A Conflict of Interest Read online

  The first credo of Cromwell Altman is never to pass up a paying client. The lesson is reinforced daily when the firm sends around the origination scorecard, showing the top rainmakers. So I overlook the circumstances—my father’s funeral—to pitch for the business.

  “How can I help you, Mr. Ohlig?”

  “Please, Alex, if we’re going to be working together, and even if we’re not, you have to call me Michael.”

  “Okay. How can I help you, Michael?”

  “Thank you,” he says in something of a non sequitur. “It’s not appropriate to your father’s memory to talk about it today. I’ll come to New York next week and meet with you in your office.”

  “It’s okay to talk about it now. I really don’t mind and it will let me think about something else.”

  “No. It just isn’t right,” he says, making it clear he will not change his mind. “But, if you’ll permit me one more indulgence. I don’t want your mother to know about any of this. Attorney-client privilege and all that good stuff. She’s got enough on her mind now without my problems adding to it.”

  “I understand. All representations are kept in the strictest confidence. Even from my mother.”

  He laughs, as if we had been talking about something other than the fact that he finds himself in criminal jeopardy. This much I’ve already surmised: Michael Ohlig is one cool customer. Most clients are like my daughter before a doctor’s visit, requiring constant assurance that everything is going to be all right and a painstakingly precise description of each step to follow, but not Michael Ohlig. He’s heard enough.

  There are really only two possibilities for Ohlig’s demeanor. Either he has deluded himself into believing there’s nothing to worry about, or he knows the peril he’s in and sees no reason to request false promises. Even though I’ve only just met him, it is already apparent that Ohlig isn’t the self-deluded type.

  2

  Ohlig arrives at my office at nine o’clock on the dot the following Monday. He’s wearing a dark suit, a white shirt, and an expensive-looking tie. But for the fact his hair is a few inches longer than a white-shoe lawyer would find appropriate, someone passing by my office would assume I was meeting with the firm’s senior partner.

  “Thank you again for making time for me, Alex.”

  “My pleasure, Michael.”

  “How’s your mom doing?”

  “She’s okay. Thanks for asking. I spoke with her yesterday. She’s trying to sound upbeat, talking about the future. But it must be so hard. My father was everything to her.”

  He smiles softly. “She’s a strong woman, your mother. She’ll be okay, of that I’m sure. And you, how are you holding up?”

  “Good. Again, thanks for asking.”

  “Good. Thanks for asking,” he repeats as a gentle mock. “Have you always been so reserved in your emotions?”

  The truth is that I always have been. It’s something that Elizabeth finds difficult to comprehend, wondering how I can argue with people for a living and yet remain so even-tempered in my own life. “That’s why,” is what I normally tell her.

  My father’s death is my first experience with grief. I cried when my mother called me with the news, but since then I’ve been able to hold my emotions in check, even while eulogizing him. It was Charlotte, ironically enough, who first called me on it. Noticing how Elizabeth was crying as I told our daughter the news that Papa had died, Charlotte seemed confused.

  “Papa was your daddy, right, Daddy?”

  “Yes.”

  “Then why aren’t you crying too?”

  “I cried for Papa earlier, when Grandma told me the news. And I may cry for him later too. Everyone feels sad in their own way.”

  I told Ohlig a variant of the same thing. Like Charlotte, I don’t think he bought it.

  “Alex, even though I’m up here seeking your sage counsel,” he says, “I may be able to offer you some advice too. I know what it’s like to lose a father, and I know what a great guy your father was, which I can only assume makes it a hundred times tougher for you than it was for me when my father died because my old man was one mean SOB. I guess what I’m trying to say is that even though we don’t know each other very well, other than your mother, no one knew your father better than me. So, if you ever want to talk about anything, I’m here for you.”

  “Thank you. I really do appreciate it,” I say, meaning it.

  He looks around my office. “Okay, so before we get started, you gotta tell me what’s up with the Batman stuff.”

  It’s a fair question, and one that others have posed. For the most part, my office, like much of my life, is little more than a façade with which I try to project what I think the world expects from me. In this case, that includes a sleek Le Corbusier glass table and matching guest chairs, a high-backed black leather desk chair that looks as expensive as it was, a sofa I don’t believe anyone has ever sat on, pictures on my desk of Charlotte and Elizabeth that face me, and artwork I stare at for twelve to sixteen hours a day, but would be hard-pressed to identify if it were stolen.

  The exception to all this high-end seriousness is assorted Batman paraphernalia. Some of it is of the expensive toy variety, like a Cobblepot for Mayor poster that was an actual prop in the 1992 Batman movie and cost nearly $2,000 on eBay, but most of it is what you might expect to see in an eight-year-old’s bedroom—a Batman mug that holds my pens, Pez figures on my bookshelf, and a toy bat signal. They stand out in these surroundings much the same way I would at a partners’ meeting if I dyed my hair purple.

  “I like Batman,” I tell him. “Think of it as my way of identifying with another defender of the innocent.”

  He laughs at this, but it’s shallow, as if he knows my last comment was facetious.

  “So what is it that caused you to come to New York City to seek, what did you call it, my sage counsel?” I say, getting down to the business at hand.

  Ohlig leans forward, locking onto my eyes. It’s a stare with some power behind it, so much so that it’s a struggle for me to maintain his eye contact.

  “I don’t know if your father ever mentioned it, but I run a boutique brokerage firm called OPM Securities. We focus on emerging companies, mainly biotech. There’s a criminal investigation about some of our trading. My corporate counsel is telling me he has a conflict representing me, he’s not admitted in New York, criminal law isn’t his specialty, yada yada yada.”

  Michael Ohlig is very economical with his words. This will make him a good witness, but a difficult client. It’s one thing to make a prosecutor work for every piece of information, but when your disclosures to your lawyer are on a need to know basis, there’s a substantial risk that something important will be missed.

  “You need to give me a little more than that, Michael. What’s shared between us is privileged, so don’t worry about it going any further than me. But if I’m going to represent you, I need to know everything, the good, the bad, and the ugly.”

  He smiles, a Cheshire cat-like grin. “One thing you’ll learn about me, Alex, is that I’m an open book. Ask and ye shall receive.”

  This is something I’ve heard before, and like most things my clients tell me, I’m skeptical as to its veracity. “What trading, in particular, is being investigated?”

  “It’s in a stock called Salminol. They have this patent to produce salmonella-free eggs. So you’d go to the grocery store, and right next to the regular eggs there’d be this box that said in big letters 100% Salmonella-Free Eggs—Guaranteed. Can’t miss, right?” I assume the question is rhetorical, but he comes to a complete halt, continuing only when I nod to confirm that no one would buy eggs that weren’t 100 percent guaranteed to be Salmonella-free.

  “Here,” he says and then pushes a packet of paper in front of me. It’s stapled in the top corner, but it takes only an initial glance for me to recognize it as a grand jury subpoena.

  A grand jury subpoena is something of a calling card, in that it’s usually the first in
dication that the government has begun a criminal investigation. Sometimes it’s difficult to ascertain what, exactly, the government is investigating, but this one leaves little room for doubt. The very first request on the subpoena reads: All documents concerning OPM’s trading in Salminol, Inc.

  When I’ve finished looking at the last page, Ohlig continues with his narrative. “Anyway, the company ended up being overly levered, and so it couldn’t make the interest payments when the balloon came due. The insiders cleaned out whatever wasn’t nailed to the floor, which sent the stock to zero. Then some blue-haired ladies complained they lost their life savings, and you know the rest, right?”

  I do, actually. This is the part of the story where my clients always make some reference that no one complains when their risky investment goes up, but if it goes down they run to the government. I’m waiting for Ohlig to offer this defense, but he’s silent.

  “How much was the loss to the investors?” I ask.

  “I don’t have it down to the penny, Alex.” He smiles at me, an expression that should be accompanied by a wink, I think.

  “Give me your best ball park.”

  “A hundred and fifty million,” he says without a hint of remorse.

  Ohlig still hasn’t offered me much, but this is enough for me to get to the first step in any representation—setting the retainer. One of my partners refers to this as meeting with the most important witness in the case—Mr. Green.

  “If it were just me I wouldn’t ask,” I say, sounding more apologetic than I’d like, “but it’s firm policy that in a matter like this we obtain a significant retainer before taking on the representation. Unfortunately, there’s a very great likelihood that your assets are going to be frozen, and while there’s a chance the freeze order will permit an exception for attorneys’ fees, it’s not a risk the firm is willing to take.”

  I have no doubt he’s already keenly aware of the SEC’s power to freeze a brokerage firm’s assets, as well as the personal assets of the firm’s principals. My guess is that for years he’s been squirreling money away—Switzerland, the Cayman Islands, the Isle of Man—in case that day ever came.

  “Conservatively,” I continue, “my estimate is that, assuming there’s a trial, legal fees could run a million dollars, and it might be more. So, I need to ask you for a million dollars.”

  He pauses, almost looking as if he’s taking my measure. “I’ll wire you two million when I leave your office, and then we won’t have to talk money for some time. Fair enough?”

  I’ve negotiated with enough clients to know that someone offering twice the retainer you’ve requested is not something that happens every day. I pause for a moment to consider why Ohlig just did exactly that, and the only reason I can come up with is that he wants to show me that price is no object.

  “It’s more than fair,” I say. “So, now that the money is out of the way, I suppose I should open the floor to whatever questions you have for me.”

  There’s a joke that is often recycled at Cromwell Altman, usually when we’re meeting with law students or describing criminal practice to the new associates. It’s an effort to explain what white-collar criminal practice is really all about. We call it the Four Questions. At the outset of a criminal investigation, clients invariably ask four questions, in this order: What’s an indictment? What’s the most jail time I can get? Does the United States have an extradition treaty with Israel? Where can I go where I won’t be extradited?

  At the very least, I expect Ohlig to ask about jail time, which could be considerable given the amount of money that was lost. In fact, I can’t recall another client who’s gone this long without asking for an assessment of the worst-case scenario.

  “No,” Ohlig says. “I don’t have any questions.”

  The rest of our conversation progresses along more or less standard lines. We cover the facts in slightly more detail, and I tell Ohlig the type of evidence that we can expect the government to be looking at, rattling off the usual land mines in a case like this one—trading tickets, emails, and new account documents. He confirms that OPM hasn’t destroyed anything, which is the first really good news I’ve heard so far.

  “What about taping?” I ask.

  “What about it?” he says, although I’m sure he knows what I’m asking.

  “Do you tape your brokers?”

  “We tape the confirms. After the broker—we call them financial advisors, by the way—makes the sale, he transfers the client to the ops department to do the paperwork. Ops is taped.”

  Many brokerage firms tape the brokers to avoid DKs—situations where the stock goes down right after the sale and the client tries to avoid the loss by claiming he never placed the order. It stands for “don’t know,” as if the client is saying he didn’t know the broker was buying that stock. There’s only one reason for Ohlig to tape his operations personnel but not the brokers—he doesn’t want a record of what his people say to sell the stock.

  There must be something about my facial expression that gives me away.

  “Alex, I know what you’re thinking,” he says, much more pointedly than any of his previous comments. “You think I’m running a pump and dump operation. One that’s in with the wrong crowd, even.” He pushes his nose to the side with his index finger, the international sign for organized crime. “That I was unloading Salminol on widows knowing the stock was worthless. If that’s what you’re thinking, get it out of your head right now. Everything at my firm is on the up and up, and I don’t want you thinking it isn’t.”

  I don’t say anything at first.

  “Are we clear on that?” he says, in a way that reminds me of the Jack Nicholson line in A Few Good Men.

  “Okay,” I say, resisting the impulse to add, crystal.

  “Good.” He smiles, perhaps to suggest he’s not really upset, despite his flash of anger, but it’s too late. Although Michael Ohlig has thus far taken pains to project a nonchalant facade, it’s now clear to me that below the surface lies an entirely different type of man.

  3

  Cromwell Altman rotates the position of assigning partner every eighteen months because it’s the least desirable job on earth. The entire function revolves around calling associates and assigning them to cases they claim to be too busy to work on, and telling the partners that the associates they want on their cases are unavailable. Every assigning partner says he’s afraid to pick up the phone if it’s any of the partners, and no associate will answer the phone when they see the assigning partner’s name pop up on the caller ID.

  The current assigning partner is Brian Fleming, who is actually pretty well suited for the job because he’s the most joyless man I’ve ever met. Back when I was an associate, and I’m sure the same is still true today among the current associates, his office was referred to as the House of Pain. In part, but only in part, this is because none of his guest chairs have any cushions—they are all fancy wood-carved pieces that scream that Fleming doesn’t expect anyone to stay too long. His face says the same thing. When I joined the firm, Fleming wore these giant glasses that covered virtually the entire top half of his head, and a full black beard that covered the whole lower half. Twelve years later, the only difference is that his beard is now gray.

  “I just brought in a big criminal case,” I tell Fleming as I shift uncomfortably in his guest chair, “and I need three, maybe four, associates. Preferably somebody senior, a mid-level, and a newbie.”

  Someone with social graces would congratulate me, but no one would accuse Fleming of possessing any. “So what’s the case about?” he asks in a way that makes clear he really couldn’t care less.

  “Criminal securities fraud. Client runs a boutique brokerage firm in Florida. The loss could be as much as half a billion.” I’ve pumped up this last figure in the hope it will earn me more help.

  “Is it here or there?” he says, meaning New York or Florida. He’s asking this because if significant travel is involved, some associates may not
be available.

  “Here.”

  “So, what did you get?” This is the only issue he really cares about—the size of the retainer.

  “Two million.”

  Fleming grimaces, causing his bearded face to crinkle in the most unattractive way imaginable. “C’mon, Miller. You know the formula—two million gets you one body. You can use temps for the other stuff.”

  The formula is followed like the Scriptures at Cromwell Altman. About three years ago, the firm hired some high-priced consultant to give advice on how to increase profits. The consultant recommended we could improve the bottom line by—wait for it—charging higher rates and reducing expenses. The way they said we could cut expenses was to use temps for certain tasks, but bill them out at the same rate as associates. The firm pays something like sixty bucks an hour for even the priciest temp, whereas associates cost anywhere from a quarter of a million dollars for first years up through more than twice that for senior associates when you factor in bonus, vacation, health care, and whatever perks we give them. Even though we work the associates to death, about 2,500 hours per year on average, they still cost the firm about three times as much as temps. Of course, the temps graduated from second- and third-tier law schools and can’t find full-time jobs, and to be an associate at Cromwell Altman you’re the type who could have had any job you wanted, so it isn’t the fairest thing in the world to charge clients the same rate for vastly different legal talent, but it does boost the firm’s bottom line considerably.

  I look at Fleming with total defeat, which seems to brighten his mood. It’s as if he thinks his job function is to break the spirit of anyone needing his assistance.

  “If you’re only going to give me one associate, I want someone very senior and very good,” I say.

  This was what I’d be angling for all along. The work of the junior people on a case really doesn’t matter much being that it’s usually comprised entirely of document review. Besides which, I won’t have direct contact with the junior people anyway. Cromwell Altman is more hierarchical than the military in this regard. Partners deal only with the senior-most associate on the team.