The Significance of the General Counsel in Modern Community Banking

In today’s regulatory and strategic landscape, the role of general counsel (GC) in community banking has expanded dramatically. Once considered an optional in-house adviser, the GC is now a crucial figure — serving as legal counsel, compliance officer, crisis manager and risk steward.

Defining the Client
At the core of the GC’s responsibilities is the principle that the bank itself — not its executives or directors — is the GC’s client. This distinction drives every legal assessment and strategic decision. The GC must often navigate conflicting interests between management and the institution, ensuring the GC’s fiduciary loyalty remains with the bank.

In structures involving bank holding companies or financial holding companies, the GC’s duties may extend across diverse business lines such as insurance or wealth management. These structures present complex questions about dual representation and conflicts of interest, requiring the GC to maintain clarity on whose interests they are representing.

Ethics and Fiduciary Duties
Community bank GCs are bound by the same professional conduct rules as other attorneys, including competence, confidentiality and loyalty. However, the stakes are often higher in a banking context. The GC also must demonstrate a clear understanding of the bank’s operations, offering legal guidance that aligns with business goals. When executive interests diverge from the institution’s, the GC may need to escalate concerns to the board, highlighting the sometimes delicate balance between legal duties and organizational hierarchy.

Regulatory Compliance
Perhaps the most visible GC responsibility is ensuring compliance with a growing body of banking regulations. From the Bank Secrecy Act and anti-money laundering statutes to consumer protection rules and cybersecurity laws, the GC must coordinate examinations, prepare disclosures and respond to findings. Missteps can result in reputational damage and regulatory penalties.

Key compliance domains for bank GCs include:

• BSA/AML compliance.
• Consumer protection laws.
• Capital adequacy and governance standards.
• Cybersecurity and data privacy regulations.

Furthermore, community bank GCs will need to be able to understand, harness and use artificial intelligence (AI) tools now and in the future. AI is already changing the banking business. The institutions which fail to properly employ AI within their operations will be falling behind and ultimately increase risk for the bank.

Risk Management
The GC plays a key role in institutional risk management. Beyond just legal interpretation, they must identify and mitigate enterprisewide risks. This includes leading internal investigations, coordinating insurance strategies, advising on internal controls and overseeing responses to government inquiries. The GC must anticipate threats before they emerge and structure risk frameworks that span the enterprise.

Crisis Response and Litigation
In times of crisis — whether regulatory, reputational or operational — the GC becomes the institution’s command center. The GC manages legal exposure, navigates media inquiries and represents the bank in government investigations. Litigation management is another core duty: The GC must oversee case strategy, budgeting, settlement decisions and outside counsel coordination.

Securities Law Compliance
For publicly traded community banks, securities compliance is a significant function. The GC oversees filings with the Securities and Exchange Commission, including 10-Ks, 10-Qs, 8-Ks and proxy statements, and manages insider reporting under Section 16. In capital market transactions and M&A deals, the GC plays a key role in managing the preparation of registration statements and disclosures. As a result, the GC needs to have a deep knowledge of the securities laws applicable to the bank.

Mergers & Acquisitions
GCs are central players in M&A transactions. Their institutional knowledge and legal skill help integrate legal, financial and regulatory teams. After a deal closes, the GC (on the buy side) also facilitates the integration of systems, updates controls, manages new employee onboarding and supports post-transaction communications with investors and regulators.

Corporate Governance and Records Management
Document management is not just an administrative task but also a legal obligation. The GC ensures the bank’s books and records meet regulatory standards and mitigate legal risk. The GC also manages documentation to the board, minutes practices and the basic corporate governance functions of the bank.

The GC as Strategic Partner
Today’s bank GC is a legal technician, business strategist and institutional guardian. The most successful GCs know when to engage outside counsel and how to translate legal advice into business value. As community banks continue to evolve, GCs must continue to embrace technology, compliance and practical leadership.