Tuesday, June 13, 2017

Litigation Costs - some perspective

From today's Globe and Mail a couple of fascinating stats about the cost to companies for legal services.
The piece by J. Stempel out of NYCNY for Reuters comments on the recent settlement of an investors lawsuit against global banking giant Deutsche Bank AG.

DB agreed to settle a case where bank people manipulated certain data (European Interbank Offered Rate - Euribor).
The Bank agreed to pay $220 million (Cdn) to the investors. $220,000,000.00
Sounds like a lot of money.

And maybe it is.
But compared to the costs the Bank has incurred over the years for legal bills, well, maybe not so much.

It is also reported that DB has paid $220 billion in legal costs for the period 2009-2016. (explanatory note below)

Which means the settlement amount that went to the injured folks was 1/10th of 1 percent of their legal bills for the last 8 years. A pittance really.

What's amazing is the cost to the Bank of legal services.
On average, roughly $27 billion, with a B, per year.
Now that's a lot of money.

After some further checking online:
When DNB speaks of "legal costs" I now understand that to mean the cost of settling court cases, which involves a lot more than simply legal fees. It includes payments to the folks who complained.

There is available from other sources, info on the amount the Bank has paid in 'Legal Fees' in certain periods. So for 2015, if memory serves, the Bank paid about $300 million in legal fees. That year it had 6,000 cases in the system, 1,000 of which involved claims over $100,000. 
Still very serious money. 


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