The RTC already had filed complaints against Peat Marwick for alleged negligence in connection with S&L audits it had performed elsewhere in the country. In March 1992, for instance, the agency sued the firm and its partners, seeking $100 million in damages for work it performed for Hill Financial Savings Association, a Pennsylvania thrift that had made loans on a number of real estate projects in Colorado.
Baker & Hostetler, however, resisted North's recommendation--because, the suit alleges, the accounting firm had been one of its clients. Angry that North would recommend a suit against Peat Marwick, Clark placed North on a "leave of absence" and cut his salary in half, the suit claims. North was forced to spend the next several months working out of his $300,000 home in Greenwood Village.
Then, in the fall of last year, North met with several Baker & Hostetler attorneys in the firm's Denver office. During that meeting, the suit says, some of the lawyers suggested that the firm cut its ties with North. Shortly afterward, Clark wrote North a letter informing him that his employment at Baker & Hostetler would end on January 1, 1994.
The firm's treatment of North "was particularly outrageous because [Baker & Hostetler] knew that North had forsaken a stable and prestigious position as Regional Counsel of the RTC," the suit claims. Furthermore, Clark and other members of the firm knew "their conduct would permanently cripple North's legal career."
Lawyers familiar with the case say North's claim about the Williamsburg Savings Bank case is the most serious allegation in his complaint. If true, one RTC lawyer says, the firm should not have agreed to represent the RTC at all in the Williamsburg case, since it should have known that a failed thrift's accounting firm is always a potential target of an RTC claim. If North is right, the RTC lawyer says, "someone's got a hot potato in their lap at the law firm."
But one source, who insisted on being identified only as a Denver attorney, says it's more likely that the inspector general's investigation of North doomed his prospects at the firm. North's main value to Baker & Hostetler, the lawyer says, was his relationship with the RTC. Regardless of the outcome of the probe, adds the attorney, North was tainted from then on and became a liability instead of an asset.
"It was a purely mercenary thing," the lawyer says. "He was supposed to come up with the goods. As soon as he couldn't, he was history."
North's Denver attorney, Jay Horowitz, refuses to discuss the lawsuit. "Other than to say Mr. North feels strongly about the claims he's made," Horowitz says, "we have no comment."
Baker & Hostetler has not yet filed a response to North's complaint, so its version of the events surrounding North's hiring and firing has not been made public. The firm's attorney, Frances Koncilja, has filed a motion in court asking that an arbitrator take over the case, which would mean the dispute would be removed from court and adjudicated out of the public eye. Koncilja did not return repeated phone calls. Reached by phone, Clark referred a request for comment to John Burlingame, the firm's executive partner in Cleveland, but Burlingame also was unavailable.
Attorneys familiar with the case, meanwhile, are divided on the merits of North's claim against Baker & Hostetler. North isn't the kind of person "who would make statements like this wildly," says one former colleague at the law firm. "I know he is not a loose cannon."
But North's enemies from his days at the RTC say they're salivating at the prospect of a lengthy, revealing court battle. "What we're hoping," says one attorney, "is that the case will go to trial and there will be a lot of mudslinging.
