Independent Banker - April 2021 - 33

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Peter Weinstock, co-practice
leader of the financial institutions
group at Richmond, Va.-based
Hunton Andrews Kurth, LLP,
says the number of emerging risk
areas for community banks has
grown dramatically. Of a typical
community bank's employees, about
30% now perform work related to
consumer compliance, Bank Secrecy
Act (BSA) or IT. " These are risk
areas that we didn't think about 20
years ago, " he adds.
As these risks have grown,
Weinstock says, sometimes even
smaller community banks are
hiring a seasoned lawyer as general
counsel. A general counsel is not
expected to be an expert in all legal
areas but should be an " informed
buyer of legal services, someone
who appreciates what type of legal
expertise is needed for a project at a
good price point, " he adds.
" I used to think you needed to
be $500 million to $750 million in
assets before it made sense to have
a general counsel, " Weinstock says,
" but what I find on a day-to-day
basis is that the lack of somebody
who has an appreciation for legal
minds can wind up with some real
penny-wise, pound-foolish results. "
With that said, many community
banks still exclusively use outside
law firms rather than hiring a
general counsel-and this model
works well, too. With or without a
general counsel, most community
banks will work with several firms
for legal advice because the range of
issues being addressed is so broad.
" The most critical thing for
community banks that don't have an
in-house general counsel, " Fenimore
says, " is to have one dedicated firm
Seven years ago, VeraBank typically reviewed the boilerplate
in vendor and technology contracts without analyzing every
aspect with a fine-tooth comb. That's changed, says Brad
Tidwell, president and CEO of the $3 billion-asset community
bank in Henderson, Texas. " These contracts have become more
complicated and sophisticated, " he adds.
As a result, Tidwell has begun relying on outside legal counsel to
review and analyze contracts in much greater depth.
Chris Floyd, president and CEO of First National Bank in
Syracuse, Kan., agrees. " You can't just carte blanche take
everything the vendor ships you and sign it, " he says. By carefully
reviewing technology and vendor contracts with outside counsel,
Floyd has gotten " a pretty good education " into why specific
changes make sense.
Indemnification for security breaches is, of course, a critical
issue for lawyers to consider. Technology has become " the
sidewalk where customers come in to see you, " says Peter
Weinstock, leader of the financial institutions group at Hunton
Andrews Kurth in Richmond, Va. So, he adds, " issues of technology
now go to the heart of product delivery. Being able to do digital
banking well from a legal to a compliance to a technology
standpoint is as white-hot as any area a community bank faces. "
and a lawyer or two who can almost
act as their outside general counsel. "
Assessing who's a good fit
When hiring a firm, Chris Floyd,
president and CEO of $420 millionasset
First National Bank in
Syracuse, Kan., says one criterion
should be to have " a point of contact,
or someone who makes sure that the
work gets done. "
Weinstock agrees, noting that
relationships with firms work best
when a designated individual takes
responsibility for outcomes and
when the scope of all projects is well
defined. " This can't be something
where you toss a ball into the yard
and then turn your back, " he says. An
early understanding of what a project
entails-and what it will cost-will
help promote a successful outcome.
Industry expertise is another
must-have. " It's very important that
the law firm understands community
banking and has a background in
community banking, " Sellers says.
Finally, Sellers says a relationship
with a knowledgeable group of
lawyers can provide a sounding board
for exploring cutting-edge ideas that
may be worth pursuing. " I call [the
lawyers I work with] just to bounce
ideas around, " he says, adding that
when a lawyer truly understands the
issues a community bank faces, " it's
a relationship that develops and gets
better over the years. " 
Elizabeth Judd is a writer in Maryland.
independentbanker.org Q 33
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Independent Banker - April 2021

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