JPMorgan’s $9.2 billion in legal bills might flummox even billionaire Bernie Ecclestone, who’s known to be excellent with formulas of all sorts. The $9.2 billion in fees are pre-tax so CEO Jamie Dimon can take his first quarterly loss a little easier. (The bank hadn’t had a loss since Dimon took control in 2005.) But the JPMorgan numbers are so mind boggling that it’s worth doing a little elementary school math. If JPMorgan pays $500.00 per hour for legal aid that’s 18,400,000 hours. I’ll write that again: eighteen million four hundred thousand hours. How is that even possible? Maybe they’re paying on average $1,000.00 per hour–even at that rate that’s nine million two hundred thousand hours (9,200,000 hours). There are 8,766 hours in a year (rounding up). If everybody working on the JPMorgan legal pickle was making a thousand dollars an hour and worked 12 hour days year-round including weekends that would be 2,148 lawyers making $4,282,000 each! (Four million two hundred and eighty-two thousand each.) Let’s keep doing the math, it’s fun right? Not everybody makes $1,000 an hour, of course, even when something is too big too fail. So how many modest millionaire lawyers did JPMorgan’s troubles mint? Well if the $9.2 billion had been equitably distributed, 9,200 lawyers would have made a $1,000,000 each. And at $500 per hour, they’d only have to work 2,000 hours for that–less time than the 2,087 hours a fully employed factory worker or nurse averages. For more perspective, at the current national minimum wage of $7.25, the $9.2 billion could employ 632,737 people full-time for a year. Very few of them would be able to resolve JPMorgan’s troubles, but so far neither has its lawyers.
It gets crazier, during a recent call the bank warned that its legal reserves might be too low and that $6 billion more might be needed. JPMorgan at the same time is reporting $31 billion in reserves, meaning they expect mountains of further litigation, $37 billion worth in fact. That would run the state of Wisconsin for a year. Mind boggling.
—Jeff Hildebrand lives in a 400-year-old stone farmhouse in the French countryside. He trades futures and options, and blogs about it at Brandnet.com. He was born in New York and raised in Ohio.