Tomahawk, WI 10/17/2013 (BasicsMedia) – JPMorgan Chase & Co. (NYSE:JPM) has been in court throughout much of 2013. Some of the legal matters it had to handle in court were from the previous years, which had somehow made their way into 2013. At one point, it seemed as if JPM was willing to settle with the government in order to bring all these lawsuits to conclusion. A figure of $11 billion had been mentioned as the one JPM was willing to part with in order to end all these legal matters. The company recently announced that it paid more than $9 billion as legal fees. Why didn’t JPM settle?

JPM’s Rumored Settlement With the U.S. Government Fully Supported

I was one of the analysts who supported JPM when it was announced that it was willing to settle all these legal mumbo jumbos with the government. I argued that this made perfect sense and would benefit JPM a great deal. Now, I wonder why the company never followed up on what every single analyst supported. Spending such a huge sum of money on attorneys to take care of your legal costs is unheard of, even if you are JPM. Defending JPM is not wrong, and should be pursued at all times, but there is a time when it is better for everyone else to settle.

Why Was JPMO Afraid of Settling?

The fact that the government was willing to hear JPM out when the $11 billion settlement figure was bandied around shows that this step made perfect sense in many ways. JPM could have done with the absence of negative news which it continues attracting every time it is required to appear in court to defend itself against further accusations. I think that JPM thought settling with the government now, and paying the aforementioned amount, would have far reaching consequences where other legal cases would arise compelling it to pay huge amounts.

This was a possibility but JPM should have not used it as justification for not settling with the government. Now that it has not pursued settlement with the government, I think it has opened itself up for more lawsuits. This is a situation which it will not emerge the winner. At some point, JPM may be forced to settle, but the figure may go much higher than the $11 billion, which had been mentioned previously. Once all the details regarding the cases filed against JPM start emerging, the company will attract negative publicity thus turning the public against it.

Has JPM Lost a Golden Opportunity to Settle?

In the end, in think that JPM will have spent more than $20 billion on legal matters. By the time it is through with all these lawsuits, the company will be forced to settle for any amount above $10 billion, added to the more than $9 billion it has already spent on hiring law firms, it will end up spending close to $20 billion, and above. This is why I still insist that settlement right now makes perfect sense and is the best option for everyone concerned. It is still early to say with certainty whether JPM has rule out settlement. Even if it settles, it will be too late.

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