25 Oct Why Small Banks Need Outsourced Counsel
Today’s Millennial business owners are more apt to doing business with local banks they know over impersonal chain banks. This provides a tremendous opportunity to community banks that are prepared to handle the business. This often means establishing outside partnerships with expert organizations that can step in to keep momentum going. Small- and mid-sized banks are ideal candidates that stand to benefit greatly from partnering with an outside law firm.
Stronger Legal Protection
When outside counsel is hired, it frees up the internal legal team to spend their time more effectively on internal needs. Additionally, the internal team will act as “air traffic control” over the outside counsel, directing them on how to resolve other issues beyond their specializations. Hiring outside counsel also expands the range of legal issues the bank can address and resolve, as the external law firm will have a number of lawyers with various specializations available.
Remain Abreast of Lawsuits
Oftentimes, smaller banks do not have enough legal issues to warrant a specialized, full-time legal staff, so they omit the department until the need for legal assistance arises. While this practice may seem like it saves costs, it does not, as acting reactively to a lawsuit will accrue a much higher overall legal tab. Even if the bank has never needed a lawyer in the past, it is a strong business practice to retain counsel to ensure compliance is met and the business is protected from lawsuits. Outside, hourly counsel acts similar to insurance: it does not accrue costs when it is not used and it is extremely helpful to have when it is needed.
Legal teams at mid- and large-sized banks are consistently plagued with to-do lists that require more time and resources than they have available. As such, management should utilize any resource they can acquire to assist their lawyers in tackling their lengthy, important to-do lists. Legal professionals spend a significant amount of time traveling to and from courthouses to handle litigation around retrieving loans and recovering debt. This allows the internal team to focus on their legal strengths.
Banks are like any other industry and are extremely vulnerable to lawsuits from financial-related to employee-related matters. Working with outside counsel can help banks save money, increase internal efficiencies and avoid legal complications.