan. 2015. Web. 9 Jan. 2015.

6 Factors To Consider When Planning The Path To Partnership

Ask most associates and (if they’re honest) they’ll tell you: a bird in the hand is worth two in the bush. Or a dollar today is worth three tomorrow. You’ll “never” make partner, so better to gun for prestige, compensation, a practice you love or some combination of the three, then escape into an in-house career before it’s too late.

Looking at the stats, the majority of associates, oftentimes chasing the immediate gains mentioned above, will lateral a little less than once every three years during their law firm careers, which is to say your average associate (factoring not only those who make partner but also the vast majority who don’t) will be on his or her fourth job before even being eligible to make a run. Needless to say, chances of partnership under such circumstances are an insignificant percentage of miniscule at best, which is why it is important to make only the “right” move (assuming you need to move at all). As an aid to your decision-making, we’ve compiled a list of six things to consider when planning your long-term path to partnership and any lateral moves you might make as an associate.

There’s no substitute for experience. Although it is true that many law firms require a track record of business generation or associated skills and abilities, it is equally true that legal expertise must come with.  In this respect, size can play a role: you want a firm that is sizeable enough that it can provide plenty of support staff for your practice and also where you can get valuable hands-on experience.

Career Direction

Politics may be king. Firms differ in their structure and the distribution of power within partnership ranks. One firm may operate its practices in clearly defined silos, each of which represents its own power base and profit center, while another is more collaborative across practices, encouraging the sharing of credit and the more equal exposure of associates across practice groups to partners of influence. If you’re considering a firm using the former model: who will you be working with? When it comes time to seek support for your partnership bid, which “power centers” will be behind you? For those considering firms of the latter kind: entrepreneurialism, initiative and personal merit factor in that a little bit more.   It is important to choose the kind of firm which best suits your individual style.

Know who is your competition. Believe it or not, answers to this question can range from “other associates” to “other partners” at your current or intended firm, and it is important not to be misled by reference to past partner promotion statistics. Has the firm recently promoted or brought in senior associates and/or counsel? If so, you may be facing some pretty hefty odds at best. Are partners at the firm barely pushing 55? Has the firm recently jettisoned its mandatory retirement policy? If so, you might be in for a longer ride than you had bargained for. Yes, partners lateral away (and often, these days). Still, do not forget that succession plans are paramount.

career competition

 

 

 

 

 

 

 

 

 

What’s their poison? The above notwithstanding, statistics are always worth a quick look. A major question to be asked is the following: from where does the firm in question tend to source its partners? From the ranks of its associates?  From those of other firms? Perhaps even from outside partners and counsel?

Don’t forecast the entire decade. In the current climate, you’ve no doubt noticed it’s difficult enough to forecast just one year—think of all the surprise mergers over the last year—never mind the next eight or ten. Firms can rise and fall quickly—Dewey, Howrey? Anyone? Instead, while you’re doing what you can to make the right friends and gain the right experience, make sure, too, that your current position offers a strong foundation and positive growth: a good platform from which to explore partnership opportunities elsewhere if necessary.

For those considering these things: danger signs of firm failure can include sharp drops in PPP, unsustainable leverage, multiple years of gross loss (if not offset by a rise in PPP) and poor profit margins.

What’s your endgame? When evaluating your career choices, it’s important to determine your ultimate goals. If your ultimate goal is to make partner: sketch a rough map of your career and always be mindful of how present actions impact the future, and take those three dollars tomorrow if you can afford it. A partnership will pay more dividends than any associate bonus ever could.

If you are looking for additional career advice, contact one of our career counsellors.  Often times it helps to have a third party to evaluate your situation to assist you in making the best decisions.  Whether you are looking to make a move or just in need of counsel, a call today could make all the difference for tomorrow.

How to Build Your Book of Business From the Inside

Top Legal Recruiter, Nancy Grimes agrees with Above the Law author, Kevin McKeown, that the best way to increase your business is to focus on your existing clientele.  Like Gina Rubel states: these clients already trust you with their business.  As mentioned below, it is 50% easier to sell to existing clients than to new clients.  Nancy believes your best bet is to network with other attorneys within your firm in order to locate new opportunities and provide additional services to existing clients.  If your clients trust you, and you vouch for the attorneys who would be taking over their other business needs, it will build their credibility and bring more business under your origination belt into the firm.  You should also consider networking with other attorneys within your firm to determine if their clients have needs with which you may assist. Below is Kevin McKeown’s article:

This mash-up is inspired by a lawyer I know who thinks that signing new clients solves all his problems. He’s certainly not listening to Gina Rubel:

business orignation

“As a legal marketer, I am constantly reading articles for lawyers about business development. Common titles are “Biz Dev for Lawyers,” “How to Be a Law Firm Rainmaker,” “How to Bring Business to Your Law Firm,” “Using Social Media to Grow Your Book of Business,” and so on. While everyone is pushing the acquisition of new business, how about focusing on the low-hanging fruit — the clients who already trust you with their business.”

Smart businesses don’t chase new clients at the expense of keeping and growing existing clients. And, law firms shouldn’t either. Consider:

  • 80% of future revenue will come from just 20% of your existing clients–Gartner Group
  • It’s 50% easier to sell to existing clients than to new clients–Marketing Metrics
  • Existing clients convert at 60-70% compared to new prospects at 5-20%–Marketing Metrics
  • Repeat clients spend 33% more compared to new clients–CMO.com
  • Boosting client retention by 5% can raise profits by 75%–Bain and Company

A 10% rise in customer retention yields a 30% increase in the value of the company–Bain and Company

Look to the business world for how they view the significance of an existing client relationship. Here’s a sampling of the research I complied:

From It’s Cheaper to Keep ‘Em by Karl Stark and Bill Stewart:

“Growing businesses tend to spend so much of their time and money acquiring new customers that they often overlook their best source of growth: retaining and growing their existing customer base. It’s cheaper, easier, and more effective to retain current customers than it is to acquire new ones.”

existingclientsFrom To Sell More, Focus on Existing Customers by Rick Reynolds:

“Seeking new sales without strong account management and operating teams is like pouring water into a bucket with a hole in it. Identifying and fixing the holes — the gaps in customer satisfaction — can help your company retain existing accounts and increase new sales. When attempting to generate a sustained increase in sales, the first place to start is with existing customers. Your selling investment is lower, you have an existing relationship…”

From Five Customer Retention Tips for Entrepreneurs by Alex Lawrence:

“   …[M]any entrepreneurs are so focused on gaining new clients and customers that they fail to effectively address the need to retain those they already have. This is counterproductive… …[B]eing passive about customer retention only leads to greater attrition.”

From Customer Retention Should Outweigh Customer Acquisition by Jerry Jao:

“Customer retention and customer acquisition don’t have to be two parallel lines that never meet. In fact, when done right, customer retention campaigns can actually bring in new business. How? Through word-of-mouth and referrals, of course. By implementing smart retention strategies and treating your customers well, you are increasing the likelihood of getting referrals. Referrals are priceless to just about any type of business…”

From Customer Retention: The First Pillar of Social Media by Debra Ellis:

“When people have good relationships with individuals within an organization, they are more loyal. The only way to guarantee a loyal customer base is to create unbreakable bonds. This is done one person at a time. Social media changes the playing field because it provides a venue for the one-to-one connections that create unbreakable bonds.”

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Here are some practical strategies from client-retention expert Ross Beard that will help you improve client retention and raise your bottom line:

  • Set client expectations: set expectations early and deliver faithfully on those expectations to build retention.
  • Be the expert: trusted advisors proactively communicates with clients about issues in their industry that will affect them.
  • Build trust through relationships: client relationships must be based on trust and shared values; blog about issues that help your clients and signal your interest in their business.
  • Implement anticipatory service: avoid negative client experiences by being proactive: stop problems from happening by checking in with your clients each quarter.
  • Make use of automation: standardize your processes and set expectations for service levels to increase client loyalty.
  • Build KPIs around client service: measure and incentivize your firm based on levels of service/performance tied to the client’s goals.
  • Build relationships online: your clients are online so build relationships with them while they are fixed to their computer screens via Linkedin, Twitter, Facebook, blogging, etc.
  • Go above and beyond what’s expected: look for opportunities to woo your clients to build long term loyalty.
  • Listen to your clients: implement client surveys, etc.

Read Beard’s 9 Customer Retention Strategies For Companies for more insights, strategies and examples.

How are you building enduring client relationships? How do you retain your clients for the long haul? How are you managing your client accounts? How do you deal with that buffoon lawyer who chases clients away?

McKeown, Kevin. “Focus On Keeping And Growing Your Existing Clients.” Above the Law. Above the Law, 12 Nov. 2014. Web. 14 Nov. 2014.

The Compleat Bank Lawyer

In 1653, Isaac Walton wrote “The Compleat Angler” a book that is still read by avid fishermen desiring to learn all they can about the sport. One might ask today what makes a complete bank lawyer. The answer is usually not understood by bank senior management. They often fail to differentiate between legal and compliance. Both functions are critically important and they must work together as a team; however, while the lawyer should be a resource to compliance officers in helping them interpret complex or ambiguous regulations, it is not the lawyer’s responsibility to make sure they are followed by bank personnel. This is the role of law librarycompliance.  Why is it important for senior management to be aware of the differences between the two functions and the scope of their respective responsibilities? Because these are key functions and, as in the case of other key functions, they should know what they do, and the knowledge and experience required of the individuals they hire to fill these key positions.

To become a complete bank lawyer, it is necessary to have both curiosity to learn new things and to have been presented, over time, with the opportunity to provide counsel to all areas within a bank as well as a bank’s board and senior management. Unfortunately, in this age of specialization, young lawyers are not afforded the opportunity to gain this broad based experience. This is why banking generalists are a dying breed. Large banking organizations can afford to hire specialists who concentrate on specific areas of the bank’s operations. Small banks cannot. One solution for them may be to hire a semi-retired generalist on a part-time basis. If this is not possible, outside counsel with experience in the various areas discussed herein, whether found within a single firm or in multiple firms, should be engaged.

It is important for all banks, large and small alike, to have a lawyer present at all board meetings, and not in the capacity of a director. This does not mean just any lawyer, but one that has some expertise in banking law. Some lawyers claim to be bank lawyers because they represent banks in connection with loan transactions, but this, alone, is not enough to qualify one as a bank lawyer. That individual need not be knowledgeable about the full range of legal issues that may be encountered by a bank, but should be conversant with laws such as the following:  Bank Merger and Change in Control Acts; Bank Holding Company Act; laws and regulations governing financial subsidiaries, operations subsidiaries and other permissible investments; dividends; management interlocks between banks and public utilities;  securities law restrictions regarding insider trading; and banking laws and regulations regarding restrictions on transactions with affiliates and insiders. The individual must also be knowledgeable about laws relating to corporate governance. In addition to their general oversight responsibilities, directors are required to review or approve of specified policies and procedures. The lawyer should know what specific reviews or approvals are required and ensure that each director receives an adequate executive summary of the underlying law or regulation.

Here are some things with which a bank lawyer, or the bank’s lawyers, collectively, should be familiar. To begin with, obviously, they should have a thorough knowledge of banking laws and regulations. They should also be aware of the interplay among them. For example, state member bank dividends are subject to restrictions applicable to national banks under the National Bank Act, and certain provisions of the FDIC Act apply to all banks, regardless of who their federal regulator is. A thorough knowledge of Articles 3, 4, 8, and 9 of the Uniform Commercial Code is also required. Collectively, these Articles apply to the core bank functions of receiving deposits and making loans. If the client issues letters of credit, knowledge of Article 5 is also required. In addition, since Article 5 expressly provides that an issuer’s liability can be governed by the Uniform Customs and Practices for Documentary Credit if the letter of credit so provides, it is Complete Lawyerimportant to be familiar with this document as well. The Uniform Customs is published and updated periodically by the International Chamber of Commerce.

If the client issues stock that is sold to the public, it is necessary to have at least a rudimentary knowledge of securities law in order to know when to call for the assistance of experts in this area. Even if the client does not sell securities to the public, securities law questions can arise. For example, SEC Rule 141 could impose restrictions on the sale of publicly traded stock offered as collateral by prospective borrowers, who might be subject to the Rule’s conditions.

These days banks, like all businesses, often face employment law issues, and so a general familiarity with this area of the law is important. However, it is essential that they be knowledgeable about legal limitations on executive compensation under laws and regulations addressing safety and soundness. They should also be familiar with limitations on life insurance taken out on the lives of senior executives, commonly known as “BOLIs’”, a short hand reference to bank owned life insurance.

In the ordinary course of business, contracts will have to be drafted or reviewed, so the lawyer should be acquainted with the fundamental principles of contract law. The same is true with respect to real estate law, not only because of real estate lending activity, but also because the bank itself may be a buyer or seller of real estate. With regard to the former, they should be aware of the legal and regulatory limitations and conditions applicable to bank ownership of real estate.

Banks are frequently both plaintiffs and defendants in lawsuits. Litigation experience is invaluable. It not only enables the lawyer to understand the litigation process and to assess the quality of the bank’s litigation counsel, but also is it is helpful when drafting documents to have a sense of how they may be perceived if introduced in court someday. The lawyer should also follow case law involving banking industry wide issues such as, for example, the ability of banks to charge a fee for cashing checks of non-customers and how it handles the order of posting checks. Legal questions can also arise in connection with proposed new products or services. Services such as Remote Deposit Capture and ATMs initially raised the question of whether they would be considered as tantamount to a branch, and subject to branching restrictions under federal law. Those issues were subsequently resolved (the issue would be moot today because Dodd-Frank removed these restrictions). Branch personnel often call for advice about how to handle legal processes served on the bank and other claims and demands by prosecutors, private attorneys and customers that the bank take or refrain from taking certain actions respecting customer accounts. It is important to know how to distinguish the efficacy of those coming from out of state tribunals or officials from those issued by state courts and officials and restrictions on release of customer information requested by federal government officials under the Financial Right To Privacy Act as well as other conditions and limitations respecting disclosure of customer information to third parties.

The variety of legal questions that might be presented by branch personnel typically involve a broad range of issues and are impossible to catalogue. Some common questions are: The lessee or joint lessee of a safety deposit box dies, what action should I questionstake; What do we do when a depositor declares bankruptcy?; What documents should we receive to verify the authenticity and signing authorities of business entities (there are typically 6 types of business entities recognized under state law, corporations, LLCs, general partnerships, limited partnerships, limited liability partnerships, and limited liability limited partnerships); How should we handle custodial accounts under the Uniform Transfer to Minors or the Uniform Gifts to Minors Acts and how are they distinguishable; What are Totten Trusts and how should deposit accounts established by the trustees be handled;  How should we respond to a dispute among stockholders or members of non-corporate entities, each demanding information about or access to accounts in the name of these entities;  Or when do we need to file a suspicious activity report? Although Bank Secrecy Act (BSA) compliance falls within the domain of the compliance department, since it is so critically important, bank lawyers should be familiar with it and implementing regulations of the US Treasury Department and the banking agencies.

Ideally, the bank lawyer should review the Federal Register every day to look for proposed or final rules and regulations of the banking agencies. Hardly a week goes by when none appear. The Federal Register is available on line. The web sites of the federal banking agencies should also be reviewed regularly. They often set forth Guidance and Policy Statements applicable to various bank activities. The bank lawyer should also be familiar with Examination Guides and Handbooks issued by the Federal banking agencies.

If the bank client has trust powers or if it is a non-deposit trust company, the lawyer should be familiar with basic principles of trust law and also the fiduciary regulations of the OCC. Even if the client is not a national bank, these regulations are important because they have been given deference by the other banking agencies. The Federal Reserve has characterized them as being the industry standard. Because of the importance of tax law in estate planning, typically a bank will have separate trust counsel with expertise in tax issues, typically lawyers who have earned a Masters Degree in Taxation.

Finally, the bank lawyer should also be able to handle unanticipated matters, which can make the position even more interesting.  I once heard a great example of this from well-known banking attorney who experienced this while he was serving as the head of a bank’s legal department. Because the bank’s directors preferred to travel to board meetings via helicopter, he was asked to take all steps necessary to authorize a heliport on bank property. This entailed contact with the FAA and state and local authorities and learning about all applicable legal requirements.logo

As you can see, there are a great many banking attorneys in the United States, however, a complete banking attorney is much harder to find.  GLI/Grimes Legal, Inc. A Global Legal Recruiting Network, has partnered with some of the top banking lawyers in the country in order to locate and qualify top banking attorneys who bring the whole package to today’s banks, organizations and law firms.  Our seasoned experts know exactly what it takes to be a truly complete bank lawyer because they have walked the halls of some of the most prestigious banks and firms in the country and they are ready, able and willing to assist your organization in locating the best banking talent in your area.  To further discuss your needs, we welcome you to call.  Together, we will find the complete banking lawyer for you.

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