JP Morgan disclosed on Friday that it had set aside $9.2 billion to cover its mounting legal expenses leading it to report its first quarterly loss under its CEO Jamie Dimon. Mr. Dimon, JPMorgan’s chief executive, described the legal expenses on Friday as “painful.” But that pain is profit for the bank’s outside law firms, who off course will see their income increase.
Jamie Dimon had sighted various issues relating to its acquisition of Bear Sterns and Washington Mutual, two firms it acquired in the wake of the 2007 & 2008 Banking Crisis. Both acquired institutions are thought to have violated several mortgage related issues with the country’s regulators. A lot of the issues are still in court with the bank’s lawyers helping in its defence. JP Morgan has already kept about $23billion in reserves should the litigations crystallise. Other Big banks like Bank of America have also incurred about $20billion in legal cost.
Law firms profit a lot of litigations for or against corporate entities who have to face mounting legal battles from all sides. It could be the government, regulators, communities, competitors, customers, suppliers etc. Recently I wrote about how Seven Up had also set aside N681million just for litigations as well.
