Zoltan Fenyi is the General Counsel for Sberbank Hungary. As he describes it, he had a “simple career line leading up to today and was lucky enough to be in this position at the relatively young age of 31.” He first started working while still in law school as a Trainee Lawyer at the Metropolitan Court in Budapest, which offered him an experience he characterizes as “extremely important, especially for a young law student.” After 3 years there, and after graduating from law school, he began working in-house with CIB Bank, where he stayed for about 1.5 years. In 2009 he joined Volksbank. In 2012 the bank had a change in indirect shareholding structure resulting in him joining Sberbank. He fondly recalled two tutors within the organization, Krisztina Lantos and Tamas Nadasi-Szabo, who helped him to develop within the company. His first managerial role came in 2012 as Deputy Head of the Legal Team, and he became General Counsel in 2013.
How would you define the role of a Head of Legal?
Z.F.: In my case, I find there are several aspects to the role. First you need to act as a partner to the Managing Board and as a counsel to the CEO (the latter, by the way, is legally prescribed in Hungary as the General Counsel has to be directly subordinated to the CEO). The role also has a strong managerial position requiring me to lead, make decisions, spread out work, and support my team members with their problems – be they professional or private in nature.
Of course, the role also implies acting as a legal counsel. On this I would say that it is critical to stay involved in the daily legal problems of the company and to stay close to the business, from product development to sales channels and so on. To facilitate this, we follow a policy (which is also a personal policy) of an “open doors” approach.
You mentioned acting as a partner to the Managing Board. How do you find communicating and relating with the Board is most effective to carry out your role?
Z.F.: Communication depends a lot on the personality of the CEO. In our case, it tends to be quite informal and open – critical for building a relationship of mutual trust. Naturally, the Board meetings themselves are rather formal, in accordance with internal and external regulations, but the material communication tends to be quite informal.
What are the main challenges posed by your role?
Z.F.: In terms of the biggest challenge, the one that stands out in my mind is managing the constant and inevitable conflict between the business and legal risk functions. Managing the balance between the two is one of the trickiest things I deal with on a regular basis, not only in terms of coming up with solutions, but also managing the situations to ensure that a professional conflict does not become a personal one. In terms of managing this conflict I think personal communication and building relationships are key in order to position ourselves as trusted advisors. In fact, we spend a lot of time supporting staff from other functions, even on personal matters. Naturally, this is done outside of normal “business hours” and it is not an official function of the legal team, but we do get approached on a regular basis for such support and we are happy to lend a hand. We feel that a mutually supportive approach is in line with and further builds the corporate culture in our organization. We have to be counsel to the whole company, knowing and representing all of its sometimes contradictory interests than be simple lawyers. In fact, this is an area that I cannot fully empathize with, having never worked in a law firm, but I do see a big difference in their approach and sometimes it is hard to get them out of a purely legal mindset.
How large is your team and how do you structure it?
Z.F.: There are two types of positions within the legal team. The first is related to administrative work and includes four colleagues. The second is the actual legal matters and includes seven colleagues. Within the latter there is no formal split of responsibilities. Informally, there are differences in focus – may it be more corporate-work-related or retail. Overall, all my team members have to be able to handle all kinds of legal issues, but the priority is these two. I think that this variety is why an open position at this department is quite interesting for many lawyers, which leads to a flood of CVs any time we have an opening.
The banking industry in Hungary has seen a number of regulatory changes – both at the national and EU level. Of these, which ones prove to be most challenging for your legal team, and why?
Z.F.: Unfortunately, it’s not hard at all to pick one. The new consumer law issues and the fair bank package in Hungary pose big challenges, as we are still struggling to interpret a great deal of them. We fear recent changes represent a dangerous bug for the system for the future. I feel much of them were developed without a concept behind them and without taking enough time to reflect on potential consequences and ramifications. As a result we ended up being confronted by hasty legislation without a lot of time to implement it, and I worry about it as a final solution since it will likely cause a lot of problems in the mid to long-term.
One of the main concerns in the industry at the moment is the consumer lending part, which many players might perceive as becoming much more risky these days. There are two possible theoretical answers to this: (1) not dealing with this kind of business altogether; or (2) increasing prices to reflect the additional risks. Both have adverse affects for the industry and economy as a whole, so we have to work on precise techniques to manage the additional risks. On the other hand, I see potential with the corporate and SME business. Based on the work flow that my in-house team has had to deal with lately, I see a lot of potential in this direction in terms of the increasing number of deals and the increased size of the transactions.
What type of work do you tend to carry out in-house and what types do you prefer outsourcing to external counsel?
Z.F.: The general rule for me is to try to handle entry problems in-house as much as possible. There are some exceptions, such as labor law litigation, since in such cases we may be exposed to hidden relations/conflicts of interest in-house – a risk that cannot be taken. Of course, if we have to use or give opinions on transactions/deals requiring foreign law we involve external support. In some instances, there are also some specific questions where the Managing Board decides to request external opinions, such as when there is large liability, where it seems to be necessary to seek an external/objective opinion – or if there is a potential perceived reputational risk. The last ones are not frequent.
When you do outsource, what are the main criteria you use in selecting the firms you will work with – and what tools do you use to learn more about their capabilities?
Z.F.: We have a panel and we tend to choose one of the firms from it. Cost awareness is natural a highly appreciated consideration from the management team. We tend to run tenders when the matter involves specific tasks/projects, and usually we choose the best price offer but, of course, we also factor in past experiences and the firms’ expertise. In terms of the panel used, we have a local panel, in which we take into account the group one. We just finished establishing the new panel and the previous one was set in 2012.
In what way, if any, do you think the role of a GC is unique in Hungary as opposed to any other jurisdictions?
Z.F.: The main difference, based on my experience relative to colleagues from other countries, is that in Hungary a much higher involvement in the business side is expected of the General Counsel. I do not have a serious feel of other companies in the country to see whether this applies, but I suspect it does. I say this in light of the overall uncertainty in the legal system due to significant and quick changes of material laws that were recently passed (e.g. the Civil Code). With regulatory change being the norm and with the increase in risk that brings, I think businesses are more prone to turning to their legal counsel and involving them directly in the decision-making process.
On the lighter side, what is your favorite spot in Budapest, and why?
Z.F.: I am a BIG fan of Italian cuisine. As a result, my favorite place is a little Italian restaurant in the Buda side of the city: Alessio.
This Article was originally published in Issue 2.1. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
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