While murky edicts from Washington are frustrating for bankers, they have brought compliance lawyer Leonard A. Bernstein a boatload of business.
A partner at the Philadelphia law firm Reed Smith Shaw & McClay, Mr. Bernstein helps 200 banking clients decipher federal and state consumer regulations.
"I turn to him all the time," said Lynne Sutphen, assistant counsel at UJB Financial Corp., Princeton, N.J. "Len has a knack for explaining the law to a layperson."
Reed Smith has so much business that it plans to add at least three lawyers to its 12-person compliance group next year.
"Nobody thought it would zoom to what it's become," said the 36-year-old Mr. Bernstein. "It's about five times the size of what we projected."
Reed Smith started its banking compliance practice in early 1992 when dozens of new rules were being written to implement the Federal Deposit Insurance Corporation Improvement Act.
That enormous law was followed by the government's multi-faceted campaign to end lending discrimination. Mix in the Department of Housing and Urban Development's tortuous writing of real estate settlement procedures, and there are plenty of confused bankers to help.
"Our clients . . . raise their hands in disgust at the lack of guidance," Mr. Bernstein said.
"Questions are often way ahead of existing statutes and cases," he added. "Often times, the questions that come to us are unanswerable, and that's why they do come to us."
So Mr. Bernstein and his colleagues take their clients' questions straight to the regulators.
Beyond seeking case-specific responses, Mr. Bernstein advises clients baffled by how to comply to make sure they have a legitimate business reason for any questionable action.
Mr. Bernstein, who came to Reed Smith after nine years with Blank, Rome, Comisky & McCauley, divides his time equally between the firm's headquarters and its Princeton office.
Mr. Bernstein is a detail-minded, energetic person who puts in long hours. After a full day at the office, he stays up until 2 a.m. editing the firm's quarterly compliance newsletter or reading new regulations.
He knows an opportunity when he sees it, too.
Reed Smith snapped up Geoffrey M. Connor, the former New Jersey banking commissioner, after Democratic incumbent James Florio lost the governor's race in 1993.
The first call Mr. Connor got after the election was from Mr. Bernstein. "He said, 'Sorry about your boss, would you like to work for Reed Smith?'" recalled Mr. Connor.
Commenting on Mr. Bernstein's hectic pace, Mr. Connor quipped: "I'm convinced that Len is two people."
Reed Smith's customers are mostly financial services firms, including banks, mortgage companies, and credit unions. But Mr. Bernstein also gives advice to software companies that sell to banks and other lawyers.
Because noncompliance can be expensive and hurt a bank's reputation, Mr. Bernstein's clients expect fast answers.
"Responsiveness is the most essential element in today's legal market," he said. "If we fall down on responsiveness, we lose our clients."
Right now, his clients are concerned about disparate impact, the government's phrase for defining lending bias. It is a bank practice or product offering that negatively impacts a class of people protected by the Equal Credit Opportunity Act or the Fair Housing Act.
A year ago, Reed Smith became one of the first law firms to defend a disparate impact case. In the case, the Philadelphia Commission on Human Relations sued a Philadelphia mortgage company over its minimum-loan-amount requirement.
The commission said the mortgage company was discriminating against low-income borrowers, who would want smaller loans.
Unfortunately for those who hoped the case would set a legal precedent, the mortgage company settled last month.
"Even for folks who are very sophisticated, trying to analyze what the law is when there is no law in the lending arena yet is very difficult," he said.
Bankers might be surprised to hear that Mr Bernstein is on the board of the Public Interest Law Center of Philadelphia, a civil rights group that is more likely to be on the opposite side of lenders on discrimination issues.
"We want the best people with the best minds," said Karen Black, an attorney with the center. "And they come on both sides of the fence." Board duties include deciding which cases to take and raising money. Ms. Black said Mr. Bernstein's reputation in Philadelphia also helps validate the center's causes.
As with fair lending, Mr. Bernstein thinks the government needs to more clearly explain compliance with the Real Estate Settlement Procedures Act.
Mr. Bernstein and about 20 other lawyers have formed a group to write an unofficial commentary to the law that they hope will be adopted by HUD next year.
The settlement procedures act is confusing, Mr. Bernstein said, because HUD only has one person, senior attorney Grant Mitchell, working on the regulations.
"The residential mortgage industry has one man providing the answers to the whole country," he said. "That misallocation of resources is absurd."
In addition to decoding regulations that have been issued, Mr. Bernstein ponders what's coming.
He's spending time now trying to figure out how state laws will clash with the federal statute granting interstate branching.
"Interstate will present a new layer of legal issues: which types of state laws apply and which do not," he predicted.
Mr. Bernstein doesn't expect compliance to get much simpler any time soon.
Lawmakers and regulators, he said, will continue to react to individual cases of abuse, such as a lender fleecing a borrower or a bank gouging customers with high fees.
Government officials are less enthralled with reducing regulatory burden.
"There's no romance to bank simplification," he said.
Leonard A. Bernstein
Feb. 9, 1958; Fort Lee, N.J.
BS and BA, University of Pennsylvania; JD, Temple University Law School
1992-present: Partner at Reed Smith Shaw & McClay
1983-1992: Associate with Blank, Rome, Comisky & McCauley
Married, with two children
Playing the tuba, running a baseball fantasy league