enterprise wide legal process (2017) - e baker law firm pllc

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Page 1: Enterprise Wide Legal Process (2017) - E Baker Law Firm Pllc

•Establish and maintain MIS•Assess realistic potential losses

•Review system for tracking and evaluating litigation exposure, litigation expenses for types of

cases, budgets

•Establish culture•Develop and revise written policies•Maintain adequate capital•Implement systems and controls•Implement training programs•Seek legal advice early•Oversee & manage outside counsel

•New products or services

•Loan or investment documents, contracts

•Correspondence regulatory and or customer involving potential litigation

•Have legal counsel perform emerging risk and root cause analysis

•Review identified litigation and potential legal matters

•Perform root cause analysis•Advise on revision of policies and procedures, documentation and contracts to reflect lessons learned

Reassess & Revise

Identify &

Reduce

Measure &

Monitor

Control &

Mitigate

Page 2: Enterprise Wide Legal Process (2017) - E Baker Law Firm Pllc

Banks & Financial Institutions: Developing an Enterprise Wide Legal Process

Does your bank or financial institution have an Enterprise Wide Legal Process in place for identifying and resolving the risk of potential claims and litigation? Is your Enterprise Wide Legal Process articulated within policies and procedures? Are those procedures auditable, accurate and effective? Failure to have an up-to-date EWLP can result in losses both monetary and reputational.

Regulators recommend that banks develop a process for the centralized oversight of all communication with bank customers and other groups including employees regarding matters of pending and potential litigation. Management is recommended to initiate this legal review process at the first indication that potential litigation may develop and to ensure that all communications are timely and appropriate. An Enterprise Wide Legal Process should:

Page 3: Enterprise Wide Legal Process (2017) - E Baker Law Firm Pllc

IDENTIFY AND REDUCE RISK OF POTENTIAL LITIGATION. A bank or financial institution should have legal counsel (internal or external) participate in reviews of: • new products and services, to identify areas of potential legal exposure. These reviews should encompass existing products, services, and processes that are significantly modified and the use of third parties in delivering products and services. • loan or investment documents the bank uses to ensure compliance with legal requirements or evaluate the legality of particular transactions. • all correspondence regarding potential liability issues including customer complaints and regulatory investigations. • identified emerging risk issues and root cause analyses of large loss events.

MEASURE AND MONITOR LITGATION AND ITS IMPACT. A bank or financial institution should: • establish and maintain a management information system (MIS) that informs the board and executive management of pending and potential litigation in a timely and accurate manner. • assess realistic potential losses posed by pending or potential litigation. • incorporate a review system that tracks and evaluates litigation exposure for every product and service offered.

CONTROL AND MITIGATE LITIGATION AND ITS IMPACT. A bank or financial institution should • establish a culture of ethical standards and ensure that compensation systems are aligned with risk management objectives. • develop written policies for monitoring and managing litigation. • maintain adequate capital or specific contingency reserves to cover potential judgments or settlements consistent with generally accepted accounting principles. • implement systems and controls to ensure continual and full compliance with current laws, regulations, and other legal requirements. • implement training programs and internal control processes to identify, limit, and manage litigation exposure. • seek legal counsel’s advice and assistance early to reduce the risk of potential claims becoming actively litigated claims. • oversee and monitor any outsourcing of or third-party arrangements for legal services. As a Certified Risk and Compliance Management Professional and a former in-house counsel for over 10 years representing private and publicly traded financial institutions as well as litigator for the largest publicly held P&C insurer in America, I advise, collaborate with and represent banks and financial institutions in the development, review and enhancement of their ENTERPRISE WIDE LEGAL PROCESS.