Will BigLaw Partner Tapped for AG Be
Visited by Ghosts of Clients Past?

By David Ingram and Joe Palazzolo
Legal Times
New York Lawyer
December 8, 2008

WASHINGTON - One afternoon shortly after the 2001 inauguration, Eric Holder Jr. considered his future from his lavishly appointed office in the Justice Department’s Robert F. Kennedy Building, still his a while longer, until his Republican successor arrived. One of his old friends, Covington & Burling’s Thomas Williamson Jr., was visiting for lunch.

"It was a lengthy lunch, because a number of firms were coming to him to join their partnership," says Williamson, head of the firm’s employment practice. "I wanted to be sure I didn’t just rely on, ‘Come be my partner because we’re old friends.’?" Williamson, who met Holder in the late 1970s, says he told the longtime public official that he could channel a portion of his private work into Covington’s pro bono efforts, and he told Holder that the firm could offer exciting work.

"It took a couple of weeks," Williamson says, "but he came around."

While much is known about Holder’s more than two decades in government, supporters and critics of his nomination to be attorney general have said relatively little about his seven years with one of Washington’s premier law firms. His private practice—following his time as a lawyer for the Justice Department’s Public Integrity Section, D.C.

Superior Court judge, U.S. attorney, and No. 2 Justice official—focused on complex criminal and ethical investigations and defending major companies from claims of discrimination. Holder has been in the spotlight as a lawyer for the National Football League in Michael Vick’s dogfighting case and for Chiquita Brands International regarding its payments to Colombian guerrillas. He also advised the campaign of President-elect Barack Obama, who last week named Holder as his choice for the nation’s top law enforcement official.

His work at Covington, which averages $1.175 million in profits per partner, reveals some of the qualities he would bring to his next job and some of the conflict-of-interest challenges he’ll likely think about as he goes through the confirmation process and—if confirmed—takes over as AG.

MR. FIX-IT

Since 2001, Holder has been a sought-after figure for companies, nonprofits, and government agencies caught up criminal or ethical investigations. In 2004, he represented the United Way of the National Capital Area when its former director of 27 years pleaded guilty to embezzling nearly $500,000 from the organization. That same year, he also represented the president of the University of the District of Columbia in an ethics inquiry, and the Illinois governor recruited him—until the state attorney general intervened—to conduct a public review of the awarding of a casino license.

"His transition to private practice was effortless," says Lanny Breuer, co-chairman of Covington’s white-collar defense and investigations group. "He just brings this extraordinary level of judgment and this remarkably calm and thoughtful demeanor to every problem."

Breuer says he and Holder were the lead attorneys for a committee of Hewlett-Packard’s independent directors, managing a team that investigated allegations in 2006 that the company spied on journalists following the leak of sensitive information about company strategy. Holder also represented Chiquita in a 2007 settlement with the Justice Department in which the company agreed to a $25 million fine for payments it made to a Colombian terrorist group that was threatening company employees.

In defending Chiquita, Holder at one point criticized the Justice Department for not giving the company clear guidance after it notified Justice of the payments. He said in court that if department staff had failed to act on such information when he was deputy attorney general, "heads would have rolled," according to a December 2007 article in Corporate Counsel magazine, a sibling publication to Legal Times.

Earlier this year, Holder was lead counsel for Merck & Co. when it agreed to pay $671 million to settle allegations that the company routinely overbilled Medicaid for four popular medicines. The agreement was one of the largest Medicaid fraud recoveries in history. In 2002, he registered as a lobbyist for Global Crossing when the telecommunications company was seeking approval from federal security officials to be sold to Asian buyers. He has also represented the widow of Robert Wone, a former Covington associate who was killed in a Dupont Circle row house in 2006.

DISCRIMINATION DEFENSE

Holder complemented his high-profile investigations and criminal work with dozens of employment cases, many of which he handled with Williamson. Holder defended MBNA Corp.—now part of Bank of America—as well as Purdue Pharma and GlaxoSmithKline against claims of racial, gender, and national origin discrimination.

In the early 2000s, plaintiffs’ lawyers were threatening MBNA with a nationwide class action on behalf of employees alleging discrimination. MBNA’s general counsel at the time, former FBI Director Louis Freeh, went to his friend, Covington partner Aaron Marcu in the New York office, for advice. Marcu recommended Freeh hire Holder to devise a strategy.

The plaintiffs’ test case—a discrimination suit brought by an Iranian-American in Dallas—flopped. Holder first-chaired the trial and won so thoroughly that the judge ordered the plaintiff’s law firm, Gary Williams Parenti Finney Lewis McManus Watson & Sperando, to cover MBNA’s legal fees. The other 20 or so MBNA cases were either dismissed or settled for modest sums.

David Ellis of K&L Gates, Holder’s co-counsel in the MBNA cases, says Holder decimated the claims "but treated the plaintiff with total respect" throughout the five-day trial.

"The jury loved him," Ellis says.

Firoozeh Butler, the plaintiff, did not. MBNA had offered Butler, a senior program analyst, $400,000 to settle the case, but she forced a trial in 2004, alleging she was denied promotions, harassed, and discriminated against because of her Persian descent. Butler lost her job about five months after the trial for repeated absences. She was about two months short of early retirement.

Butler, who lives in Dallas and is unemployed, says she was laid up for health-related reasons. "Not a day goes by that I don’t think about this," Butler says of her failed lawsuit. "I hope to God [Holder] doesn’t get confirmed."

In other employment cases, Holder was less prominent, serving in either an advisory or supervisory role. "In the limited interaction with Eric that I had, he came across as an extremely skilled, great attorney, and I have nothing but kind words to say about him," says Shanon Carson of Philadelphia-based Berger & Montague. The firm is representing three black former employees of Swiss bank UBS in a lawsuit claiming racial discrimination, and Holder has helped represent UBS.

And, as Williamson suggested in 2001, Holder has taken cases pro bono. He’s been representing a Louisiana man who’s seeking damages for serving nearly 20 years in prison for a rape he didn’t commit. The man, Dennis Patrick Brown, participated as a fill-in in a police lineup while he was being interviewed about an unrelated burglary, and he was wrongly identified as the attacker.

CONFLICT QUESTIONS

Lawyers who are named to an administrative post are generally expected to pull back from their private practice, handing off duties to colleagues. Jamie Gorelick, who preceded Holder as deputy attorney general, says Holder might have already done that because he has spent much of the last year helping Obama. "Eric told me that his billable hours had been slim during the campaign," Gorelick says, "so I would imagine that extricating himself wouldn’t be that difficult." Williamson says Holder has not been "actively consulted in recent weeks on cases we’re working on."

Holder declined to comment for this story. Timothy Hester, chairman of Covington, referred questions to Breuer.

"He’s in the process from withdrawing from his practice in anticipation of being the next attorney general," Williamson says.

Still, there could be conflicts Holder will have to consider. Former Justice Department lawyers say Holder would need to think carefully about the oversight of cases where a former client is involved—including, for example, investigations of UBS and of Bank of America’s troubled subsidiary Countrywide Financial Corp. "I’m confident that Eric would check very carefully any ethics question and abide by whatever the determination is," says Orrick, Herrington & Sutcliffe partner Michael Madigan, a former federal prosecutor and a Republican who supported Obama.

There’s also the broad reach of Covington & Burling, the Washington area’s third-largest firm by head count, and with it the potential for other conflicts of interest. In 2005, then-Assistant Attorney General Robert McCallum faced criticism involving his former law firm after the Justice Department lowered the penalties it was seeking from tobacco companies in a landmark racketeering case from $130 billion to $10 billion. McCallum had never represented tobacco companies in private practice, but colleagues at Alston & Bird had. An internal Justice probe cleared McCallum, who is now ambassador to Australia.

"The Justice Department has pretty clear rules about this," says Gorelick, now a partner at Wilmer Cutler Pickering Hale and Dorr. "Eric will need to recuse himself from anything in which he participated in private practice, and prudentially should recuse himself from matters involving his old law firm, at least for a little while."

And, she adds, there’s an easy fix: "He can always refer to his deputy." While working under Attorney General Janet Reno, Gorelick says she served as acting attorney general in several situations where Reno recused herself.

George Terwilliger III, who served as deputy attorney general under President George H. W. Bush, says he doubts that Holder will have much trouble with the transition back to public office. He calls Holder "highly qualified."

"Sometimes people try to make an issue out of, ‘Well, you were in private practice and you worked for a bank, so how can you work on banking issues in the Justice Department?’?" says Terwilliger, a partner at White & Case. "That, to me, is a complete red herring."