Legal Risk Concept in FirstBank

Companies in operation are required to implement policies, procedures and guidelines in respect of the management and control of legal risks and First Bank of Nigeria Plc has conformed with this international best practice.

Legal risk covers contractual risk, legislative risk, intellectual property risk and litigation risk. Legal risk includes:

1. Failure to act appropriately or diligently in response to a claim made against the Bank;
2. Failure to take proper action to preserve the right of recourse to insurers in respect of any claim against the Bank;
3. Inability to successfully defend a claim brought against the Bank;
4. Inability to take action to enforce the rights of the Bank through the law courts; or
5. Failure or inability to mitigate the likelihood that an adverse claim will be successfully made against the Bank.

Legal Risk Management Structure

The Bank has a dedicated global legal function which is responsible for managing legal risk. This comprises the provision of legal advice and support in resisting claims and legal proceedings against the Bank, analysis of legal issues, management of litigation, non-routine debt recoveries, and any other litigation against third parties.

The Head Office Legal Services Department oversees the global legal function of the Bank and reports to the Chief Risk Officer.

For the smooth, efficient and effective performance of its duties, the Department is sub-divided into four hubs which are headed by senior officials of the department who report to the Head, Legal Services. The four hubs are as follows:

1. Retail and Securities Hub – with responsibility for the documentation and perfection of securities considered necessary to secure credit facilities extended by the Bank to its customers.
2. Litigation Hub – with responsibility for the commencement and monitoring of legal actions on behalf of the Bank, defence of any legal action against the Bank, and rendition of legal advice in relevant matters. The unit evaluates out-of-court settlement options with a view to decongesting the Bank's litigation portfolio and reducing contingent liabilities to a bare minimum.
3. Corporate and Contracts Hub – with responsibility for the documentation of transactions entered into between the Bank and its corporate customers as well as the preparation and vetting of contracts entered into between the Bank and its customers/third parties in appropriate cases.
4. Regional Co-ordination/Administration Hub – with responsibility for the coordination and supervision of duties performed by Legal Managers posted to some Business Development Offices (BDOs) of the Bank and the performance of administrative duties in the Head Office Legal Department. The Legal Managers perform the duties arising from the hubs they cover to a limited extent.
5. There are two sub-hubs responsible for the preparation and vetting of bonds and guarantees issued by the Bank or accepted as security by the Bank.

Legal Risk Policy and Reporting

A major legal policy of the Bank is that all known potential incidents of material legal risks are reported at an early stage and mechanisms put in place for rapid escalation to Management for proactive summary decision.

For effective implementation of this major legal policy, the various units of the Bank are expected to promptly notify Legal Services Unit of any actual or threatened litigation against the Bank or any of its officers in their official capacities.

The Head, Legal Services prepares quarterly reports on litigation matters and their consequent costs to the Board of Directors while Management is furnished and kept abreast of details of cases involving major potential liabilities against the Bank.