Like most seasoned lawyers, Charles R. Berman is circumspect on most issues and sees both sides of every problem - with one exception: He feels it is a big mistake when a bank's outside general counsel goes on the bank's board.

"How can he be objective in his legal opinions when he is part of the decision-making process in the bank? It could be basic conflict of interest."

I asked Chuck, who has had 23 years as a bank lawyer with the firm of Bourne, Noll & Kenyon in Summit, N.J., after five years' work as a bank lawyer for a Wall Street law firm, "What other reasons are there to avoid serving on the bank's board?"

His response: "That one is so overpowering, I don't need any others."

I had thought it would be merger and acquisition work and other dramatic problems.

Chuck disabused me of that opinion. Sure he does this, but most of his time is spent on transactions - largely in the credit arena, fielding questions on regulation and daily banking transactions, and helping with workouts.

"I can get 20 calls a day from one bank client alone, and I should have an immediate answer for most of their questions."

"Is this dull?" I asked.

"Absolutely not. Banking changes minute by minute, so we get new questions now like the attempt to use an IRA as collateral (no), the unique problem of lending to limited liability companies (not really), changing the language of a printed bank form, and ever-changing environmental regulations.

What about CRA issues?

Most banks have in-house counsel, Chuck explains, and they should handle this and other policy issues. Our job is to come in on transactions and larger projects, since it would be too expensive for most banks to have enough in-house people to handle all the deals that must be evaluated.

And working with in-house counsel is no problem - as each lawyer feeds the other ideas, while the outsiders also provide support and serves as a resource.

In fact Berman feels one of his most useful roles is in contacting regulators, and even the SEC, to find out if something the bank wants to do will cause it difficulty later.

The regulators, he explains, are happy to talk about issues up for interpretation, as it saves them later grief too. And by having an anonymous and knowledgeable outside counsel make the call, before reformulating it the bank does not have to show its hand.

What's the biggest pitfall a bank lawyer faces? Chuck Berman's answer was immediate.

"To impress a client, too many attorneys attempt to make business decisions in the guise of legal suggestions on issues that are none of their business.

"A lawyer who works on an M&A deal should recognize that his opinion on the price of the deal is irrelevant.

"They are the bankers. We are not."

"Even on workouts, we may know the people involved as we looked over the loan in the first place, but still our judgment should not be involved."

Choosing a firm.

I asked Berman how a bank should go about deciding which outside law firm or firms to use. Here he had definite opinions similar to his advice to stay off the board:

* Don't pick a single practitioner. You need a firm with a computer- accessed library, knowledge of related issues, and regulatory contacts. (His own firm has 13 specialists in banking.)

* Find out who will be responsible for your account and demand that the same person or persons continue to be your lawyers.

You are hiring individual lawyers not a firm name. You don't want to have to tell your story over and over again.

* Make sure you respect and like the lawyers who will work for you well enough so you and they can be honest, and they can call the CEO or any officer about a policy or practice that causes them concern without fearing losing the relationship.

* Ascertain that the lawyers you pick will be willing to make the effort to understand your corporate culture, loan policies, your due-diligence approach, your attitude toward customer disputes and other sensitive issues so they will coordinate with your policies rather than cause friction of their own.

What about fees?

There was a time, according to Berman, when as a New York bank lawyer, he would send bills and say, "That's it."

While he hopes that the reputation of his firm for fair pricing is strong enough, when a bank does request a reduction or asks for a cap on costs, whether it is for itself or for the bank's client who is paying the fee to get the bank loan, Berman's approach is to say, "Yes, we will work it out."

For he knows that the prestige of being a bank lawyer is great, it leads to referral business, and keeps a lawyer at the forefront of a wide variety of legal issues most important in today's business climate in which managing all costs, including legal ones, is a key to success.

In one of life's ironies, Chuck Berman was first trained as a pharmacist.

He had spent three days on his first job when a woman bought 100 pills and objected because he charged her 59 cents.

"The pharmacy down the street would have charged me 49 cents," she complained, and Chuck realized that he would face complaints like this all his life. So he quit and went to law school.

But think! Had his pharmacy allowed Berman to make the 10-cent concession on the pills, the way his law firm might not for his bank clients, he might still be a pharmacist today instead of a bank lawyer. Chuck says he has no regrets.

* * *

Regarding our January contest where the winner receives a certificate as president for a day of the Schmidlap National Bank, the problem is this: The CEO has brought his son into the bank and made him an officer.

The bank is small enough so that everyone's actions can affect the morale and effectiveness of the entire operation.

His son goes around, pushing his weight, and telling long-standing employees things like, "We in management will make decisions. You will carry them out."

His poor judgment, lack of experience, and abuse of power are truly damaging, yet he is the apple of the CEO's eye.

What can you do to protect the bank? Mr. Nadler is a contributing editor of American Banker and professor of finance at the Rutgers University Graduate School of Management.

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