Thoughts on To Kill A Mockingbird

This year is the 50th Anniversary of the publication of To Kill A Mockingbird. There was an entire program devoted to it at the State Bar Convention this summer and my daughter was assigned the book for her summer reading project. I decided to give the book another look. I was struck by the following passage. To me, it captures the ideal of what it means to be a lawyer and man of honor.

“Do you defend *******, Atticus?” I asked him that evening.

“Of course I do. Don’t say ******, Scout. That’s common.”

“’s what everybody at school says.”

“From now on it’ll be everybody less one—“

“Well if you don’t want me to grow up talkin’ that way, why do you send me to school?”

My father looked at me mildly, amusement in his eyes. Despite our compromise, my campaign to avoid school had continued in one form or another since my first day’s dose of it. . . .

But I was worrying another bone. “Do all lawyers defend n-Negroes, Atticus?”

“Of course they do, Scout.”

“Then why did Cecil say you defended ******? He made it sound like you were runnin’ a still.”

Atticus sighed. “I’m simply defending a Negro—his name’s Tom Robinson. He lives in that little settlement beyond the town dump. He’s a member of Calpurnia’s church, and Cal knows his family well. She say’s they’re clean-living folks. Scout, you aren’t old enough to understand some things yet, but there’s been some high talk around town to the effect that I shouldn’t do much about defending this man. It’s a peculiar case—it won’t come to trial until summer session. John Taylor was kind enough to give us a postponement. .. .”

“If you shouldn’t be defendin’ him, they why are you don’ it?”

“For a number of reasons,” said Atticus. “The main one is, if I didn’t, I couldn’t hold up my head in town, I couldn’t represent this county in the legislature, I couldn’t even tell you or Jem not to do something again.”

“You mean if you didn’t defend that man, Jem and me wouldn’t have to mind you any more?”

“That’s about right.”

“Why?”

“Because I could never ask you to mind me again. Scout, simply by the nature of the work, every lawyer gets at least one case in his lifetime that affects him personally. This one’s mine, I guess. You might hear some ugly talk about it at school, but do one thing for me if you will; you just hold your head high and keep those fists down. No matter what anybody says to you, don’t let ‘em get your goat. Try fighting with your head for a change …. it’s a good one, even if it does resist learning.”

“Atticus, are we going to win it?”

“No, honey.”

Harper Lee, To Kill A Mockingbird, pp. 99-101.

There is so much in this passage. I agree that every lawyer gets one case in his lifetime that affects him personally. For me, it was the case of a little girl who was in foster care and whose grandmother and uncle would not give up on her. I also like the idea that a person’s right to respect depends upon doing the right thing, even when it’s hard. Finally, I like the idea of fighting with your head.

Few of us, myself included, live up to the ideal of Atticus Finch. However, if you have an ideal, at least you can try to aim in that general direction. Sometimes you might get close.

This is a book worth reading and re-reading.

Practicing Law and Having a Life

This weekend, the firms that I work for hosted a celebration for the 25th anniversary of Barbara Barron and Manny Newburger practicing together, as well as the 2nd anniversary of Barron, Newburger, Sinsley & Wier, PLLC. We joined several hundred of our friends and clients (some of whom were the same people) for barbecue and country music at the Salt Lick in Driftwood, Texas. What does any of this have to do with bankruptcy? Not much directly. However, it is a reminder to heed Shakespeare’s admonition to “do as adversaries do in law, strive mightily, but eat and drink as friends.” (The Taming of the Shrew Act I, Scene 2).

Twenty-five years is a long time. While I wasn’t there for all of it, there is still a strange sensation of waking up in another time and place. Over 25 years, we have gone through the real estate bust/S & L crisis which spawned the RTC, the leveraged buyout bust which gave rise to mega-bankruptcies, credit card defaults leading to personal bankruptcy filings topping 1.6 million, Enron, bankruptcy reform and now the sub-prime mortgage crisis. During that time, newlyweds had children grow up, our hair grew thinner and our waistlines grew larger (at least mine did). The baby boomers who hoped to transform the world now look forward to retirement.

Over the years, we have met a lot of interesting people and many of them were at the festivities. Politicians and judges mingled with real estate developers, reorganized debtors and debt collectors. Lawyers, clerks and support staff drank margaritas together. However, the best story of the night was probably the entertainment (and I am not just talking about Barbara Barron gracefully two-stepping and doing the cha-cha).

The headliner for the evening was Brian Turner and His Redneck Band. Brian is proof that only in Austin, Texas can a Jewish solo practitioner pursue his dream of being a snuff-dipping country music sensation. (While Kinky Friedman is more famous, that’s only because Brian hasn’t been discovered yet). Brian represented a significant bloc of creditors in a contentious chapter 11 case that our firm handled. As we were wrapping up the case, Brian shared one of his CDs with us. His music hits traditional country music themes such as patriotism, fatherhood and failed relationships, but does so with a wry sense of humor.

With songs like “I Miss That Dog More Than You,” “If Love Is Blind Why Do You See My Faults See Clearly” and “If You Won’t Leave Me, I’ll Find Someone Who Will,” Brian harnesses a traditional country music vibe with just a little tongue in cheek. Even his tribute to his father contains the refrain, “So here’s to my dad/ who taught me all my bad habits/ some of my good ones, too/ Like to be a great dad/ believe in your country and never turn my back on you.”

I admire Brian for managing to practice law and pursue his dream as well. Let’s hope that the rest of us can find a way to harnish our dreams and creativity outside the workaday world.

Pakistani Lawyers Risk Lives for Rule of Law

In Pakistan, thousands of lawyers dressed in black suits and ties took to the street to protest the dissolution of the supreme court and the suspension of the constitution. It is estimated that 500-700 were arrested. "Bush criticizes Musharraf," Austin American Statesman, November 6, 2007, p. A1. Meanwhile, in the United States, 37,000 dissidents gathered (in cyberspace) around a slogan implicitly advocating overthrow of the government ... and set a one-day fundraising record for Republicans. "YouTube video, Guy Fawkes motto help Paul collect $4.2 million in 1 day," Austin American Statesman, November 6, 2007, p. A6.

What do these two stories have in common? The connection is arguably tenuous, but the common link seems to be fear or the lack thereof.

In Pakistan, the president feared the power of an independent judicial branch and the rule of law which it represented. When the Supreme Court questioned his right to seek another term, Gen. Musharraf chose to impose emergency rule. Curiously, the General dissolved the supreme court but left parliament in place. This seems to suggest that a cowed legislative branch is less of a threat to absolute power than an independent judiciary. In a system where the rule of law is subordinate to the rule of power, lawyers are reduced from independent actors to government functionaries. Thus, the lawyers correctly perceived that they were under attack and took to the streets.

The story about Ron Paul's fundraising is not grim. Indeed, it is humorous in its cheekiness. Ron Paul is the Texas Congressman running a longshot campaign for the Republican nomination for president. The Paul campaign organized a one-day internet fundraiser around the slogan "Remember, remember the 5th of November." This is the first line from a poem recalling the attempt by Guy Fawkes to blow up parliament and assasinate King James I. It also featured prominently in the recent movie "V for Vendetta" in which a masked vigilante leads a mob of citizens to overthrow an oppressive British government. Ron Paul and his band of followers fancy themselves as modern day revolutionaries. They oppose most everything government does from social security to the war in Iraq. However, when they openly use the language of revolution to advance their cause, it evokes at best a chuckle or a yawn, but not fear.

While the story about Ron Paul is somewhat silly (and in no way compares to the bravery of the Pakistani lawyers), perhaps it makes a point about what we take for granted. Here, we can talk about overthrowing the government because we allow for the potential of overthrowing the government every four years. We know that on January 20, 2009, President Bush will voluntarily leave the White House. There is a good possibility that he will hand over power to the opposing party. On the other hand, the Pakistani lawyers and judges have no assurance that their constitution will prevail and that Gen. Musharraf will cede power to anyone other than a hand-picked successor.

The Sad Case of John Gellene or What It Feels Like to Get Hit By Lightning

One of the interesting features of this year’s State Bar of Texas Bankruptcy Section Meeting was a lunch time presentation by Milton C. Regan, Jr., author of Eat What You Kill: The Fall of a Wall Street Lawyer (The University of Michigan Press 2006). This is the story of John Gellene, the only attorney ever to go to jail for submitting an incomplete Rule 2014 disclosure. Although the book is a bit of a difficult read (you can read more about that in my review on Amazon.com), it is an interesting case study in the dangers of cutting corners. (The book does a really good job of documenting the pressure to cut corners, so I won’t discuss that in any detail here).

A Lawyer Walks Into A Minefield

For those who don’t remember the story from the newspaper, here is what happened. Milbank, Tweed was hired to represent Bucyrus –Erie Corporation in its bankruptcy proceeding. The bankruptcy was very contentious because the largest unsecured creditor, Jackson National Life, had accused the company’s investment banker, Goldman Sachs, with manipulating the company’s financial affairs to their own benefit. Things got worse when a Goldman Sachs partner, Mikael Salovaara, started his own firm, South Street Fund, and that firm made a deal with Bucyrus-Erie which put them ahead of all the other creditors. In order to avoid limits on debt which the company could incur, South Street engineered a sale-leaseback of the company’s principal assets. The sale-leaseback left South Street in control of the company’s principal assets and subjected the company to outrageous payments.

All this happened before bankruptcy lawyer John Gellene entered the picture. However, it created an adversarial situation between the company and the different factions. The debtor’s attorney would be caught in the middle of this conflict and would have to navigate it in order to successfully reorganize the company. One example of these pressures was Jackson National Life’s demand that every major creditor but itself should have its debt written off or subordinated.

Connections vs. Conflicts

John Gellene began representing Bucyrus-Erie a year before its bankruptcy at a time when his law firm was not representing either Salovaara or South Street. However, before the case was filed, Milbank, Tweed began representing South Street in another bankruptcy and also represented Salovaara in a dispute with his partner. Both of these were “connections” with creditors. However, Gellene failed to disclose these relationships in either of two affidavits filed with the court.

Disclosing these “connections” should have been a no-brainer. However, there were probably a lot of reasons why he could rationalize not doing it (as brought out in his subsequent criminal trial). First, Salovaara was not a creditor himself. He was just a partner of a creditor. Therefore, his representation should not be disclosed. Second, Milbank, Tweed represented South Street as a small player in a completely unrelated matter. This was not a conflict.

If this was Gellene’s thought process, he made the mistake of focusing on the purpose of the Rule 2014 disclosure rather than its language. Rule 2014 requires disclosure of “connections” with the debtor, creditors, attorneys and accountants for the debtor and creditors and employees of the U.S. Trustee. This is a requirement honored more in the breach. The requirement to disclose connections could be taken to absurd levels. For example, in a case with IRS debt, the attorneys should disclose the “connection” that they pay taxes to the IRS. In a case with credit card debt, the attorneys should disclose which attorneys hold credit cards issued by creditors in the case. However, the connections in this case were a bit more obvious. They involved major players who were at odds with Jackson National Life, the company’s main antagonist. However, if Gellene focused on conflicts, then there was an argument that they did not have to be disclosed.

Gellene may have also reasoned that disclosing the connection to South Street and Salovaara would merely provide leverage to Jackson National Life. If the case was to be concluded successfully, it would need to be confirmed quickly. Having a lengthy delay over employment of counsel would endanger the case’s prospects. If that were Gellene’s thinking, he made the mistake of (to use Joe Martinec’s phrase) pledging his loyalty to the deal rather than any other obligation.

It is also possible that Gellene made a quick cost-benefit analysis. In the recent Leslie Fay case, Weil Gotshal had made a very big failure to disclose. They were allowed to continue to represent the debtor and had to forfeit a “mere” $1 million out of their fees. They certainly did not go to jail. If Gellene had weighed the likely consequence of being caught against the possibility of being disqualified on the front end, he likely would have chosen to take the risk.

It is also possible that the failure to disclose was inadvertent. Gellene began working on the Bucyrus-Erie case in February 1993. However, the case was not filed until February 2004. The representations of Salovaara and South Street did not come up until December 2003. Therefore, it is possible that disclosures were drafted before the connection arose and were never updated during the hustle and bustle to prepare the case for filing.

From Triumph to Tragedy

Gellene successfully guided Bucyrus-Erie through its reorganization and his firm was paid nearly $2 million in fees for doing so. Unfortunately, his successful plan put the company’s old adversary, Jackson National Life, in control of the company. Years later, Jackson found out about the failure to disclose and sued Milbank, Tweed to return its fees and for malpractice. This proved to be very costly for Milbank, Tweed but it was worse for John Gellene. The publicity spawned by the fee litigation prompted the U.S. Attorney to file criminal charges against Gellene. A deal to plead to a misdemeanor fell through and the case went to trial. The prosecution sought to portray the failure to disclose as black and white, the while the defense attempted to put the statement in context. The jury sided with the U.S. Attorney and Gellene was convicted and sentenced to 15 months in prison. Gellene went from being a highly respected bankruptcy attorney to a convicted felon in a relatively short period of time.

Why John Gellene?

So, what happened? In some respects, Gellene was the victim of extremely bad luck. The Asst. U.S. Trustee in the case had previously been the U.S. Attorney (not an Asst. U.S. Attorney, but the U.S. Attorney). Therefore, he was more likely to look at the case from a criminal viewpoint than with bankruptcy eyes. He was also likely to have the informal clout needed to get a criminal referral taken seriously. Additionally, the Bucyrus-Erie case was filed in Wisconsin rather than New York or Delaware. Here, a big firm came swooping into Wisconsin, took a respected company into bankruptcy and walked away with nearly $2 million in fees. There had to be a little bit of jealousy of and distrust toward the outsiders. (Let’s face it, no one likes it when big firms poach all the good cases). Finally, Gellene’s own work product was part of his undoing. The confirmed plan left Jackson National Life in control of the company and allowed it to prosecute claims on behalf of the estate. Jackson National Life was still plenty upset toward Goldman, Sachs, Salovaara, South Street and Milbank, Tweed. Being left in a position to investigate the claims while having control of the company’s attorney-client privilege, made it likely that they would discover the non-disclosure and would be unhappy. This case proves that just because lightning may only strike one in a million times, doesn’t mean that it won’t hurt the person who gets hit.

Lessons to Be Learned

The lessons to be learned may be fairly simple. As Jay Westbrook is quoted as saying in the book, “Disclosure should be like voting in Chicago—early and often. Disclose, disclose, disclose. It’s hard to get in trouble when you follow that rule.” Eat What You Kill, p. 228. Attorneys rarely have to make statements under penalty of perjury. Since Rule 2014 is one of the few cases, it should be treated seriously. However, there is a significant temptation not to. The Rule 2104 disclosure is filed toward the beginning of the case. As a result, there is a temptation to get it on file quickly and to copy the disclosure from the previous case with a few modifications. This would be a mistake. As I have read 2014 again recently, I was surprised to learn not only that it required disclosure of connections rather than conflicts, but that it required disclosure of connections to other attorneys and accountants in the case. Sometimes it is easy to get so familiar with something that you respect for it. That would be a mistake.

Another lesson would be that it is better to tattle on yourself than to get caught. John Gellene could have submitted an amended disclosure at any point during the case, but did not. Even if he had brought it up at the hearing on his own fees, he probably would have received little more than a slap on the wrist. Instead, the issue didn’t come up until Jackson National Life brought it up and by that time, they were plenty mad so that the time for a slap on the wrist was gone.