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By: PETER UMAH Esq

INTRODUCTION

In our contemporary world, so much so in the 21^st century, crisis management is critical and very fundamental for any and every business organization. The importance of crisis management cannot be over emphasized as it helps to ensure that the organisation can survive and thrive during a crisis event. Crises can take many forms, including natural disasters, cyber-attacks,[1] financial meltdowns, and product recalls, among others.

It suffices to categorically state, that an organisation or business without a well-structured crisis management plan may, when crisis comes, be unable to recuperate and continue its business. Having said this, the adverse effect of crisis, ranges from financial losses, damaged reputation and in most cases, potential legal actions, which a lawyer must be called upon to proffer solutions.

• WHAT IS CRISIS MANAGEMENT?

 Crisis management is the application of strategically designed measures to assist an organization deal with a sudden and heinous negative event, while still maintaining business continuity. Crisis management involves the making of and implementation of policies and procedures to defend, mitigate and prevent a crisis^[2].

 Crisis management is also the systematic way of setting in place plans, structures, measures and policies in other to prevent, cure and exit challenges which may pose short or long term business threat to an organisation or business. Crisis management involves analysing and managing potential major problems that can threaten the existence of an organization or business.

3.0 THE SCOPE OF CRISIS MANAGEMENT

Effective crisis management programs strive to prevent crisis from occurring in the first place. They also guide quick and decisive responses designed to restore trust and resume operations in the event a crisis occurs.[3] While some crisis can be prevented, others cannot. Having preparedness programs and systems for quick and effective response to crisis events, makes all the difference between chaos and a managed response with mitigated loss[4].

3.1 Many companies tend to effectively find out the potential threat or negativity that may occur to the organization in the future. These businesses or organizations do their best to avoid these threats as much as they can or when the threats occur, they do their best to turn the negativity into positivity for the organization.

Generally, the scope of crisis management is centred on just one thing – to plan[5]. It is imperative that every organization has a suitable crisis management plan. Without a proper plan, then the management of the crisis will not be a success.

Therefore, the first necessary thing to perform as part of crisis management is to create the crisis management plan. Normally, according to the nature of crisis to be encountered, there are several plans to apply such as a pre-crisis plan, a crisis plan and a post-crisis plan.

4. 0 WHO IS RESPONSIBLE FOR CRISIS MANAGEMENT?

For every organization or business, there are different strokes for different folks. What may be attainable here may not be attainable in another organization as per the modus of managing crisis.

There is usually a team set up for the purposes of crisis management in every organization. This team comprises executive members, risk assessment officers, members of staff and most importantly, lawyers from the legal department.

There are key factors which must be present towards attaining success in crisis management. This key factor is the need to have lawyers in your team; a lawyer should, as a matter of necessity, be a part of that team because there are advice only lawyers can proffer which can help in pre-crisis, crisis and post crisis era.

5.0 ROLES OF LAWYERS IN CRISIS MANAGEMENT

Lawyers in an organization or those retained by organizations, bear important responsibility for ensuring that an organization is prepared, and aware of any potential threat or crisis. Lawyers should, after preparing other team members, be ready to take up the lead role during crisis.

The lawyers’ role can be grouped into:

1. Pre- crisis Phase

The issues always surrounding a crisis will naturally include but not limited to duty of care to a neighbour, financial cost and a variety of regulatory and compliance issues. Many of these issues stem from legal obligations; all represent substantial legal liability and reputational exposure. It is the duty of lawyers to appreciate them, anticipate them and understand how to address them. When this is not done, crisis preparedness and the resulting response may be severely compromised[6]

Here the lawyers are very much needed to give legal advice which will help in wise policing making by the organization. The roles always include making sure that organization complies with all regulatory bodies and extant laws. This is most applicable for start-up companies

• Crisis Phase

In this stage, the lawyers play a central role. They are not in the forefront in this phase.  There is a need to understand that the appropriate response to a crisis requires the right blend of skills and actions and competence at the right times. That means, lawyers must work hand in hand with experts in crisis management, crisis communication, and other disciplines in other to detect the seriousness of the crisis and what needs to be done to savage the situation at the very moment. They must work hand in hand with the communication team to put out a valid legal solution internally or even to the public. They also are responsible for analysing the extent to which the crisis has affected the organization, the legal remedies or legal wrongs facing the company and a way forward.

• Post Crisis Stage

The lawyers here, advice the organization on the need to comply on the non-compliance that brought about the crisis initially and advise them appropriately on subsequent compliance in other not to repeat such mistake. It is the role and duty of lawyers to always keep the company updated on new laws in other to foil further liability or crisis.

Conclusion

The need for crisis management cannot be overemphasized. Crisis are inevitable, therefore, the ability and how well it is prepared for is what makes an organization stand out in this business. Where an organization fails and crumbles in the face of crisis and adversity, it only goes to show that the strength of that organization is weak. In-house lawyers or lawyers on external retainership must hone their crisis managerial skills to be able to stand in for the organization where necessary.

References:

1. Regester, M., & Larkin, J. (2005). Risk issues and crisis management: A casebook of best practice. Sterling, VA: Kogan Page US.
2. Crisis Management: From Policy to Response (Dentons Canada LLP and ACC Canada Mar. 2014), http://www.acc.com/chapters/canada/up load/Crisis-Management-From-Policy-toResponse-March-2014-3-copy.pdf
3. Institute of Business Continuity Management, Organisation Resilience: Business Continuity, Incident and Corporate Crisis Management, https://www.continuitycentral.com/Organis ationResilience.pdf (includes extensive bibliography and reading list)
4. Crisis Management: What to Do When a Company/Brand-Threatening Event Occurs, (Europe source) http://www.acc.com/legalresources/resour ce.cfm?show=20231
5. https://www.theirm.org/news/3-cyber-risks-to-look-out-for-in-2023/
6. https://www.techtarget.com/whatis/definition/crisis-management

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[1] https://www.theirm.org/news/3-cyber-risks-to-look-out-for-in-2023/

[2] https://www.techtarget.com/whatis/definition/crisis-management

[3] Crisis Management: From Policy to Response (Dentons Canada LLP and ACC Canada Mar. 2014), http://www.acc.com/chapters/canada/up load/Crisis-Management-From-Policy-toResponse-March-2014-3-copy.pdf

[4] Institute of Business Continuity Management, Organisation Resilience: Business Continuity, Incident and Corporate Crisis Management, https://www.continuitycentral.com/Organis ationResilience.pdf (includes extensive bibliography and reading list)

[5] Crisis Management: What to Do When a Company/Brand-Threatening Event Occurs, AM, June 2006 (Europe source) http://www.acc.com/legalresources/resour ce.cfm?show=20231

[6] Regester, M., & Larkin, J. (2005). Risk issues and crisis management: A casebook of best practice. Sterling, VA: Kogan Page US.

By: DOYINSOLA OMOMOWO Esq.

INTRODUCTION:

Trusteeship is not strange to Nigeria or Africa. Among the various ethnic groups in Nigeria, trusteeship is well-inherent and operates according to customary conventions. It is fulfilling to know that our people are increasingly becoming aware of the benefits of estate planning. You have worked so hard to build a comfortable savings cushion with the intention of living comfortably at retirement and to make sure your children and family are well taken care of. It is only logical to have your ‘sweat’ well preserved by applying processes and procedures that ensure orderly management while alive and a seamless transfer at passage.

WHAT IS A TRUST?

A trust is a legal (document) arrangement through which an individual (or an institution such as bank or a law firm), called a “Trustee”, holds legal title to property of another individual known as a “Settlor or Grantor” for a third party called a “beneficiary” It is designed to allow for the easy transfer of the settlor’s assets thereby by-passing the often complex and expensive legal process of probate.

The trustee has the fiduciary duty to manage the settlor’s assets wisely and upon the death of the settlor, these assets flow to the beneficiary (ies) according to the settlor’s wishes as outlined in the trust agreement. Unlike a Will, a trust does not have to clear the courts to reaches its intended beneficiaries when the settlor dies or becomes incapacities. The trustee named to carry out the instructions in the trust contract can be a relative of the settlor, an appointed professional trustee (such as a financial institution), etc.

The settlor can leave a full inheritance to his or her heirs (beneficiaries). The settlor also has the power to place certain conditions that need to be fulfilled before named beneficiaries can access the inheritance such as a beneficiary finishing college before he/she can have access to the inheritance.

TYPES OF TRUST

There are two major types namely:

1.   Testamentary Trust; and

2.   Living Trust.

TESTAMENTARY TRUST

This type of trust is set up through a last will and testament i.e. it only comes to existence upon the death of the settlor. It needs to pass through the process of probate before such can be transferred to the beneficiaries.

Here, property must pass into the trust by way of the will and, thus, said to be funded and must go through the probate court process.

LIVING TRUST

This type of trust is setup and implemented during the settlor’s lifetime. The settlor names a trustee to carry through the provisions of the trust upon his or her death. This happens outside of the probate process thereby saving time and cost in this regard. Establishing a living trust requires additional planning and documentation beyond a last will and testament, therefore it costs more upfront.

Worthy of note is that an unfunded living trust would technically not exist until it receives some assets. If you attempt to create a living trust but fail to transfer any asset to it except through your will, the property must go through probate just like a testamentary Trust.

Other types of trust include the following:

•   Totten Trust;

•   Charitable Trusts;

•   Spendthrift Trust;

•   Constructive Trust;

•   Asset Protection Trust;

•   Corporate Trust;

•   Special Needs Trust; etc.

FORMS OF TRUST

There are two forms of trust namely:

1.   Revocable Trust; and

2.   Irrevocable Trust.

REVOCABLE TRUST

In this form of trust, the settlor has the power to change and amend the trust at any time such as changing the names of the beneficiaries or even undoing the entire trust. Here, the settlor can name himself or herself as the initial Trustee i.e. designating himself or herself as a trustee while he or she is still alive. In the event of any form of incapacity or death, the Successor Trustee immediately steps in without the complexities and costs in engaging a solicitor, applying for probate, etc.

The downside of this form of trust is that the assets in the trust would still remain a part of the settlor’s estate, meaning he or her may still be liable for estate taxes after his or her death (i.e. where the estate is valued beyond the estate tax exemption at the time of death). Revoking this form of trust is not a quick job, but it can be done making it a flexible option.

IRREVOCABLE TRUST

This form of trust allows you to permanently and irrevocably give away your assets during your lifetime thereby relinquishing all control and interest in the assets.

Once the trust agreement for an irrevocable trust is made, the named beneficiaries are set and the settlor can do little to amend the agreement. It would take a judge to decide whether a change can be made and even then, the circumstances would have to be very special. Some people might start off with a revocable trust but then convert it to an irrevocable trust later (i.e. when they are more certain of things).

When the settlor dies, the revocable trust automatically converts to an irrevocable trust (as the only person who could have changed it has passed on

ADVANTAGES OF CREATING A TRUST

Some of the merits of creating a trust are:

1.   Avoids Probate – probate is a requirement under a valid will, but under a trust, your successor Trustee is required to pay your debts and distribute your assets according to your instructions.

2.   Provides Privacy – This is because a trust is not made public and is distributed in private. A will on the other hand is a public record and so all transactions will be public as well.

3.   Offers more Protection if Challenged – this is because it would be harder for challengers to prove that you were coerced into signing the trust documents and also proving the fact that you went through the whole process of finding the trust e.g. retitle and re-deed process.

DISADVANTAGES OF CREATING A TRUST

Some of the demerits of creating a trust are:

1.   Personal Inconvenience – not having control over the assets anymore except under revocable form of trust which would still be a long process to ensure wielding control over such assets in the trust.

2.   High Expenses – some of these attending costs include cost of setting up the trust, cost of administering the trust, cost of the process of retitling the documents to bear the name of the trustee, etc.

3.   More Detailed – as trusts are much more complex to draft.

CONCLUSION

While a living trust is a better option for some people, wills are just fine for others. A trust is most appropriate for individuals who have complex financial or personal circumstances.

Therefore it is always advisable to consult an estate planning attorney for more information and to act as a legal guide.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For more information, clarity or consultation, fill in the contact form, or send us a mail.  info@asalawpractice.org

SOURCES

Article (Trusteeship – An Overview by Monro Wright & Wasbrough

LLP Solicitors August 2014) – http://www.mww-llp.com/wpcontent/uploads/2014/09/Trusteeship-an-overview-FINAL.pdf

Breaking Down ‘Trust’ – https://www.investopedia.com/terms/t/trust.asp

FindLaw.com “Types of Trust” – http://estate.findlaw.com/trusts/types-of-trusts.html

Ekundayo: The Business of Trusteeship Needs a Complete Overhaul March 29, 2017 – https://www.thisdaylive.com/index

JOURNAL

• Abdulkarim I., Trust Law and the Administration of Real Property in Nigeria, in

International Journal of Advanced Legal Studies and Governance, (2011) Vol. 2(1) 210- 235