When Lawyers 'Manage' Reputation

Fraser Seitel

Jeffrey Epstein was a bad hombre.

The late financier and child sex offender was also a friend and advisor to the rich and famous, and he artfully used those contacts to further his own fabulous fortune.

Ever since his death by jail-cell suicide in 2019, Epstein’s secret life as procurer and pedophile has been exposed, and his fortune has been largely ladled out to his many underage victims. Lately, politicians and the media have pressured the Trump administration to release the Epstein government files and reveal the privileged individuals who enabled him.

A few weeks ago, New York Times business reporter Matt Goldstein wrote a brilliant exposé on one of those enablers, a man named Jes Staley, who served as Epstein’s private banker and bosom buddy at JPMorgan for many years. The Times’ story also laid bare JPMorgan’s culpability in perpetuating the convicted sex offender’s illicit actions.

What the piece also demonstrated was how dangerous it is to appoint lawyers, rather than public relations professionals, to preside over an organization’s reputation.

In JPMorgan’s case, according to the Times, after Epstein was convicted in Florida in 2008 of procuring a child for prostitution, the bank’s top compliance officer suggested he be terminated as a client. Epstein BFF Staley objected to this and asked the bank’s top lawyer to sit down with his long-term client and make a judgment.

The lawyer, Stephen Cutler, was a Yale Law School graduate with experience at top white-shoe law firms and a stint at the Securities and Exchange Commission. In other words, he was the bluest of blue blood among the bank's general counsels.

Cutler listened as the smooth-talking Epstein pled his case and, after pondering for weeks, the lawyer told Staley he had concluded that the bank should, indeed, cut ties with the financier. He reasoned—correctly—that retaining Epstein, a Level 3 sex offender, as a client would not only send a terrible signal to JPMorgan’s female colleagues but also threaten the institution’s reputation.

Staley, a rising star and leading candidate to become Morgan CEO, adamantly disagreed with the lawyer. He argued that it would be a mistake to part ways with Epstein, especially in light of his network of high-level contacts and his $300 million in JPMorgan deposits. It was then, according to the Times, that the lawyer folded.

In the face of his colleague’s insistence, the lawyer rationalized that, as potentially damaging as Epstein was as a client, he wasn’t using his accounts for criminal purposes and therefore had not broken the law. And his own primary responsibility, Cutler reasoned, was to protect JPMorgan from legal—not reputational—risks.

So, he changed his mind and decided that as long as Staley monitored him, Epstein could stay a client. Not only that, but Cutler also decided not to escalate the matter to the bank’s CEO Jamie Dimon.

Both decisions by its chief attorney turned out to be catastrophic for JPMorgan.

In 2019, Epstein was arrested and jailed on new charges related to alleged sex crimes, and the story escalated from there. JPMorgan was among those institutions mentioned prominently as Epstein enablers.

In response, JPMorgan Chief Communications Officer Joe Evangelisti acknowledged the bank’s relationship with Epstein “was a mistake” and added that JPMorgan “would never have continued to do business with him if we believed he was engaged in an ongoing sex trafficking operation.”

The bank pinned the blame on its former account officer Staley and agreed to pay $290 million to settle with women who accused Epstein of abusing them and another $75 million to the U.S. Virgin Islands, where Epstein had an estate.

It’s unclear what role, if any, the bank’s public relations department played in the Epstein fiasco.

What the bank should have done, of course, was to assign management of the Epstein dilemma to its public relations professionals. Evangelisti is among the public relations industry’s most experienced, trusted and competent communications advisors. And Dimon is one of the world’s smartest and most respected business leaders.

It’s hard to believe that both of these men, had they been confronted early on with the facts of the Epstein relationship, wouldn’t have immediately decided to throw the convicted sex offender out of the bank. They would have understood that the institution's reputation was far more important than the clout or the connections of any one client. And they would have realized that perpetuating a relationship with such a questionable individual simply wasn’t worth the risk, regardless of whether or not he was breaking the law.

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Fraser P. Seitel has been a communications consultant, author and teacher for 40 years. He is author of the Pearson text “The Practice of Public Relations,” now in its 14th edition, and co-author of “Rethinking Reputation" and "Idea Wise.” He may be reached directly at [email protected].