How to Make Jamie Dimon Pay Your Legal Fees

This story is as sweet as Marjorie Taylor Greene’s congressional district. According to Ron Lieber writing for The New York Times, JP Morgan Chase acquired a start-up called Frank owned by Charlie Javice for $175 million. Frank helped students fill out financial aid forms. Apparently, JP Morgan was less interested in helping students fill out the forms than it was in Frank’s client list. However, when JP Morgan acquired Frank’s supposed client list, it consisted most of fictitious e-mails. According to CNBC’s reporting, at the time of the acquisition, Frank claimed to have 4.25 million customers, but it actually had more like 300,000.

JP Morgan sued Ms. Javice for fraud, but the SEC also got involved. In September, a jury found her guilty of four counts of fraud, and she was sentenced to seven years in prison. The story of JP Morgan buying a client list without performing basic due diligence is funny enough. However, and this is where it gets especially interesting, because JP Morgan brought Ms. Javice on as an employee, a Delaware court determined that JP Morgan was obligated to pay Ms. Javice’s legal fees in connection with both her civil and her criminal proceedings. And her lawyers don’t come cheap. According to Mr. Lieber, those bills included charges for “luxury hotel upgrades, extravagant meals and cellulite butter, a personal care product that some people use to treat their skin.” Ms. Javice made use of the services of attorneys from five different law firms, including lawyers who had represented “Elon Musk, Harvey Weinstein and Sam Bankman-Fried.”

JP Morgan has, according to Mr. Lieber, already had to pay $115 million for the legal fees of Ms. Javice and her accomplice. There is no reason to think that they will not appeal their convictions. Why not? It’s not going to cost them anything.

If this is the whole story, I can’t say that it makes a lot of sense to me. Judges routinely give parties a “haircut” when they calculate legal fees, and the cuts can be pretty severe, even without the cellulite butter.

When I was a litigator, we won legal fees after a bench trial, and we carefully gathered evidence of all of our expenses. It was all legit. There were only two of us on the case, me and a partner. We pulled in another partner for a three-day bench trial, as I was not admitted in the Eastern District (and also was not ready to appear in a trial). We pulled in a team of low-level associates to help with spot research as we went from temporary restraining order to trial in a week. We were up against Paul, Weiss, and they clearly had more people working on the case than we did. Nevertheless, the judge was ruthless in scrutinizing our accounting. He demanded that we disclose what subject matter associates were researching. He would not allow redactions — even though the other side was certain to appeal and removing the redactions could reveal litigation strategies to our very clever and resourceful adversaries.

I find it hard to imagine that the court would not make Ms. Javice pay for the cellulite butter and other items that one likely would not put on one’s tab if one were paying one’s own bill. Ms. Javice denies that the more alarming things on her bill were things that she bought for herself, but that is not relevant. If the costs were not reasonable and necessary to her defense, I would not expect the court to make JP Morgan pay so that its adversary’s attorneys can live the high life.

But Ms. Javice has other reasons to be optimistic. The President loves to pardon people who commit massive fraud. Jamie Dimon didn’t do himself or JP Morgan any favors by failing to pony up for the President’s new ballroom.