An individual with both an MBA and a JD who had been hired as a manager asked me, "Don't you think I should be paid more because I'm a lawyer?" "No," I told him. "If you're smart, you'll shut up about it — and just hope everyone forgets it."

But it's now evident that we need more lawyers in banks and, more important, we need to make them accountable for the legal liabilities and risks of everyday bank operations.

Consider the recent headlines about lender/servicer operations where large numbers of documents needed for court filings in foreclosure cases were prepared using an unsatisfactory process that, once it became known outside the company, resulted in suspended foreclosures — and governmental investigations. Even the notarizations in some of these cases are said to have been obviously fraudulent.

Lots of laymen, even I, might have been legally literate enough to know that this way of doing business could not stand and was unwise. But a lawyer would have had to know it. And a lawyer, ultimately reporting to the legal department, should have been keeping the judicial document-preparation process, a very sensitive and high-value process, under close scrutiny.

The actual process used to produce the foreclosure documents was irresponsible and excessively risky, and it exposed the companies to liabilities. This didn't involve "rogue employees" or "rogue branches." It constituted a mainstream business practice.

Now, who would you expect to be held accountable for this? Will it be the chief legal officer of the company, the general counsel?

Based on my experience as well as on what we now hear and read, such an outcome is extremely unlikely. That's despite the fact that this particular set of practices involved preparation of documents for court filings — not just papers delivered to customers or others.

I can think of several other instances in which bank activities that were open and condoned within the organization resulted in nine-figure legal liabilities. In none of these cases was the general counsel treated as blamable. Indeed, he is often immunized retroactively or prospectively through the creation of a Compliance function that does not report through Legal. Typically, most of the people exercising the "compliance" function are not lawyers.

Surely this is unsound practice. The chief legal officer must have an undivided responsibility for seeing that the organization does not incur unacceptable legal risk and liability. If it's beneath his dignity to concern himself with how ongoing operations are conducted — and to take personal responsibility for the legal propriety of all this activity — then he should look for a different job.

One possible reason for the immunization of the general counsel is that he often serves as an informal and confidential adviser to the CEO. Hence he "knows too much." (He might claim ignorance of foreclosure processing, but he's probably up to date on pending M&A, issues with regulators — and on which executives will be pointed toward the exit.) Furthermore there might be fear that if discharged he could become a hostile witness. Well then, "promote" him to vice chairman — and make sure he can do no further harm.

An amusing contrast to the endemic teflon scenario I have described occurred recently in a major bank, where it is said that the general counsel was abruptly fired right after giving advice in a critical situation that ruled out what the CEO wanted to do. (There's no law against firing him for that!) Evidently there are circumstances like these where it's not too painful to cut the cord.

The more fundamental problem is that Legal is typically reactive: approving, rejecting or adjudicating problems and propositions that are overtly brought to its attention. Legal's ignorance of the legality and riskiness of the conduct of the corporation's regular business is only one of the bad consequences of this.

A second is that Legal does not take the initiative to assess ambient and new legal risks so that these can be weighed against benefits, assuring consistency in accepting courses of action with uncertain legal consequences. Rather, Legal most often operates as if all possible decisions were either "legal" or "illegal." This is foolish. We live in a world of uncertainty, not a court. Legal's job is to assess, not to approve.

Third, and worst, Legal does not scan the business and look out to the horizon for ways in which the bank could achieve better performance through more up-to-date, incisive or aggressive policies that carry little risk or acceptable risk.

Lawyers are taught to think like judges, no more. The solution is not to put nonlawyers in charge of keeping the bank legal. It is to search out, train and demand and reward performance from lawyers who can think like businesspeople, in fact like bankers — rather than like judges.

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