http://www.nytimes.com/1994/02/26/us/rose-law-firm-arkansas-power-slips-as-it-steps-onto-a-bigger-stage.html?pagewanted=all
Rose Law Firm, Arkansas Power, Slips as It Steps Onto a Bigger Stage
By STEPHEN LABATON,
Published: February 26, 1994
WASHINGTON, Feb. 25— With Hillary Rodham Clinton in the White House and three other partners taking influential jobs in the Clinton Administration, the Rose Law Firm of Little Rock, Ark., seemed to be on the verge of national prominence a year ago.
But things quickly went awry. The Rose firm, which made itself a dominant power in its home state, is now suffering under the unforgiving glare of publicity.
Vincent W. Foster Jr., one of the partners who moved to Washington, serving as a top White House lawyer, committed suicide. A coveted spot on the national scene has failed to materialize. And last month, an independent counsel opened an office in Little Rock to investigate accusations of fraud and conflicts of interest that uncomfortably keep leading back to the converted Y.W.C.A. building that is the Rose headquarters.
Instead of basking in the glory of its ties to Bill and Hillary Clinton's White House, the firm has had to hire its own lawyers to defend itself and cope with the counsel's requests for confidential files. He has ordered the firm not to shred any documents related to the Whitewater Development Company real estate venture. The Clintons were partners in Whitewater with the proprietor of a failed Arkansas savings institution. The independent counsel is investigating whether the institution, Madison Guaranty Savings and Loan Association, improperly funneled money into Whitewater or into Mr. Clinton's 1984 re-election campaign when he was Governor of Arkansas.
The Republicans on the Senate Banking Committee made the Rose firm the target of their scorn during a hearing on Thursday on savings institutions, saying the firm improperly used its connections throughout the 1980's. They denounced as a whitewash a Federal Deposit Insurance Corporation report clearing Rose of a conflict of interest in a case involving Madison Guaranty.
This morning, the chairman of the F.D.I.C ordered the conflict investigation reopened.
The turmoil and the independent counsel's request for client files has made some Rose lawyers apprehensive that they may lose some business, although so far there is no indication of defections from a list that includes most of the state's biggest companies, like Stephens Inc., one of the largest investment banks in the United States, and the Worthen Banking Corporation, the largest banking company in the state, Tyson Foods, one of the world's largest poultry companies and Walmart, the country's biggest retailer.
"It's been a roller coaster ride with its ups and its downs," Herbert C. Rule 3d, a senior partner who has been at Rose for 30 years, said in an interview in Little Rock recently. "It'll pass. It won't be like a kidney stone passing. It will just sort of drift away."
Even if that happens, the brush with power will have left some lasting wounds. After Mr. Foster killed himself in July, the firm delayed its plans to open a small office in the capital until October. "We lost our stomach for the whole idea of Washington," said Allen W. Bird 2d, the partner who opened the office. Pedigree White Shoe Firm Grew in the 80's
The Rose firm bills itself as the oldest legal establishment west of the Mississippi, tracing its history to 1820. It gets its name from a founder of the American Bar Association, U. M. Rose, who joined the firm at the end of the Civil War.
Among Arkansas firms, Rose is viewed as the whitest of the white shoes. It is dominated by white men, most of whom came from privileged families in the state and graduated from one of the two accredited law schools in the state. Only a handful of women, and no blacks, have been made partners. Law professors at the University of Arkansas at Little Rock say Rose is among the most sought-after employers by the state's top law students.
Until the mid-1970's, Rose was little more than a loose confederation of a small group of lawyers.
But it changed direction largely because of C. Joseph Giroir Jr., the first full-time securities lawyer in Little Rock, who joined Rose after doing corporate-finance work at the Securities and Exchange Commission in Washington. With his help, the firm quadrupled in size as its list of clients, a Who's Who of the Arkansas corporate elite, grew during the explosive economic growth in the 1980's.
By the early 1990's, according to Federal filings, the top partners at the firm were billing clients as much as $185 an hour, among the highest rates in the state, though considerably lower than the top rates of the large firms in bigger cities.
While Mr. Giroir forged one set of connections, another set began to grow with the hiring of the firm's first woman lawyer, Mrs. Clinton. She joined the firm as an associate in January 1977, about the time her husband was being sworn in as State Attorney General.
She became a partner at the age of 32, in 1979, just as her husband was being inaugurated as the nation's youngest governor. Little Trial Work
Although Mrs. Clinton was described as a trial lawyer in some news accounts both before and during the Presidential campaign, many former colleagues cannot remember any cases she tried, and court reporters in Little Rock say she appeared in court infrequently, perhaps as seldom as once every two or three years.
She was the primary wage earner for the family, since Mr. Clinton's salary as Governor was $35,000. But income tax returns and interviews with other lawyers indicate that she was among the lower-paid partners for much of her time at the firm, in large part because the pay scale was based on how many hours a lawyer billed and the clients the lawyer brought in. Her income did eventually grow, however. She made $203,172 in 1992, the year she left the firm.
Since she was also Arkansas's First Lady, Mrs. Clinton in effect held two jobs, spending considerable time away from Rose. And she would occasionally take leaves from the firm when Mr. Clinton was involved in tough races.
But Mrs. Clinton lent prestige to the firm's letterhead and served as director of several of Rose's biggest clients, including Walmart and TCBY, the large yogurt-franchise company. In a 1992 interview, William H. Kennedy 3d, the head of the firm's executive committee, said she was a leading "rainmaker," the term for a partner who drums up clients for a firm.
Mrs. Clinton was also among the most important state figures involved in the selection of judges. Lawyers, judges and former aides to Mr. Clinton in Arkansas say she played a crucial role in deciding who would fill the unexpired terms of judges, dealing directly with candidates for the jobs. Although state judges are elected, the governor makes appointments to complete terms of those who resign or retire. These appointees, given an advantage by incumbency, are often then elected to the bench. Regulatory Work
One of the firm's biggest attractions was its ability to help clients navigate the rocky regulatory shoals of state government. When, for instance, Stephens wanted to enter new finance businesses that required Federal or state approval, it was Rose lawyers they turned to. When Tyson wanted tax breaks or had potential environmental problems, it was Rose lawyers who lobbied the state legislature or regulators.
For large companies outside of Arkansas, like General Motors and the Prudential Insurance Company of America, Rose was the firm they turned to when they had local matters to attend to.
At its peak, Rose represented several Arkansas government and quasi-government institutions as well, including the Little Rock Airport Commission and the Public Service Commission. Partners at Rose say that to avoid any suggestion of a conflict of interest, Mrs. Clinton's compensation excluded any profits from municipal and state clients. Accusations Conflict Questions Occasionally Raised
Along with the Rose firm's pre-eminence have come accusations that the firm on occasion has been involved in conflicts of interest. Many of the questions involve one of the firm's smaller clients, Madison Guaranty, which has become a central focus of the Whitewater investigation. Madison was controlled by James B. McDougal. In 1978, the Clintons joined Mr. McDougal and his wife, Susan, in buying the Whitewater land, a 230-acre vacation home development along the White River in northern Arkansas.
The independent counsel, Robert B. Fiske Jr., is studying whether Madison improperly put money into Whitewater to prop it up, or funneled money through Whitewater into Mr. Clinton's gubernatorial campaigns.
The Madison connection has provided fodder for critics who contend that the Rose firm looked the other way when it came to potential conflicts of interest. For one thing, they say, Mrs. Clinton represented her own business partner before state officials appointed by her husband. Other accusations center on work Rose did after Madison failed, when Rose represented the Government in a suit against Madison's auditors.
Mrs. Clinton's press secretary, Lisa Caputo, said accusations that Mrs. Clinton was in a conflict over her representing Madison were unfair and politically motivated.
"It's yet another attempt to pile on Hillary," Ms. Caputo said. "It reminds me of the Republican convention of 1992, when the Republicans tried to attack Bill Clinton's wife."
The issue of possible conflicts has also arisen in other savings and loan cases handled by Rose lawyers.
In January 1988, the firm and its insurer paid $3 million to settle conflict accusations raised by Federal regulators in connection with the failure of First South Savings and Loan, the largest savings institution to collapse when it was seized in 1986. Firm Switches Sides
In another instance, a former savings and loan executive in Arkansas has asserted that the firm had a conflict after it represented him and his family in many matters. The executive, Royce Barrett, said Rose switched sides in December 1985 and represented the Government in taking the savings association away from the Barrett family. Mr. Barrett charges that it was improper for the firm to side against his family once it had handled confidential matters that could be involved in the Government's lawsuit.
"They drew our wills, they knew our assets, they helped set up our trusts," Mr. Barrett said, adding that they had also set up the savings association's holding company. "I felt like it was a conflict of interest."
Mr. Rule of the Rose firm disputed Mr. Barrett's account.
"There is not any conflict, and there never was any suggestion of a conflict," he said, declining to elaborate.
In another episode, lawyers criticized Mr. Clinton's selection of a judge in a case involving the Rose law firm. The Governor appoints special Supreme Court justices in cases in which any justice steps aside because of potential conflicts. That occurred when a lawsuit against Alcoa came before the Supreme Court.
A closely divided Court overturned a $1.1 million judgment won by a man who accused the company of negligence after he suffered a serious injury. The opinion was written by a special justice who had been selected by Mr. Clinton. Alcoa, it turned out was represented by Rose, although the firm says Mrs. Clinton was not involved in the case.
Still, Ted Boswell, the plaintiff's lawyer and a prominent lawyer in Arkansas, charged in court papers that Mrs. Clinton did assist in the Alcoa defense.
Lawyers for the Rose law firm denied that Mrs. Clinton was involved in the case or had influenced the selection of the special justice.
Ms. Caputo, the First Lady's spokeswoman, said the accusation of a conflict was outrageous.
"There was no evidence to support the claim, and the court shot it down," Ms. Caputo said. Prospects Tough Atmosphere To Attract Clients
In the months after the four ex-partners went to Washington, representatives of several foreign governments and Pentagon contractors traveled west to Little Rock, hoping to capitalize on the Rose firm's bright new connections.
The mood today is far different. Lawyers at the firm say the last few weeks have been as tumultuous as 1988, when Mr. Giroir left the firm after several lawsuits over his business dealings. Now, many of the firm's senior partners are finding themselves distracted from their work.
"This atmosphere undoubtedly makes it difficult for them to build their practice," said W. Jackson Williams Jr., a partner at Little Rock's Williams & Anderson, which over the years has been on both the same and opposite sides as Rose lawyers. "All the publicity can't be terribly helpful."
Only a few years ago, the Rose Law Firm was looking forward to a large expansion. It built a large addition to its headquarters and planned to double its size to nearly 100 lawyers. Now, some partners at the firm say that projected growth may have been overly optimistic.
To finance the new construction, the firm took out a large loan, which now accounts for more than $3.9 million of the nearly $6 million that the firm and its partners have borrowed from the Worthen Bank of Little Rock.
The firm continues to comb its records for material that has been sought by Mr. Fiske. The latest order issued to the firm by Mr. Fiske about preserving documents was prompted by an article in The Washington Times quoting an unidentified employee who claimed to have seen business records that relate to the Clintons' real estate interests being shredded this month.
Ronald M. Clark, the firm's administrative partner, said those records were not shredded this month, although other unrelated material was destroyed and may have been the source of confusion.
Mr. Clark said the Rose Law firm began a policy of shredding confidential client material in 1992, as the law firm was become the focus of more attention because of Mr. Clinton's campaign.
"Every firm in America destroys sensitive material," he said. "There is absolutely nothing wrong with that." THE FOUR WHO CAME TO WASHINGTON
They were the four closest partners at Rose, working on cases, socializing at the same country clubs and participating in the same charitable and political efforts. Together, they came to Washington to take the some of the most powerful positions in Government. Hillary Rodham Clinton She arrived at the firm in 1977 after teaching for two years at the University of Arkansas in Fayetteville, and became a partner two years later. While at Rose, she served on several corporate boards and state task forces. Vincent W. Foster Jr., deceased. In Little Rock: Courtly and widely respected at Rose among partners and associates, he was Mrs. Clinton's closest confidant. He graduated at the top of his class at the University of Arkansas School of Law and was top scorer on the state bar. He was one of the firm's top litigators. His wife, Lisa, taught Chelsea Clinton how to swim. In Washington: Mr. Foster, who became a deputy White House counsel, continued to handle personal financial matters for the Clintons. He committed suicide in July 1993 and an independent counsel is now looking into the circumstances of his death. Webster L. Hubbell, Associate Attorney General In Little Rock: A former college linebacker drafted to the Chicago Bears, he never made it to the pros because of a knee injury. At the firm he was the top administrative partner in the 1980's and the chairman of the conflicts committee. Mr. Clinton appointed him briefly to serve as chief justice of the Arkansas Supreme Court and he also was the mayor of Little Rock. In Washington: Since he arrived at the Justice Department in the first days of the Clinton Administration, he has been the subject of regular criticism by Republicans who say he is the behind-the scenes-conduit for improper White House influence. He remains a regular golfing companion of Mr. Clinton. William H. Kennedy 3d, Associate White House Counsel In Little Rock: The firm's top administrative partner in the late 1980's and 90's, he was known the firm to be no-nonsense and at times tough. He came to Rose after working as a counsel for Senate Appropriations Committee in the 1977 and at the firm, handled securities and corporate matters. He owns an Italian restaurant in Little Rock. In Washington: A few weeks before Mr. Foster's death, Mr. Kennedy was rebuked in an internal White House report over his role in calling in the Federal Bureau of Investigation to investigate the staff of the White House travel office.
Webster Lee "Webb" Hubbell
Webster Lee "Webb" Hubbell (born 1948) is an American author, lecturer, consultant, advocate, and Arkansas lawyer who practiced law from 1974-1993 inPulaski County. He has held executive level positions in government and industry including: U.S. Associate Attorney General, Chief Justice of the Arkansas Supreme Court, Mayor of Little Rock, Managing Partner of the second largest law firm in Arkansas, and Executive and Chief Counsel for a large Washington based Commercial Insurance Company. While he practiced law he was Mayor of Little Rock from 1979 until 1982, one of the nation's youngest mayors. He also served on Little Rock's City Board from 1978 to 1984. He was appointed by Bill Clinton as Chief Justice of the Arkansas Supreme Court in 1984 at age 36. When Clinton became President of the United States, Hubbell was appointed as Associate Attorney General. In 1997 he published an autobiography, Friends in High Places, and in May 2014 his first in a series of legal thrillers, When Men Betray, was published by Beaufort Books. In May 2015 he published book two of the Jack Patterson Thriller Series, Ginger Snaps.
Early Life and Education of
Webster Lee "Webb" Hubbell
Born and raised in Little Rock, Arkansas, Hubbell was a three-sport letterman at Hall High School. He attended the University of Arkansas on a football scholarship where he played offensive tackle for the Razorbacks. In his senior year, the Arkansas Razorbacks were SWC co-champs and beat undefeated Georgia in the Sugar Bowl. He was selected in the National Football League draft by the Chicago Bears, but a serious knee injury ended his football career. He graduated from the University of Arkansas with a degree in Electrical Engineering in 1970, then graduated with a Juris Doctor degree from the University of Arkansas School of Law with honors
Career of
Webster Lee "Webb" Hubbell
Hubbell began the practice of law with the Rose Law Firm in 1973, where in February 1977 Hillary Clinton joined him as a law partner. In September 1978 he was appointed to Little Rock's City Board of Directors, and in 1979 he was elected Mayor of Little Rock.] He served in that position until 1981. He was also re-elected to the City Board of Directors in 1980 where he served until he resigned in 1984 to become the Chief Justice of the Arkansas Supreme Court. After his service on the Court, he returned to the Rose Law Firm where he remained until he left for Washington, D.C. in January 1993. Hubbell was active in community affairs including, serving as president of the Visiting Nurses Association, on the Board and Treasurer of the Arkansas Arts Center, on the board of the UAMS Foundation, and as chairman of the board of the Arkansas State Board of Bar Examiners
Federal government career
After the 1992 election, Hubbell was one of the Clinton Administration transition's senior officials, Counsel to the Transition Board and responsible for vettingappointments to the Cabinet and other top positions,[1] among others George Stephanopoulos, Henry Cisneros, and Jim Woolsey, former head of the Central Intelligence Agency and Bernard W. Nussbaum, White House Counsel.
After Clinton's inauguration, Hubbell became White House liaison to the United States Department of Justice,[1] arriving at Justice on January 20, 1993.[2] During the period before an Attorney General was approved, Hubbell worked as the assistant to the Attorney General,[3] but reported to Bush appointee Republican Acting Attorney General Stewart Gerson. Clinton floated Hubbell's name for the Attorney General job on January 30, 1993, after Zoë Baird's name was withdrawn, but Clinton nominated Janet Reno.[4] Hubbell was formally nominated as Associate Attorney General on April 2, 1993,[5] and was immediately attacked for his ties to the Clintons. Hubbell's nomination was quickly confirmed by the U.S. Senate, however, and he served as Associate Attorney General until April, 1994. He oversaw all the civil divisions of the U.S. Department of Justice, the Immigration and Naturalization Service, and was appointed by Janet Reno as the Chief Operating Officer of Department and its 100,000 employees and $10 billion budget.
Resignation
During the Whitewater controversy, Hubbell was indicted for alleged overbilling of clients while in private practice. Hubbell had previously resigned as associate attorney general on April 14, 1994 to avoid controversy regarding his work at Justice and in hopes to reach a civil resolution with his old firm. In December 1994 Hubbell plead guilty to one count of wire fraud and one count of tax fraud in connection with his legal billing at the Rose Law Firm and on June 28, 1995, Judge George Howard sentenced Hubbell to 21 months' imprisonment.
As a convicted felon, Hubbell entered Federal Correctional Institution, Cumberland in August 1995, and was released from a halfway house in February 1997
Additional Criminal Charges
During the months after Hubbell's resignation, he entered into legal consulting contracts with several clients including the Indonesian Riady family and Revlon.[8] This activity became the focus of another Starr investigation while Hubbell served out his sentence. Despite years of investigation, and although Independent Counsel Starr alleged that Hubbell "did little or no work for the money paid by his consulting clients," Starr ultimately concluded there was insufficient evidence to prove that any legal consulting contract or payments were intended to influence Hubbell's cooperation with investigators in the Whitewater investigation.
Starr and his prosecutors were convinced that Hubbell knew all the Clintons' secrets that were under investigation and that, if pressured enough, Hubbell would tell all. On April 30, 1998, Hubbell and his wife were indicted for conspiracy, tax evasion and mail fraud. Hubbell had, in the course of Starr's investigation, provided documents as part of an immunity agreement with the Independent Counsel about his consulting agreements. Despite this agreement, Starr used this information to obtain an indictment of Hubbell, his wife, his accountant and his tax lawyer.
District Judge James Robertson dismissed the charges against Hubbell and his wife on July 1, 1998, ruling that Independent Counsel Kenneth Starr had overstepped his authority in bringing the Hubbell indictment. Judge Robertson ruled that Starr had violated Hubbell's Fifth Amendment rights against self-incrimination by building a case that relied on materials collected under an immunity agreement with Hubbell.[9] Starr appealed to the Court of Appeals and Judge Robertson was affirmed. Starr then appealed to the United States Supreme Court. In an 8-1 decision (with Chief Justice William H. Rehnquist the lone dissenter), the Supreme Court also ruled in favor of Hubbell.
On November 14, 1998 Starr obtained an indictment of Hubbell for a third time, this time for alleged fraud and allegedly giving false testimony to the House Banking Committee and federal banking regulators. On June 30, 1999, the day Starr was required to step down as Independent Counsel, Hubbell entered into a plea agreement resolving the indictments and bringing Starr's pursuit of him to an end. Hubbell pleaded guilty to one charge of failing to disclose a potential conflict of interest that occurred ten years earlier. He was sentenced to one year of probation in exchange for the prosecutor dropping all charges against his wife, his lawyer, and his accountant and an agreement by Starr not to bring further charges against Hubbell ever again.
Life After Prison
During the six years of Starr's investigation, Hubbell worked for criminal justice think tank NCIA. After all the investigations were finally over, Hubbell worked as an independent legal consultant, general counsel for an Internet start-up, and general counsel and senior vice-president for a large commercial insurance company until July 2010. After a liver transplant instigated by a rare form of hepatitis, he moved to Charlotte, North Carolina, where he now writes novels. His first novel, When Men Betray, was released in May 2014 by Beaufort Books