"The leading rule for the lawyer," Abraham Lincoln said, "as for the man of every other calling, is diligence." For the in-house legal team at Lloyds Banking Group, diligence – or its legal practice equivalent, due diligence – has been a perpetual administrative headache in the bank's recent history.

The 2008 government-brokered acquisition of HBOS, estimated to have lost Lloyds £10bn, prompted a continuing string of lawsuits from shareholders accusing the purchaser of short-sightedness and diligence failings. Four years later, Project Verde – Lloyds' attempt to sell off the 632 branches that later became TSB – stumbled shortly after Lloyds' due diligence found that the buyer, The Co-operative Bank, had a major cash shortfall in December 2012.

Lincoln's maxim would have been foremost in the minds of those lawyers who moved to TSB when it began to formally separate from Lloyds in 2013. Another major test of the business was likely. A possible initial public offering (IPO) of TSB had been mooted as early as February 2013, before Verde's collapse, but when former Post Office legal chief Susan Crichton was appointed as general counsel at the end of that year, the course had not yet been set.

"Obviously Lloyds had been working on this project to separate part of its business for some time, but the hypothesis that Lloyds had made was that it would be a trade sale, so a separate legal function hadn't been envisaged or established," explains Crichton, who was the last of the leadership team to join TSB when she arrived on
6 January 2014. "My business manager and I looked at one another and we both asked: 'Where do we go from here?'"

It soon became clear that Lloyds intended to float TSB by mid-year, and Herbert Smith Freehills corporate partners James Palmer and Nick Moore and outsourcing partner Nick Pantlin were called in to brief Crichton on the separation process and what was required to operate as a standalone bank.

On 27 May, a little over five months into Crichton's new job, Lloyds announced the intention to float TSB, with shares admitted to the London Stock Exchange four weeks later. For Crichton this period involved "a lot of early starts and late finishes" and "an addiction to yoghurt-coated raisins".

Guiding Lloyds and TSB through the £1.5bn listing of 25% of TSB – later increased to 50% following massive over-subscription – was Linklaters corporate partner Matthew Bland, who was previously mandated by Lloyds on the HBOS takeover and a £22.6bn rights issue in 2009. "Linklaters knew the business very well," comments Crichton. "[They were] very good at getting through a tremendous amount of document checking."

For the GC, who had never before been involved in an IPO, the process was akin to a complicated juggling act: "You become the glue when you're dealing with the board – finalising and making sure everything is checked and double checked and all of the risk factors are considered."

And all of the pain and frustration Project Verde caused in the previous two years turned out to be something of a blessing when it came to listing. "Once the transaction with The Co-op had fallen away there were a lot of people in the legacy Lloyds group who were very familiar with the business," explains Crichton.

"We've got a team of 20 lawyers, around nine of whom are here in London, and the rest of whom are spread between Barnwood in Bristol and Edinburgh. When I started I had around 10 lawyers, and it has grown from there; we've hired some from private practice, and others from in-house teams, including Royal Bank of Scotland and RSA."

Law firm relations: early days
As to how familiar law firms are with the bank, and what those relationships might look like, the jury is still out. "When we separated from Lloyds we inherited their panel, though it was clear that we didn't need that many advisers," says the GC, who has spent much of the past year explaining TSB's culture to external advisers and what the bank aims to do. "The expectation over the next year is to whittle that down further and get a clear idea of our legal needs."

One major project on the agenda is to simplify and review the terms and conditions for all of the bank's product lines, which were also inherited from Lloyds, with which Crichton's team now has little contact.

"Some of the firms are really excited to work with a new bank and understand our business, lending us office space and secondees. Others are a bit more focused on the financial side of things, and start by saying: 'We understand TSB's legal needs are not on the same scale as Lloyds'.' It's an interesting distinction."

Crichton has also been encouraged by the way regional law firms – in the face of deal-making dominance by the City and the magic circle in particular – are "more focused on ways they can be innovative in their offering". Given advice on financial products, property and employment are likely to comprise a large chunk of the company's legal spend, this may create openings for a wider reach of firms outside London.

But these relationships, like TSB the company, are in their infancy. Throughout our conversation, it is clear that, one year into the post, Crichton and her team are still feeling their way, and to around half of my questions – what is TSB's legal spend? How many law firms do you need relationships with? How large will the in-house team need to be? – she responds with the Beckettian line: "We're waiting for BAU (business as usual)." When will BAU come? TSB's legal head isn't sure, but the next calendar year is a rough timeframe.

Going it alone
But perhaps some of that uncertainty – or, more generously, openness and responsiveness – is part of what TSB is trying to do differently. After a stratospheric rise in the public enemy rankings in the last decade, UK banks have an abysmal reputation, something a newly launched lender is rightly conscious to distance itself from.

"We do describe ourselves as a challenger bank; it's something I had the [legal] team think about the other day," Crichton reflects. "To us, it means we think about things from the customer's perspective. Lawyers are innately conservative and sometimes we need to think things through in fresh ways."

Indeed, the bank's London headquarters – occupying a single, cramped floor at 20 Gresham Street – feel more like an open-plan start-up than the swarming, labyrinthine financial institution that you might expect. Chief executive Paul Pester's glass office is visible from most points on the floor, which is peppered with impromptu break-out groups and huddled sales teams.

TSB is going it alone, and it's encouraging to see. Crichton, who says she didn't want to be a lawyer after university, sees something solitary in her in-house role – "us GCs are loners in many ways" – she opines. It may be an unmapped path ahead but, free from Lloyds and the problems of the past, it's one that Crichton and her team are well prepared for.

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Susan Crichton CV
2014 – general counsel, TSB
2010-13 – general counsel, Post Office
2008-10 – legal, risk and governance director, Skandia International/Old Mutual
1999-2008 – general counsel EMEA, GE Money
1987-99 – head of European legal services, Avco Trust/Associates Capital Corporation
1985-87 – legal adviser, Forward Trust Group
1983-85 – articled clerk, Bower & Bailey
1979-82 – graduate trainee and legal assistant, Griffin Factors