In its latest move to boost profitability and cut costs during a period of low interest rates, J.P. Morgan Chase & Co. appears to be targeting lawyers
by Michael Mata
In its latest move to boost profitability and cut costs during a period of low interest rates, J.P. Morgan Chase & Co. appears to be targeting lawyers from top firms. J.P. Morgan is restructuring its private banking arm to handle a smaller pool of higher-net-worth individuals who generate more fees and entail less risk.
Lawyers, who often work closely with J.P. Morgan on deals, are among the clients most impacted by the Private Bank’s recent decision to double its minimum from US$5 million (A$6.5 million) in investible assets to US$10 million (A$13 million) in investible assets.
This decision hits US lawyers particularly hard since some of them had previously enjoyed private-bank status without the US$5 million in investible assets. With the bar raised much higher, legal professionals lower down the food chain—such as lower level associates—would be effectively snubbed.
J.P. Morgan is planning to enforce its new minimums more aggressively, which would affect lawyers at top firms.
The changes are expected to affect about 10% of J.P. Morgan’s clients, who will be moved from the Private Bank to an offer with less personalisation, known as the Private Client Direct. Clients under Private Client Direct should have investible assets ranging from US$2 million (A$2.6 million) to US$10 million.
Pushing scores of high-earning and competent lawyers to a lower rung of service may prove touchy. Law firms have often marketed access to top-tier banking services as a perk that their lawyers can enjoy. Lawyers privileged with these exclusive perks can enjoy discounts on mortgages and access to hedge funds, among other benefits.
J.P. Morgan and other big banks have expanded their wealth management and private banking units in recent years. These divisions have grown with the stock market and don’t tie up as much capital on the balance sheets under new regulations that are designed to restrict riskier activities.
