Wells Fargo trimming outside legal expenses -general counsel

CHARLOTTE, N.C., March 21 Thu Mar 21, 2013 3:54pm EDT

CHARLOTTE, N.C., March 21 (Reuters) - Wells Fargo & Co is looking to spend less money on outside lawyers as part of a companywide cost-cutting initiative, the bank's general counsel said on Thursday.

The No. 4 U.S. bank by assets began reviewing these expenses about nine months ago and plans to start implementing changes in the next quarter or so, Jim Strother said in remarks at a University of North Carolina law school conference in Charlotte, North Carolina.

"We do expect to have a meaningful reduction in outside counsel expense," Strother told Reuters after the speech, declining to provide details.

Wells' focus on legal expenses is the latest example of banks tightening their belts at a time when low interest rates and new regulations are making it more difficult to increase revenue.

The bank will likely increase internal staff to handle a litigation workload that has mushroomed in the wake of the financial crisis, Strother said. The legal department currently has more than 800 people, including 390 lawyers, he said.

The bank doesn't disclose fees it pays outside firms, but its overall litigation expenses, like at other banks, have skyrocketed in the wake of the financial crisis. The bank's "operating losses," which include the costs of mortgage-related settlements, increased 77 percent to $2.2 billion in 2012, from 2011, according to its annual report.

"We're through an awful lot of it, but we still have quite a bit left to work through," said Strother, who has been general counsel since 2003.

In the latest legal trouble spot for banks, the U.S. Justice Department is examining the role financial institutions play in fraud schemes perpetrated by bank customers offering deceptive products, a department official said on Wednesday.

Attorneys and investigators in the DOJ's Civil Division are examining banks' possible role in assisting scammers who offer questionable payday loans, false offers of debt relief, fraudulent health care discount cards, and phony government grants, according to Michael Bresnick, who heads the department's Financial Fraud Enforcement Task Force. [ID: nL1N0CCCGI]

Wells Fargo is reviewing its practices but has nothing to announce, Strother told Reuters.

On Tuesday, JPMorgan Chase & Co said it was changing some of its practices to help protect consumers from inappropriate payments sought by payday lenders and other billers.

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Comments (1)
StuartMaue wrote:
First I would like to commend Wells Fargo for addressing their ballooning legal fees and expenses. But bringing work in house may not be the ultimate solution because there are many costs associated with this endeavor. If the CFO were to calculate all the costs it may not prove to be a cost savings at all but quite the contrary. If companies would simply draft comprehensive billing guidelines and then utilize an outside legal cost control company to assist inside counsel in the enforce of these guidelines I think major savings could be obtained. My company founded the legal auditing industry almost 30 years ago and we have helped company’s save hundreds of millions of dollars once they make a conscience decision to get serious about getting all their fees and expenses under control. I commend any company who wants to really solve these major expenses without sacrificingthe quality of their legal representation. Believe me when I tell you based upon over 38 years of managing legal expenses no law firm will stop doing your legal work if you sit down with your firms and simply lay out what your willing to pay for and what you simply are not going to pay for in the final analysis. Engage the services of an experienced legal cost management company that has a custom software program that will be designed specifically for your company and be sure they have full time experienced lawyers and accountants assigned to your company. The bottom line this is the only solution that is time tested and proven to bring the results that you are looking for in getting all your legals fees and expenses under control. Respectfully submitted, Dr. Harry J. Maue, Chairman & CEO of STUART/MAUE, Ltd. Saint Louis , Missouri

Mar 22, 2013 1:20am EDT  --  Report as abuse
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