“The calls started flooding into JPMorgan Chase last month.
“As settlement talks with the federal government over the bank’s mortgage business heated up, lawyers began aggressively seeking a lucrative piece of work. The lawyers wanted the plum assignment of serving as monitor for JPMorgan’s mortgage operations — a corporate baby-sitting role that is typically part of a settlement.
“JPMorgan’s announcement 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 Jamie Dimon — underscored how the numerous regulatory woes at the nation’s largest bank are proving to be a boon for the country’s most sophisticated law firms.
“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, which include some of the cream of the Wall Street bar: Sullivan & Cromwell; Paul, Weiss, Rifkind, Wharton & Garrison; and WilmerHale.”
“The settlement, which is still in flux, could result in the assignment of a monitor to oversee JPMorgan’s mortgage business. The Justice Department often installs monitors inside companies as part of their settlements.
“Most recently, as part of its guilty plea last December, BP agreed to pay $4.5 billion in criminal fines and penalties, and said it would retain a risk management monitor and an ethics monitor.
“Dennis Kelleher, the head of Better Markets, an advocacy group focused on financial industry reform, was a partner earlier in his career at the large law firm Skadden, Arps, Slate, Meagher & Flom. He blames the bank for its prodigious legal bills.
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