Smoke Gets In Your Eyes

Harry McPherson has a copy of The Nation lying on his expansive desk in his corner office at Verner, Liipfert, Bernhard, McPherson and Hand in downtown Washington. The magazine subscription is a gift from his daughter, an amulet meant to ward off the evils lurking in her dad’s chosen profession.

The subscription, McPherson says, smiling, “is just so that I won’t become hopelessly enslaved to the corporate world.” His daughter lives in Greenwich Village and writes for the Village Voicea world away from Gucci Gulch, where McPherson and his fellow lobbyists do business. But McPherson sounds proud of his daughter’s chosen vocation, aware of how ironically appropriate it is that his child would work for one of the aging landmarks of the left.

From 1965 to 1969, McPherson worked as White House counsel to Lyndon Johnson. He was, by almost all accounts, an icon of integrity, instrumental in helping to construct Johnson’s Great Society legacy. And depending on whose lore you believe, McPherson was also the man who urged his boss to resign and to end the war in Vietnam. After he left the White House, McPherson authored a beautifully written autobiography, A Political Education: A Journal of Life with Senators, Generals, Cabinet Members and Presidents. In news clippings, his name is almost always preceded by the word “wise.”

So after he came to Verner Liipfert in 1969, it was only natural that McPherson would bring along a team of friends and Democratswho were one and the same back then: Lloyd Hand had worked as a staffer for Johnson when he was the Senate majority leader; Berl Bernhard had worked for JFK and LBJ and had run Edmund Muskie’s unsuccessful 1972 presidential campaign. More recently, the firm has signed up even bigger-name ex-politicosIreland peace broker and former Senate Majority Leader George Mitchell, former Texas Governor Ann Richards, and former senator and Treasury Secretary Lloyd Bentsen. Even after Republican Bob Dole joined the firm in 1997, Verner Liipfert retained its reputation as a Democratic strongholdthe kind of firm clients turn to when they need to get in the doors of minority party offices on Capitol Hill.

So nobody among Verner Liipfert’s army of contacts and friends could explain what happened in 1997. That year, Verner Liipfert took more money from the tobacco industry than any other lobbying firm in Washington. Never before had the firm worked on tobacco’s behalf. But over the next two years, Verner Liipfert would gross a whopping $18 million from tobacco companies looking to negotiate a legislative settlement with Congress.

To consumer advocate Ralph Nader, stories of honorable lawyers peddling their influence holds zero shock value. “All the lawyers who were special assistants do it all the time,” he says. Still, even Nader was surprised when the players in that tired skit turned out to be Harry McPherson and George Mitchell. “I wouldn’t have thought that those two gentlemen would have risked that much,” he says. In June of 1998, the efforts to reach a tobacco settlement collapsed. But the attorneys at Verner Liipfert still got paid. For them, tobacco represented the most lucrative work they had ever known.

But for all the longtime admirers of the firm’s lineup of progressive-minded leaders, the decision to represent tobacco was confusing at best, indefensible at worst. How to reconcile that Verner Liipfert had traded in its donkey mascot for Joe Camel? How could prototypical “great men” like McPherson and Mitchell be taking gobs of money from an industry that has targeted 13-year-olds as a key market? From the manufacturers of a drug that is responsible for nearly one in five deaths in the United States and that drains the economy of more than $100 billion in health care costs and lost productivity each year?

Staunch tobacco opponents say there is nothing mysterious about the firm’s decision. Not even the so-called Democrats at Verner Liipfert could resist the sheen of piles and piles of tobacco money. “It was the biggest stealth lobbying campaign that was ever conducted,” says John Banzhaf, a public-interest law professor at George Washington University and head of Action on Smoking and Health. “Everybody of every political stripe was being bought out by the tobacco industry.”

But McPherson calmly rebuts the clichd, sell-out accusations. Even now that he knows how the tobacco story turned out, he stands wholeheartedly behind the decision to represent tobacco. And then he goes one better: With a straight face, McPherson says working for Philip Morris was a public service.

Verner Liipfert was transformed by its tobacco work. In 1997, it became the No. 1 lobbying firm in terms of revenue. The boost came almost entirely from tobacco money. “That money made them one of the premier lobbying firms in town,” says a former partner who recently left the firm. “Before that, they weren’t a Washington powerhouse.”

“I was convinced then and remain convinced that that settlement was in the best interest of the country,” McPherson says. Other partners at the firm refuse to discuss the tobacco work on the record, deferring to McPherson to make the case. “Harry was and still is the heart of the firm. If Harry believes in it, the firm believes in it,” says one attorney who recently left the firm.

And indeed, McPherson serves as an able spokesperson. He patiently answers my inquiries about the decision to represent tobaccostanding up at one point to pace back and forth behind his desk, but never becoming defensive or dismissive. To him, the decision was all very logical: Tobacco companies were not asking him to claim that cigarettes were a force for good; they were asking him to help them change for the better. “We never made the case for tobacco. We weren’t asked to and didn’t do it,” he says, more than once.

What did happen is that in 1997, tobacco executives approached George Mitchell in New York with an offer he had trouble refusing: Come help broker an unprecedented and historic settlement between tobacco, the state attorneys general, and Congress. The idea reportedly captured Mitchell’s imagination and his yearning to do something meaningful after leaving the public sector. “I can see George looking at this and not looking at it in terms of evil or even in terms of fees,” says one former attorney at Verner Liipfert. “He would look at it as a problem to be solved.”

But as with most major decisions at the firm, it was McPherson and Bernhard who needed to be convinced. So the two of them met with the CEOs and general counsels of Philip Morris and RJR Nabisco to hear what they had in mind. It took several meetings, McPherson says, before he believed in the cause. “When it became clear that it really was real, that these people were really prepared to offer major changes, it seemed to us to be an extremely good deal for the public if the United States could get this kind of a settlement,” he says.

McPherson gave the same earnest speech to his fellow partners when he pronounced his decision to represent tobacco at one of the firm’s monthly meetings in 1997. He stood up after lunch and delivered the big news without a hint of self-doubt. “Harry announced it as this great opportunity to achieve good by doing good, the ultimate win-win situation. They were going to help children and health and get money,” remembers a former partner at the firm who is now practicing elsewhere in D.C.

To be fair, there is a strain of logic running through McPherson’s justification. It would indeed have been a great public service if he and his colleagues had been able to help shape the perfect dealin which the tobacco industry agreed to pay out billions of dollars and the government imposed meaningful regulations to rein in the company’s nefarious marketing tactics. And it’s hardly the first time Washington lawyers have called upon the good-Samaritan defense to justify working for tainted clients. But in McPherson’s case, the rationalization would get stretched threadbare.

After McPherson gave his public-service speech to his partners, they did not exactly stand up and salute their leader. “It was bullshit,” the former partner goes on to say. “People didn’t entirely buy the notion that they were doing this great and noble cause People knew they were going to make a zillion dollars.” According to this former partner, not even Harry McPherson bought the do-gooder speech. “Look, Harry’s a sophisticated guy; they knew they were going to make a lot of money. And remember, the purpose was to get a deal that would be acceptable to tobacco.”

Still, no one protested very loudly at that meeting, according to attorneys who were there. Says one recently-departed partner: “There were some people in the firm who had some serious concerns about [the tobacco clients], but there were very few in my judgment, and the reason is that the culture of the firmin my viewis to reward successful marketing.” The ability to land big clients is the most valued trait of a large firm’s “rainmaker” partners. After all, no firm climbs to the top of Fortune Magazine’s “Kings of K Street” listas Verner Liipfert would in December 1998based on its benevolence.

Verner Liipfert employs more than 185 attorneys and consultants. Like most big firms, it is hardly a participatory democracy. If attorneys lost sleep at night over working for tobacco, they weren’t likely to vent their existential fears the next morning around the water cooler. Says a former partner: “That was not a place where a lot of people would be verbal about things. Those who became verbal tended not to be there anymore.”

But a few attorneys at Verner Liipfert were uncomfortable about the tobacco clients, even if McPherson was not. While he visited about 20 different senators and a dozen members of the House on behalf of big tobacco, at least two associates asked to be transferred to other projects for moral reasons. McPherson says he did not stop them.

Jared H. Jossem worked in Verner Liipfert’s Hawaii office and learned about the tobacco representation via a company memo. He reacted to the news with quiet dismay. “As a recovered cancer patient myself, I obviously had personal reservations,” says Jossem, a partner at Verner Liipfert until he left the firm last year. “However, given the governance structure of the firm and my geographic remoteness, I had no opportunity to have any impact on that engagement.”

In September of 1997, a dozen senators met on Capitol Hill to listen to McPherson and tobacco-company lawyers sell their proposed settlement. One Senate staffer whose boss was involved in the negotiations remembers a surreal quality to that meeting. “There was sort of an awkwardness in the room for some of the senators there. It was McPherson hanging out with the bad guys,” the staffer says. And when McPherson went to work trying to sell the deal to the lawmakers, his pitch fell flat. “The reaction was a series of questions from senators and staff pointing out that this wasn’t such a good thing,” the staffer recalls. “It was obvious to the staff what the problems were, and I don’t think McPherson did a very good job of answering those concerns .He was putting a nice face on everything. He kept arguing it was good for the public health.” The original deal the tobacco industryand McPhersonbrought to Congress began to crumble under scrutiny. While the state attorneys general had found much to like in the proposed settlement, members of Congress were not so easily persuaded. And since they hadn’t been involved in the shaping of the initial deal, they were quick to criticize.

Under the deal Verner Liipfert touted on the Hill, tobacco execs would have agreed to pay $368.5 billion to the states and tack on a 62-cent price increase on packs of cigarettes. A hefty financial penalty, beyond a doubt. But the businessmen would have reaped a quiet, long-term windfall for their troubles. To begin with, critics say the Food and Drug Administration regulations established by the deal would have been easy enough to bypass. And, most importantly, the deal would have granted tobacco companies complete immunity from future class-action suits. Individual lawsuits would be capped at $5 billion a year, and companies would be shielded from most civil suits over past mistakes.

“Throughout the entire thing, there were loopholesin every section,” says the Senate staffer. “This tremendous immunity provision from lawsuits was insane.”

Nobody in Congress wanted to stand up for a package that was summarily blasted by health organizations and former FDA head David Kessler. To do so would have sparked accusations that members had protected the evil cigarette manufacturers. So, in early 1998, members of Congress introduced their own bills, many of which would have watered down the legal immunity and boosted the financial penalties.

Any pretense of civil detente vanished that spring. In April, tobacco executives abandoned the settlement talks and declared war on the proposed legislation. They unleashed a $40 million advertising campaign and spent millions more on lobbyists, fighting regulations with the same scorched-earth tactics they’ve used for decades. And they won. By June, the tobacco bill sponsored by Sen. John McCain (R-Ariz.) was officially dead.

Verner Liipfert continued to receive money from tobacco companies after the industry had abandoned the settlement idea. But McPherson flatly denies that his firm had anything to do with efforts to squash the bill. He says its role diminished significantly once the tide had turned. “We did not do any lobbying to kill the bill. That was not what we had been retained for,” he says. But if tobacco clients had asked him to kill the bill? Then he would have refrained? “I don’t know whether we would have,” he says. “It never came up.”

To hear McPherson tell the story of the failed tobacco talks, it was politicians who blew an opportunity, not tobacco. The White House and Congress refused to take a stand in support of a reasonable deal, McPherson says, which led to a bill that the tobacco industry could not possibly accept.

But anti-tobacco activists say the settlement McPherson and his colleagues were pushing on tobacco’s behalf was not in the public interest and never was. “The deal was horrible,” says Banzhaf. “Any reasonably astute Washington firm ought to have realized that this was not a very good deal, this was not in the public interest.”

Despite its massive fees, Verner Liipfert was never as integral to the tobacco discussions as the partners had hoped, says one former partner. “They were getting paid more for who they were than what they did,” the partner says.

Matthew Myers, executive vice president and general counsel for the Campaign for Tobacco-Free Kids, was at the table throughout the original settlement talks. He says Verner Liipfert’s attorneys were hired to lure people into the room, but not to impact what happened there. “They never played a substantive role, period,” Myers says. “In one respect, it’s almost embarrassing because George Mitchell was clearly hired entirely because of his name. No skill of his was ever used.”

In his biography of notorious trial lawyer Edward Bennett Williams, The Man to See, Evan Thomas cites a Fortune magazine article which illustrates the phenomenon of noble esquires trading their reputation for gold. This time, instead of Mitchell and McPherson lending their legacy to a client, it was Thomas Corcoran and James Rowe”two New Dealers who had stayed on to become enormously influential Washington lawyers,” Thomas writes. At one point during the Johnson administration, the duo came before a Federal Trade Commission antitrust hearing on behalf of their client. But throughout the proceeding, they said not a word. “[They] merely sat at the counsel table while another lawyer from another firm presented the case.” One of the FTC commissioners was up for reappointment at the time, and it was no secret that Rowe had Johnson’s ear. So the men’s presence alone served their client’s interests.

McPherson insists his firm’s role was just what he had expected it to be. At the same time, he concedes that the major tobacco companies already had other firms serving as their “principal negotiators.” But if McPherson knew from the start that he would not be intimately involved in shaping the deal, it’s hard to understand how he thought he would perform a public service. He would have had to have enormous faith in his tobacco clients if he had signed up to flack whatever deal they ended up backing and still believed he would be serving the country’s interests.

“Here’s the problem with Harry McPherson’s reasoning: If he concluded in the middle of the negotiations that the deal was no longer in the public’s interest, he would have had to withdraw. And you can’t withdraw,” says a partner at another major Washington law firm.

Apparently, Verner Liipfert did not sell its brokering skills for $18 million; it sold its reputation. Even if McPherson’s reasoning held up in 1997, it wilts under the glare of hindsight.

Now we know that McPherson and his colleagues did not perform a lasting public service. “If the public interest was the principle on which they were operating, they lost their way in the end,” says Myers. Verner Liipfert may have overestimated the prospects for a “win-win” as much as the tobacco companies overestimated their hopes of buying their way into a beneficial settlement. “One of the great miscalculations the tobacco industry made was that if they purchased the most powerful Republican lobbying firms and the most powerful Democratic firmscombined with their former contactsthat they would be able to pass an agreement without major resistance,” Myers says. Instead, what the country got was a “tragedy,” he says.

Last November, the tobacco companies settled with 46 states, agreeing to pay them $206 billion over 25 years. The other four states had already accepted a $40 billion settlement over the same period. Already, it’s apparent that much of the money will not be going toward anti-smoking initiatives. Mayors and governors across the country have claimed the funds for their pet projectsfrom school computers to better sidewalks to lower property taxes.

“There was a golden opportunity to make fundamental changes that could have made the difference in the health of millions of Americans,” says Myers. “And in its place we’ve returned to a war of attrition. Both sides battling a long-term, small-step-by-small-step battle where the price that gets paid is people’s health.”

There is a long tradition of lawyers who come to Washington to do goodand end up just doing well. Whether they like it or not, their advice becomes less important than their names. It would be almost tragic to watch their falls from grace, if they weren’t making quite so much money in the process.

The legacy may have started in 1947, when three prominent New Dealers left public service to start the law firm of Arnold, Fortas & Porter (now Arnold & Porter). In private practice, Thurman Arnold, Abe Fortas, and Paul Porter kept their liberal badges polished by representing the Black Panthers and McCarthy-era accused communists. The firm has always boasted a strong pro bono program, as well. But all the while, Philip Morris has been one of Arnold Porter’s biggest clients. The split personality never appeared to bother Arnold, Fortas, and Porternor Rowe, Corcoran, or Clark Clifford, for that matter, who took similar paths in the era of wise men turned wealthy men.

Williams, a criminal defense attorney infamous for representing mobsters and spies, simply did not dwell on the ramifications. “[T]here is no outward sign that he ever engaged in any kind of serious self-examination. He may well have searched his soul while kneeling down at morning mass, but publicly he never questioned the contradictions of his life,” writes Thomas.

Usually, attorneys justify representing dubious clients by waving around a copy of the Constitution. They say that it simply does not matter what individuals (or corporations) have done; everybody deserves a defense, the best defense they can get. What most of them really mean, of course, is that everybody deserves a defense, the best defense they can afford.

But McPherson says just the opposite: that if tobacco had asked him to defend its health record, he would not have done so. It would have been wrong, he says. “If the question had been to go to the Hill and argue that tobacco is not harmful or that it hasn’t been proven to be harmful I don’t think we would have done that,” McPherson says. “We wouldn’t have wanted to. You’ve got to believe at least somewhat in what you’re doing.”

But as McPherson is the first to admit, he never had to make that decision. The tobacco executives never asked him to. And if they had, former members of his firm say, the answer would not have been so obvious. “I don’t believe it,” says a former partner. “If tobacco had come to them, you would have heard the great constitutional argument: Everybody deserves a defense.”

Verner Liipfert is hardly a standout in the lawyerly race to the bottom. Law firms, especially large, gilded ones, do not make business decisions based on a moral calculus. Political opinions may figure into the debate, but they do not break or make big deals. Still, McPherson claims his firm has turned clients away for ethical reasons outside of the ones they are required to consider by the D.C. Bar. He refuses to say which clients or which reasons, though, and the former partners I spoke with could not remember any specific examples.

Over the last couple of years, law firms’ always-impressive abilities to justify their fees was tested when European banks and corporations looked to them for help in resolving lingering Holocaust-era disputes. The cases provoked unpleasant debates in even the most cushy firms.

Wilmer, Cutler & Pickering, for example, has steadfastedly refused to represent tobacco. But, after much intra-office debate, that firm decided to represent German companies accused of exploiting forced laborers under the Nazi regime.

Twelve lawyers at Cravath, Swaine & Moore in New York protested their firm’s decision to represent Credit Suisse in the bank’s wrangling with families of Holocaust victims. In response, the partners made the same case as McPherson, insisting that their clients were ready to “do the right thing” and the firm’s skilled attorneys might as well be the ones to help them, according to a 1997 Washington Post opinion piece by Ronald Goldfarb.

Although the tobacco legacy does not a Holocaust make, Cravath’s have-it-all reasoning was strikingly similar to McPherson’s. In a memo to the managing partners, the opposing associates countered by pointing out the obvious: “It seems implausible that Cravath could both serve Credit Suisse and bring about a fair and honorable resolution for those who suffered at the hands of the Nazis and their collaborators.” Ultimately, the firm stuck with the case.

“Lawyers can’t have it both ways, representing plundering companies for a living and not taking on their coloration, or representing scuzzy clients and avoiding public cynicism for doing so,” Goldfarb wrote at the time. Because he has worked for McPherson and others at Verner Liipfert, Goldfarb refuses to discuss the firm’s particular choices surrounding tobaccowhich he claims to know nothing about. But in a general sense, he will say what is so rarely said: “It is fair to judge an attorney by his clients.”

Sources close to Verner Liipfert say the firm’s decision to work for tobacco was really just a depressing accommodation to the political times. Once Republicans took over Congress in 1995, the firm needed to expand its offerings if it was to continue to bring in an obscene amount of revenue as a legislative-branch lobbying firm. It is no accident that the firm hired Bob Dole and former Sen. Dan Coats (R-Ind.) after the “Republican Revolution,” making a major break with its Democratic history. Last year, the firm also plucked up Jamie E. Brown, former legislative counsel to Republican Sen. Connie Mack of Florida.

“They needed to do it because you had to have Republican credentials,” says a former partner. “Their friends were leaving, and not a lot of people care that Harry McPherson was Lyndon Johnson’s guy … That’s an old world.” Even more so than the revenue, the former partner says, attorneys at Verner Liipfert craved the power and attention afforded to a firm with big-name lawyers and big-pocket clients. “They loved every minute of it,” he says, remembering the gloating that went on in the office whenever a newspaper would refer to Verner Liipfert as a “powerhouse.”

McPherson does not deny that his firm’s solidly Democratic reputation is fading away. But he insists it is a good thing. “It is a change,” he admits, “but it’s an extremely attractive change.” McPherson even suggests that it’s not ideology but popularity that really counts. “Dole and I may not agree on an awful lot of issues, but it’s wonderful to work with a man who is so well-regarded. He’s really just a prince of a man, and everyone thinks so.”

In McPherson’s memoir about his years in the executive branch, he comes off as far more conflicted over moral questions than he does now. Much of the book is spent grappling with the necessity of compromise in politics. At first, a young McPherson is repulsed by the unseemly side of Washington: He is shocked by the moneyed lobbying effort undertaken by the gas industry to kill a bill in 1956, and he refers at another point to “narrow-minded businessmen.” He struggles to define the discomfort he feels when faced with shades of gray. “Moral certainty is satisfying to the soul,” he writes. “To be able to identify one’s enemies is as important to one’s political peace of mind as to identify one’s enemies is to one’s social well-being.”

But as time goes on, McPherson grows accustomed to cognitive dissonance. Instead of embracing ineffective idealism or utter pragmatism, he opts for a middle place. “One could choose a third way, and remain, as the modern theologians says, ‘in the ambiguity’–acting forcefully, but conscious always that one’s knowledge was insufficient and one’s heart slightly corrupt. The best political men I knew seemed to have chosen this way.”

Perhaps even that nuanced position was too ambitious for the real world. Or maybe what is possible in politics in not as feasible in lobbying. Because in explaining his tobacco-subsidized salary, McPherson does not reveal the smallest bruise of corruption. The money appears to have successfully softened the blow.

Still, skeptics like Ralph Nader say Verner Liipfert got a bad deal: “I think the tobacco companies took more from McPherson and Mitchell’s reputations than they gave to tobacco,” Nader says. “They will be forever associated in the history books with being the wheel greasers for the tobacco industry.”

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