By Joel Warner
By Michael Roberts
By Joel Warner
By Michael Roberts
By Alan Prendergast
By Michael Roberts
By Michael Roberts
By Amber Taufen
The firm, which had lured North away from the upper echelons of the federal Resolution Trust Corporation and then kicked him out eighteen months later, asked a judge to force North to argue his grievance behind closed doors before an arbitrator. The judge refused and has since scheduled a jury trial for next June in open court.
So Baker & Hostetler has now adopted a different litigation tack: a countersuit against North for hundreds of thousands of dollars in damages. According to the countersuit, North concealed from the partners who brought him to the firm that he was being investigated by the RTC for alleged misconduct. The firm also contends that North vastly overstated his qualifications as a litigator. And North, Baker & Hostetler says, was even "abusive" toward colleagues during his troubled tenure there.
"If Jeff North was bluffing and hoped to get a quick settlement [from Baker & Hostetler]--that's gone," says one RTC attorney familiar with the case, speaking on condition of anonymity. "It's going to be a protracted war, with his legal career and credibility at stake."
To understand the saga, one must go back to the winter and spring of 1992, when North was working as the RTC's Denver-based regional counsel ("Falling Down," July 20). Just 42, North was then one of the most powerful lawyers inside the agency, which was charged with cleaning up the national savings-and-loan mess left over from the 1980s. One of only four regional counsels in the country, North presided over the work of hundreds of government lawyers in seventeen states. He controlled millions of dollars set aside for RTC contracts with outside law firms and reported directly to RTC headquarters in Washington, D.C.
Starting in February 1992, according to court papers, North had a number of meetings with Jim Clark, managing partner of Baker & Hostetler's Denver office. Based in Cleveland, Baker & Hostetler did a significant amount of legal work for the RTC and counted the agency as one of its most important clients.
According to court papers, the pair began talking about the possibility of North's leaving government service and coming to work for Baker & Hostetler as a partner. Clark, North claims in his suit, courted him aggressively, promising that North could work for Baker & Hostetler for "the remainder of North's professional career." North says Clark indicated that he intended to "groom North as his successor" and gave him an initial salary of $180,000 a year. Clark even assigned North to a corner office, an unmistakable signal, North's suit says, that North was Clark's new "right-hand man."
But North's relationship with Baker & Hostetler quickly went sour. Not long after North joined the firm, the RTC informed Baker & Hostetler that North was under investigation by the agency. Details about the probe are vague, but court papers indicate that it focused on dealings North had with Baker & Hostetler during his negotiations for a job with the firm and involved "revolving-door" ethics rules governing federal employees who jump over to the private sector.
Baker & Hostetler put North on a leave of absence after learning of the investigation, and North spent the rest of the year drawing half his salary and working out of his $300,000 home in Greenwood Village. In November 1993, after a meeting of its Denver partners, Baker & Hostetler told North the firm was letting him go.
In his suit, filed in May, North says Baker & Hostetler hired him only because of his potential as a "rainmaker" for further legal business with the RTC. Outwardly, Clark had promised he would allow North to develop a practice serving private financial institutions, but in reality he "was interested only in the bonanza of RTC work which he expected North's presence to attract to B&H," the suit alleges. By cutting him loose, North says, Clark and the firm broke their promises to North and "irreparably damaged" his legal career.
The firm does acknowledge in the recently filed countersuit that during their initial meetings Clark and North "discussed the possibility that North's presence could enhance B&H's resume in pursuing...RTC projects." But the firm contends that North told Clark "he would be able to obtain large volumes of work from the RTC without violating post-employment restrictions."
The rest of the countersuit paints a picture of the firm's dealings with North that differs radically from North's account.
According to the firm, it was North who first broached the idea of coming to work for Baker & Hostetler during meetings with Clark in March 1992. North, the countersuit says, told Clark he was talking with several firms and wanted to know if Baker & Hostetler would be interested. During their negotiations, North told Clark that he had "significant `hands-on' experience" with professional liability cases--suits in which the government sues the directors, lawyers and accountants of failed S&Ls for damages.
In fact, according to Baker & Hostetler, North's legal skills turned out to be seriously deficient. "After North began work with Baker & Hostetler, it became clear that he did not have the experience and case-management skills he claimed to possess," the firm says. North, furthermore, was "abusive to the associates and staff at the firm," the countersuit says, something that caused consternation among partners there.
Before he was hired, North told the firm "he was not aware of any conflict of interest that would be adverse to Baker & Hostetler," the countersuit says. Not long afterward, however, the RTC alerted the firm that North was the target of an investigation by the agency's inspector general. Clark confronted North about the investigation and asked why he hadn't told the firm about it. North's response, according to the countersuit, was that the probe was "politically motivated" and would be dropped after the presidential election of November 1992.
But in January 1993, the countersuit alleges, Clark learned that the investigation was far more serious than North had let on. RTC officials met with Clark in the beginning of that month and told him that the agency was refusing to award any more work to Baker & Hostetler's Denver office. The officials demanded that North be "walled off" from all RTC legal matters and even threatened to terminate all of Baker & Hostetler's RTC work nationwide.
No charges were ever brought against North as a result of the investigation, sources familiar with the case say, and North continued on his leave of absence for the rest of 1993. In November of that year, the countersuit says, the firm's Denver partners "held a vote and determined that they did not want North to return to the office."
Baker & Hostetler is seeking at least $450,000 in damages from North, saying that he "concealed material facts" from the firm while angling for a job, including the existence of the RTC investigation and his "lack of practical experience" handling professional liability cases. "North fraudulently induced Baker & Hostetler to extend him an offer of employment," the firm says.
Baker & Hostetler's attorney, Frances Koncilja, could not be reached for comment. North's attorney, Jay Horowitz, declines to comment on the countersuit in detail but says "there's nothing alleged in the counterclaim which changes North's view that he was improperly dealt with" by the firm.
At the RTC, meanwhile, government staffers who remember North are following the case closely, according to the attorney inside the agency. North's former colleagues, the attorney says, are "surprised that things didn't settle" out of court before they got this ugly.
"The gloves have come off," the RTC attorney says. "It's going to be a no-holds-barred lawsuit.