Basel II classified Legal risk as a subset of Operational Risk in 2003. There is no standard definition, but there are at least two primary/secondary definition sets in circulation.
Mcormick, R. 2004 Legal risk is the risk of loss to an institution which is primarily caused by:- (a) a defective transaction; or (b) a claim (including a defense to a claim or a counterclaim) being made or some other event occurring which results in a liability for the institution or other loss (for example, as a result of the termination of a contract) or; (c) failing to take appropriate measures to protect assets (for example, intellectual property) owned by the institution; or (d) change in law.
Johnson and Swanson. 2007 The expenses of litigation of a company. 
Whalley, M. 2012 The risk of financial or reputational loss arising from: regulatory or legal action; disputes for or against the company; failure to correctly document, enforce or adhere to contractual arrangements; inadequate management of non-contractual rights; or failure to meet non-contractual obligations.
Tsui TC. 2013 The cost and lose of income caused by legal uncertainty, multiplied by possibility of the individual event or legal environment as a whole.