Victim of circumstance

the proud old arkansas firm where hillary clinton used to practice law is one of the innocent victims of the frenzy surrounding the whitewater investigation.

By Mollie Dickenson
Published July 27, 1998 7:00PM (EDT)

During the four-and-a-half-year Whitewater probe of the Clinton administration, dozens of innocent individuals and entities have been swept up into independent counsel Kenneth Starr's and congressional Republicans' investigative machinery -- only to emerge with tarnished reputations, huge legal bills and the inability to do anything about their predicament.

Nowhere have so many people been tainted as in Little Rock, the close-knit Arkansas state capital, where subpoenas, depositions, indictments, convictions -- and acquittals -- have touched hundreds of lives.

One institution left reeling from a multitude of media and congressional allegations is the once-venerable Rose Law Firm, where Hillary Rodham Clinton used to practice law. Three of her partners, Vincent Foster, William Kennedy III and Webster Hubbell, joined the Clintons in Washington after their 1992 victory, but only Kennedy, who was Foster's associate White House counsel, escaped back to Little Rock -- and the firm -- with comparatively minimal damage.

The Rose firm itself was accused of having a conflict of interest between its (and Hillary Clinton's) representation of Jim McDougal's Madison Guaranty Savings and Loan and the firm's later representation of the U.S. government against Madison's auditor. It was also accused, falsely, of having "shredded" Madison and Whitewater documents -- a story that led the national news shows when broken in 1994 by the conservative Washington Times newspaper.

The Rose firm was again falsely implicated when Hillary Clinton's infamous "missing" billing records turned up in the White House in January 1996, two years after they were subpoenaed.

And while an independent investigation into all the Rose charges eventually determined there was virtually no substance to them, the firm -- the oldest west of the Mississippi River, established in 1820 -- has been seriously, and permanently, damaged.

One charge frequently leveled by Clinton detractors is that the White House is continually putting roadblocks in the way of Starr's investigation. At the top of this list are the missing Rose firm billing records of Hillary Clinton's 60 hours of work over 15 months for McDougal, which had been removed from firm files in order to answer New York Times reporter Jeff Gerth's questions in March 1992, during the presidential campaign.

Ignored by the media and Clinton critics is the fact that when they did surface, the records substantiated Hillary Clinton's public and sworn statements.

Sworn testimony given in deposition by both President Clinton's personal lawyer, David Kendall, and White House Special Counsel Jane Sherburne, who were the first to question White House secretary Carolyn Huber after she located the records, tells a largely unreported story.

Sherburne, who was hired in January 1995 from the Washington law firm Wilmer Cutler & Pickering to manage the response to all Whitewater investigations, says that Huber was at first "very unsure about when or where she had found the records in the book room," a catch-all storage room in the family quarters of the White House. When Huber later testified, her story had become "precise," says Sherburne. She surmises that Huber, a former Rose Law Firm secretary, "had packed them up in the governor's mansion in Little Rock before the Clintons moved to Washington."

All the Clintons' boxes were stored elsewhere, says Sherburne, and then brought, a few at a time, to the book room, where Huber unpacked them and determined what should be done with the contents.

"But in the rush to clear out the book room in 1995 to make office space for the people who were going to help Mrs. Clinton write her book, ["It Takes a Village"], Carolyn probably threw the billing records she had unpacked into a box along with the old shoes and empty hangers that were also in the box, and moved it to her office to deal with later."

So much for the "mystery."

In Starr's search for records, Sherburne also had the distasteful task of complying with Starr's threat to search the Clintons' living quarters for a mysterious box described to her as having the name "Foster" on it.

"They wouldn't give me a clue as to what size it was supposed to be," Sherburne said. She was told that FBI agents would do the search. "'Are you out of your minds?' she says she told them. "FBI agents searching the president's private living quarters?" After negotiations, Starr's staff told her they would trust her to do it, accompanied by the White House head usher. Sherburne asked another lawyer to join her also.

Hillary Clinton's reaction to the search? "'Just get in here and do it,'" says Sherburne. "Her attitude by then was, 'It's another indignity I have to endure, and I'm not going to waste any energy getting upset about it." There have been reports that the search included the Clintons' underwear and lingerie drawers -- Chelsea's too. "The whole thing was so offensive to me that I don't want to confirm or deny that," says Sherburne, but Salon's interview with Sherburne left no doubt that she had indeed searched the Clintons' underwear drawers, and every other nook and cranny of the family's living quarters. "It took several hours. It was thorough," she says. "And it did not turn up a box with Vincent Foster's name on it."

The constant stream of charges against Hillary Clinton and her partners besmirched the reputation of the Rose firm, which until then had been the premier firm in Arkansas. Rose's reputation "was tarnished -- for the most part wrongly and unfairly and in ways that can never be undone," writes reporter Terry Carter in the July issue of the American Bar Association Journal. "The Rose Law Firm got a bum rap" and came under relentless scrutiny that "probably few could survive." His article chronicles Rose's descent into the maelstrom and its efforts to recover from the charges and slurs hurled at it.

Carter blames "an unholy alliance of congressional members and staff, special interest groups and the news media," but except for Webster Hubbell's conviction for overbilling -- which the firm itself, not Starr -- uncovered, "sensational allegations of wrongdoing at the firm have proved untrue, and that has gone unreported."

The firm was left to pick up the pieces and move ahead, without what had been the expected return of Foster, whom, Carter says, many Rose attorneys regarded "as the soul of the firm." Nine Rose lawyers have left to form their own firm, taking its most lucrative practice in securities with them.

Leading Rose today is Ronald M. Clark, who as the firm's point man during the years of investigations was badgered by the press and by the Republicans on the Senate Whitewater Committee, particularly Chairman Alfonse D'Amato, R-N.Y. When the FDIC reported in spring 1994 that the Rose firm had no serious conflicts of interest in the Madison Guaranty Savings and Loan work, "D'Amato was furious," according to Carter, and he ordered a re-investigation.

Under the more compliant Resolution Trust Corporation, the re-investigation was turned over to the Washington office of Pillsbury Madison & Sutro, and the RTC specifically designated Jay Stephens as the lead attorney. Stephens, President George Bush's appointee to the office of U.S. attorney in the District of Columbia, had just been fired by President Clinton, as had all 90 U.S. attorneys, which is customary when the opposing party wins the White House.

In addition, Stephens had publicly and personally criticized President Clinton and had considered challenging for Democratic Virginia Sen. Chuck Robb's seat in 1994 (as had Starr). Clintonites and Democrats complained loudly about Stephens' partisanship, and Pillsbury later put the investigation into the hands of two other Pillsbury attorneys.

Pillsbury vastly widened the investigation to include all of Rose's work on 38 savings and loans for the RTC and FDIC in the S&L "bailout" of the late 1980s and early '90s. Like hundreds of law firms nationwide, Hubbell and Foster at Rose sought and received some of the massive amount of legal work the government was contracting out.

Then, in a stunning reversal of government policy, many of these same firms were later themselves aggressively audited and sued. But Pillsbury reported in 1995 that it still hadn't found "substantial problems with Rose's work." Indeed, in 1994, Ira Parker, the RTC's associate general counsel, told this Salon reporter, "I chose the Rose Law Firm to do the work because they were the best firm in Arkansas."

But D'Amato also found that exoneration unacceptable, and ordered Pillsbury back to work, the edict being "to find wrongdoing," says Carter. Pillsbury, he says, then found a few "impermissible conflicts" that were inevitable "in a small state with only so many lawyers capable of handling big matters." The RTC demanded a return of $300,000, and Rose finally settled (as have many law firms to avoid lengthy and even more costly litigation with the government and its bottomless pockets) for $210,000.

Ron Clark observed: "They didn't find one thing wrong with Foster's bills." And Pillsbury's final 1996 report noted, regarding Rose's work for Madison Guaranty: "It simply would not be persuasive to argue that, for $21,000 [in legal fees over several years], McDougal corrupted the Rose Law Firm and convinced half a dozen lawyers, most of whom he did not know, to join him in a scheme to violate the law ... The conspiracy theory is hopelessly flawed."

Jay Stephens refused to review and sign off on his firm's report, despite having billed the government $68,000 for what he called his "minimal" work. Republicans had labeled Hillary Clinton's work for Madison "substantial," when, in fact, she had realized only about $300 from her work for Madison and McDougal.

The Pillsbury report also addressed the widely reported canard that the Rose Law Firm had "shredded" Madison Guaranty and Whitewater-related documents. Pillsbury said that any discarding of those documents was done "in a seemingly innocent context of routine purging of files."

It turned out that a college student who had worked as a courier for Rose had leaked the shredding story to the Washington Times. He later advertised in the American Spectator that he had samples of shredded Whitewater paper to sell, although the actual documents shredded had nothing to do with Whitewater, says Carter.

Today, determined to rebound, Rose has instituted a tighter management system under Clark and changed its compensation system. "How many firms in America could withstand what we withstood and survive?" Clark asked in his interview with Carter. Not counting the hours spent on complying with congressional demands, Rose's legal bills exceeded $1 million.

After several grillings before the Senate Whitewater Committee, D'Amato offered a left-handed apology to Clark and the Rose firm, perhaps inspired by the senator's own approval ratings, which had dropped below 30 percent. D'Amato acknowledged that "witnesses such as Clark may find themselves in positions which are unfair," and that he believed Clark "attempted to answer the questions to the absolute best" of his recollection, had not "withheld anything" and "answered in all candor ... We have a duty to try to set that record straight and indicate that."

That exchange, however, was not reported in any publication -- not the New York Times, the Washington Post, Los Angeles Times, Arkansas Democrat-Gazette nor the Washington Times, which broke the discredited shredding story.

But then, the Whitewater story has always been much more a media story than an actual criminal case, anyway. The Whitewater story is actually a breakdown in American journalism of historic proportions, as some of the country's leading media outlets failed to understand -- and accurately report -- the complexities of a political witch hunt.

Mollie Dickenson

Mollie Dickenson's articles have appeared in the New York Times, the Washington Post, the Miami Herald and other publications. She is the author of "Thumbs Up," a biography of Reagan Press Secretary James Brady.

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