Southern Discomfort: Lawyers Suing Lawyers
When asked about his business philosophy, lawyer Ronald L. Motley often quoted Dolly Levi from the musical Hello, Dolly! "Money is like manure," the Charleston (S.C.) litigator would declare in a theatrical voice. "It should be spread around to help young things grow." Motley, 57, practiced what he preached. The small law firm he led, Ness, Motley, Loadholt, Richardson & Poole (NMLR&P), parlayed the asbestos millions it won in the early 1990s into tobacco billions a few years later--and then invested the cigarette money to take on drugmakers, lead paint manufacturers, and car companies. Motley's personal rewards included annual pay in excess of $10 million, multiple homes, a yacht, and a flattering portrayal in the 1999 movie The Insider.
But this bounty proved too rich to manage. His firm began to rot from the roots up like an overfertilized magnolia. The six partners who owned the 75-attorney ouftit feuded over everything from whether to buy an $18 million private jet to who deserved the biggest share of the firm's $1 billion tobacco bounty--those who had won the settlement or partners who brought in the humdrum but paying caseload that kept the firm afloat during the costly tobacco battles. As the partners' bank accounts swelled, the atmosphere soured. One top lawyer got locked out of his office for a month. Another vilified one of his partners in the legal press as a "dictator" and the "Antichrist."
In February, 2002, four of the six share-owning partners decamped to form their own practice, Richardson, Patrick, Westbrook & Brickman, taking scores of staff and clients with them. Staying behind were the two litigators who had played the biggest role in the tobacco wars: Motley and his right-hand man, Joseph F. Rice. In the months since, the two sides have filed a series of arbitration claims against one another. (The NMLR&P partnership agreement, interestingly enough, prohibited disputes from being taken to court.) The defecting partners, Rice says, are seeking more than $100 million for their share of back pay and the firm's assets--an amount he claims would cripple the business. Rice and Motley, meanwhile, are countersuing to gain access to records and client files that their ex-partners carted away.
The Ness Motley saga is the rarest of business stories--a tale of an institution that choked on too much money. At the same time, it involves classic themes of ego, jealousy, and greed. Instead of working together to divide history's biggest legal windfall equitably, the firm's litigators just found more things to fight about. Today, partners who were once hunting buddies no longer speak to one another. Says Rice: "We were the victims of success."
That the players were plaintiffs' lawyers had something to do with the way things turned out, of course. Tort attorneys are an aggressive lot. They represent individuals against big companies in high-risk lawsuits. They can earn millions if they win--or nothing if they lose. It's entrepreneurial work that attracts forceful personalities. "It was always acrimonious" at the firm, says former Ness Motley attorney Blair Hahn, who left for Richardson Patrick.
By the time NMLR&P won its landmark tobacco settlement in 1998, the firm was already deeply fractured. Partners were squabbling over everything from what types of cases the firm should take to how its lawyers should act in court. Lead attorneys Motley and Terry E. Richardson Jr. represented opposing sides of the widening fissure. Ironically, the men started out from similar places: Both are native South Carolinians raised modestly in small towns. Motley worked in his father's gas station in poor North Charleston, the first in his family to graduate from college. Richardson grew up on a family farm about 60 miles northwest of Charleston. Both men saw law as the way to climb up the economic ladder.
But the similarities stop at their personalities. Motley declined to talk with BusinessWeek, but even enemies acknowledge that he is a creative, and sometimes flamboyant, litigator. Once, for instance, he put on a white smock and a toy stethoscope to unnerve a doctor he was cross-examining. In The Insider, he is memorialized for getting whistleblower Jeff Wigand's words on the public record for the first time. "Wipe that smirk off your face," he barks at a tobacco lawyer at a dramatic high point in the script. "I'm going to take my witness' testimony whether the hell you like it or not."
Motley lives in a gated home with security guards on James Island off the South Carolina coast and has a 9,800-square-foot vacation palace on nearby Kiawah Island. He owns a 120-foot ocean yacht christened Themis, after the Greek goddess of justice. Like many other top plaintiffs' attorneys, he's also a major contributor to the Democratic Party. "Motley likes to live rich and fancy," says Richard Harpootlian, chairman of the South Carolina State Democratic Party. "He enjoys being a celebrity."
Richardson couldn't be more different. The 57-year-old attorney lives in the same modest house in Barnwell, S.C., he inhabited when he began his career. Says Harpootlian: "You wouldn't know he had two dimes to rub together if you were in the same room with him, that's how understated he is." Where Motley commands a courtroom with populist preaching, Richardson comes across as quiet and patrician. His late father-in-law, in fact, was Julius B. Ness, the former chief justice of the South Carolina Supreme Court who gave the law firm its first name. As Motley searched for more and more national attention, friends say, Richardson was content to remain a big fish in Charleston's small pond. Comparing their local stature, a judge who knows both well says: "Richardson is the town's best high school English teacher, while Motley is the world-famous author who just happens to live in town."
At first, the differing styles of the two lead attorneys served the firm well. While Motley was out crusading against Big Tobacco, Richardson and his allies were bringing in the bread-and-butter personal injury cases that kept NMLR&P prospering. "Ness Motley would have gone broke without Richardson," says one attorney who has worked with both men.
The alliance frayed when the serious bucks started flowing in. Trouble began in 1999, when Motley and Rice pushed to rejigger the way partners were compensated. No one at Ness Motley would discuss the change on the record, but several current and former attorneys at the firm say the terms were changed to favor those who battled tobacco. For starters, tobacco fees, to be paid by the states over the next 25 years, were funneled into a new, separate fund. Forty percent of the fees--more than $400 million, all told--was allocated to Motley and Rice, who spearheaded the tobacco case. Motley's role had been to bloody the companies in court, while Rice, a master backroom negotiator, coaxed them into settling. The remainder in tobacco fees was to be divvied up according to seniority and level of involvement in the case. It's a change that favors some younger attorneys over longtime partners, say insiders. "Some people had to take a reduction in compensation to accommodate some of our younger sharks," says Rice.
Compensation wasn't the only bone of contention. A growing number of partners thought Motley and Rice were letting expenses spiral out of control. They planned to build a $25 million headquarters looking out over the Port of Charleston. And the duo won a battle to buy an $18 million Falcon jet, which cost $4 million annually to fly and maintain. Rice insisted the jet was necessary to attract rich clients. But Richardson and others scoffed. "There was no way to justify that Falcon," he says. "Expenses were out of control."
Rice, who served as the firm's day-to-day manager, also began to alienate some partners with his heavy-handed style. At one point, partner Thomas Rogers was locked out of his office for a month as tensions rose within the firm. He also gave partners less freedom to choose what type of work they did. Rice says he tightened the reins for good reason. "We were like five or six firms under one roof," he says. "I said, `No, everybody can't do their own thing."'
That rule did not appear to apply, though, to his buddy Motley, who pursued ever more quixotic ventures. When Motley sued the Saudi royal family for compensation on behalf of some victims of September 11--a highly speculative but well-publicized suit filed in August, 2002--Richardson decided that he had had enough. He led three of the firm's five other owners to leave and start their own practice. In total, 11 partners and 15 associates defected to Richardson Patrick. Rice, for one, says good riddance to the departing partners. "They lost all influence within Ness Motley," he says. "I'd be surprised if any of the senior partners are still in practice three years from now."
Rather than end the dispute, though, the defections only heightened it. Richardson Patrick filed at least four arbitration claims, arguing that the firm had been denied proper compensation for the Falcon jet, among other things. Ness Motley countersued, charging the defectors had cherry-picked its client list. "They improperly solicited our clients, and that's no way to do business," says Rice. Counters Richardson: "We have not gone one inch over the line of what's legal and ethical."
Not only money is at stake. The Ness name is one of the crown jewels of law in South Carolina--and now beyond. The judge's surviving family believes Ness Motley should give it up now that Richardson no longer works at the firm. Family members have joined him in suing Motley and Rice, whose firm is now known as Ness Motley, to drop the Ness name. Richardson says Rice agreed to relinquish it but then reneged. Rice dismisses the lawsuit as "silly," adding: "Why should they care what we are called?"
And so the acrimony and name-calling go on. The breakup hasn't mortally wounded either Ness Motley or Richardson Patrick; both continue to prosper. But fellow attorneys say the two will never wield the clout they did as one firm. And Ron Motley will be remembered not so much as a lawyer who fertilized a big institution but as one who left behind a big stink.
By Charles Haddad in Charleston, S.C.