There is a famous quote from Shakespeare’s play Henry VI where Dick the Butcher says: “The first thing we do is kill all the lawyers.” People like to cite that quote when making a general attack against the legal profession, perhaps thinking that Shakespeare was lending support to their anti-lawyer position. Interestingly, the quote in question was made by Dick the Butcher speaking about what would occur once Jack Cade, the head of an anarchist rabble overthrew the government. The lawyers, you see, would be the ones pointing out the fact that the seizure of power by the government was unlawful and the acts of such a government unenforceable. Today, lawyers grapple with similar issues on behalf of individuals and corporate clients that find themselves confronted with the power of state and federal governments whether that involves the creation of legal entities, such as banks, or the ongoing regulatory strictures such entities operate under. A bank that has had to deal with a Consent Order or a director that is being sued by the FDIC will understand exactly what I mean.
When a group of people decide to form a bank they generally retain a lawyer to create the legal entity that raises the capital and facilitate the various applications that must be shepherded through state and federal banking regulators. That lawyer is generally from an outside law firm that specializes in handling such matters. Bank boards may oftentimes have a lawyer but who may be involved in closings real estate transactions for the bank but is generally not the person to whom the bank is seeking bank regulatory advice. The reason for that is that the broad area of banking law and regulation is an amazingly complex series of laws and regulations promulgated by state and federal governments and regulator bodies. A local general practitioner will not generally have the type of training and background to provide advice on matters that may threaten the future of the bank or subject the directors to civil money penalties.