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.