People who use legal services, if you ask them the name of their lawyers, often give the name of a firm. Clients take comfort from the idea that an institution of history and reputation, one in which each member has responsibility for what the others do, is looking after their interests. But there is no such comfort if you are dealing with a limited liability partnership. The wise client will pick a particular lawyer, never a firm, for the concept of “picking a firm” now has little meaning. And, unless the lawyer you’re considering has great personal wealth, be sure to ask for those insurance policy details before signing up.
The limited liability partnership structure, obliterating the traditional relationship between client and law firm, also changes fundamentally the relationships between lawyers within a firm. The general partnership structure was based on trust. Only someone who was trusted was admitted to the partnership and kept there. Trust in your fellow partners, and in the quality of their work, was signalled to the world by agreeing to joint and several liability. Trust fostered a congenial work environment and enhanced the quality of a legal practice.
But the partners are no longer “all in it together.” Trust is no longer required; indeed, it is ill advised. The savvy partner will be very careful what work he takes on, avoiding large, high-risk transactions that could destroy him financially if they go wrong. Giving advice to colleagues on difficult problems arising in large transactions is something to avoid; a ten-minute chat in your office about the issues in an important legal opinion could wipe you out financially. One of the best features of traditional law firm life—the give and take on legal problems, the exchange of wisdom and experience—is severely discouraged. And only a fool would occupy a management position in a limited liability partnership—head of a practice group, for example, or member of an opinion committee—because such a position carries with it possible liability for everybody and everything.
A limited liability partnership shifts risk away from the law firm to clients and insurers. Even worse, it takes away a powerful incentive to adopt systems that prevent negligence and malfeasance. Many scholars have argued that the corporate debacle beginning with the collapse of Enron was in part made possible by the limited liability structure of professional firms, such as Arthur Andersen, that gave poor (and sometimes unlawful) advice to corporations that later imploded. One reason why Arthur Andersen collapsed so dramatically, suggest some commentators, is that there was no reason for partners to stay around and sort out the mess; after all, it was a limited liability partnership, and they weren’t on the hook. David Cay Johnston has described the limited liability structure of accounting and legal firms as creating a moral hazard, something that rewards misconduct at the expense of others. He writes, “Clearly, when legal and accounting firms sell tax shelters that do not pass the smell test, yet tell unsophisticated buyers that the shelters are not just sturdy, but safe, we see evidence not just of a moral hazard, but of real harm. Would the accounting firms and the law firms be so eager to sell abusive tax shelters if each partner had to put her own assets at risk in each of these deals?”27
ALMOST ALL THE LAWYERS in this book have been portrayed in a very unflattering way by a variety of commentators—by their partners and clients, newspaper reporters, judges, disciplinary bodies, Crown prosecutors, the police, and so on. The public is told that they are thieves. They are con men. They are sex offenders. They prey on the innocent and gullible. They betray trust. They have done grave damage to the legal profession. Some have been depicted as monsters.
I have spent time with almost every one of them. Some I have known for years. Others I met only when writing their story. Often I found my subjects plausible, engaging, and even charming (were they psychopaths?). I defended them in spirited discussions over dinner with lawyer friends and others. I would say in these discussions, “Everyone makes mistakes born out of weakness. That is what these people did. Unlike you and me, they were unlucky. Their mistake ruined their life, while we went comfortably on, despite the mistakes we made.”
A prominent Toronto litigator, discussing Agnew Johnston with me, said with outrage that no normal man was sexually attracted to a fifteen-year-old girl. Johnston, he said, was an unscrupulous predator, and it was right to treat him accordingly. A Vancouver corporate lawyer got angry when I suggested that, in human terms, Martin Wirick’s frauds were understandable. Wirick, argued my corporate lawyer friend, was a crook who had taken food out of the mouths of his children, presumably food that would have been bought with the money that my friend paid instead to the compensation fund of the Law Society of British Columbia. The president of the B.C. Law Society, responding to an article on Wirick that I wrote for Canadian Lawyer magazine, referred to my “naïve acceptance of Martin Wirick’s version of events.”28 An old friend, a moral philosopher living on Salt Spring Island, worried that I had become a moral relativist, and proposed over lunch that the sins of the lawyers gone bad were real enough and serious, although he allowed that human weakness could be taken into account in considering the appropriate punishment.
Stories of lawyers gone bad—even when the facts are complex, technical, and dry—have a macabre interest. Stories of dishonesty and crime in general are always seductive, but the descent of the dishonest lawyer, from power and probity to vulnerability and shame, is particularly compelling. How the mighty are brought low! And how agreeable it is! Schadenfreude is satisfied, and the beliefs of popular culture are confirmed. Failure is more interesting than success, disaster more compelling than triumph. We appreciate stories about the misfortunes of others. Part of it is because, since everything is relative, the misfortune of others makes us feel more successful and secure ourselves. More darkly, our sense of personal fragility leads us to speculate about our own problematic futures by contemplating the destruction of other people’s lives.
A large number of movies feature crooked lawyers—in recent times, for example, Gene Hackman played a lawyer gone bad in The Firm; Sean Penn, in Carlito’s Way; Ben Affleck, in Changing Lanes; Richard Gere, in Chicago (a crooked lawyer who sings and dances); and Jim Carrey, in Liar, Liar. In one film—The Devil’s Advocate—the lawyer (played by Al Pacino) was Satan himself.29 Crooked lawyers have figured in a multitude of films, including Mr. Deeds Goes to Town, The Target, Death Rides the Plains, Deep Cover, The Ashphalt Jungle, The Hard Word, The Fortune Cookie, Body Heat, and On the Waterfront. There are even crooked lawyers in cartoons (see Mewolf, in Tom and Jerry’s Amademouse). Pride of place, however, must go to the sixties science fiction film directed by Roger Corman, The Last Woman on Earth. One synopsis of this film reads, “A sudden and temporary reduction in the earth’s atmosphere kills off the entire population except a crooked lawyer, a gangster, and his wife, who were scuba diving at the time, with their own oxygen supply, in Puerto Rico. The two men must vie for the woman’s attentions to continue the human race.”30
There are innumerable lawyer jokes, few complimentary to the profession. In one that is representative, the editor of a newspaper tells a cub reporter that “man bites dog” doesn’t sell newspapers, but “client runs off with attorney’s funds” would sell out a special edition.31 A chain of restaurants in Ontario is ironically named “The Honest Lawyer.” The English newspaper The Independent reported in August 2005 that a recent bestseller in the United Kingdom, Fish Sunday Thinking, written under the nom de plume Alex Gilmore, describes the “sexual antics and misbehaviour of some of the City’s richest lawyers … binge-drinking, bullying and licentious corporate bonding sessions … The partners are portrayed as sex-obsessed and sadistic.”32 The real Alex Gilmore was an associate in a prominent firm of solicitors until he left the law to write full-time.33 Jeremy Blachman’s recent satirical novel Anonymous Lawyer, based on a popular blog,34 depicts the legal profession and its practices in a highly unattractive light.35 Blachman is a graduate of the Harvard law school.
On the other hand, as a Toronto Crown attorney pointed out to me, lawyers are also sometimes portray
ed as “exciting and cutting edge,” particularly on television shows. There is Billable Hours (a Canadian show about “the wacky world … of Canadian corporate law” centring on the lives of three associates “who get up to crazy antics as a way to cope with 16-hour workdays and overbearing senior partners”36); This Is Wonderland, another Canadian show (“The poor, the oppressed, the abandoned, the abused—they all make the pilgrimage to the storefront firm of De Raey, Sacks and Dao, where honest lawyers await”37); and Law and Order (“The investigations are challenging, prosecutions are complicated, and decisions about legal procedures and plea-bargaining are vexing”). Perhaps it’s these kind of portrayals, commented my friend the Crown attorney, that attract psychopaths to the profession.
Not all television shows about lawyers are successful. In 2005, NBC yanked The Law Firm, which featured real lawyers conducting cases. The NBC website described the show this way: “Smart, strong-willed and fiercely competitive, the attorneys work together in different teams each week, battling tight deadlines, intense pressure and even each other as they strategize and prepare and try their cases.” One critic said that the only merit of The Law Firm was that it reduced fatuous litigation by tying up lots of lawyers for a few weeks. Now media betrayal of lawyers has come full circle, with the spotlight on fallen members of the profession. Sleazy lawyers are the centrepiece on the television series Boston Legal,38 Head Cases and Just Legal. (Head Cases attracted a very small audience and was quickly cancelled.) The New York Times comments, “The fallen woman used to be a classic American redemption tale. Now it’s the fallen lawyer …. we hanker for a lubricious peek at the modern equivalent of black garter belts: billable hours and personal injury scams.”39
For those who are themselves members of the legal profession, the story of a lawyer gone bad may elicit conflicting emotions. In principle, the behaviour of the malefactor is shocking to every upstanding member of the bar, and swift retribution is to be wished. (Is it really shocking to other lawyers? Lawrence Joseph, a successful U.S. attorney and an important poet, in his book Lawyerland, records these comments by a seasoned Manhattan lawyer speaking about his colleagues: “There are a lot of people out there in the edge of criminality. A lot of real desperadoes.”40) On the other hand, a lawyer who has over-docketed even once in his career may be cautious and nervous when considering the revealed bad behaviour of one of his brethren. The words of John Bradford, uttered in the sixteenth century on seeing criminals taken to execution, may be recalled: “But for the grace of God, there goes John Bradford.”
One morning I had an appointment to review a disciplinary file at Osgoode Hall, home of the Law Society of Upper Canada. When I got there, I was put in a conference room with the file I wanted. A young law society employee said she had been instructed to sit and watch me while I went through the file, to make sure that I didn’t tamper with it or remove anything. I protested this lack of trust. I said that, after all, I was a member of the Law Society of Upper Canada myself, nothing less than a barrister and solicitor.
The young employee assigned to watch me didn’t budge. “So were the people you’re writing about,” she said.
TWO
THE NEW AGE
Martin Pilzmaker and Bob Donaldson
The new age of lawyers gone bad began in the late eighties. Two Toronto Bay Street solicitors—Martin Pilzmaker and Bob Donaldson—were dramatically present at its creation. Pilzmaker, a flashy outsider, killed himself in a cheap hotel room shortly after he had been disbarred and just before his trial on multiple criminal charges was to begin. Donaldson, the quintessential insider, avoided disbarment with the help of powerful friends and ended up a wealthy businessman, spending part of his time in a Tuscan villa and giving a million dollars to his alma mater. The lives and legal practices of Donaldson and Pilzmaker were worlds apart, their fates, dramatically different, but their stories were intertwined. The new age they began has been marked by close scrutiny of lawyer behaviour that traditionally had been hidden and often ignored, ham-handed and frightened reaction by the organized legal community to scandal, widespread nervousness on the part of individual lawyers worried about their past conduct, and unappetizing moralizing and pleasure in the misery of others on the part of all and sundry. The Pilzmaker story shows how law firm profit may trump law firm probity, how the legal establishment will come together to protect itself, and how poorly lawyers regulate themselves. The Donaldson story demonstrates the absurd lengths a lawyer may go to in order to cultivate a sense of self-importance and become successful and powerful.
MARTIN SHELDON PILZMAKER was born and raised in Montreal.1 In 1975, at the age of twenty-four, he graduated from the law faculty of McGill University (I taught there at the time and remember him well). He moved to Toronto, becoming an immigration lawyer, and his solo law practice prospered. But Pilzmaker, hankering after credibility and respectability, wanted to join a big Bay Street law firm.
In 1984, he applied for a job at Blake Cassels & Graydon, a major Canadian law firm (I started work there in 1983). He offered Blakes a lucrative immigration law practice that he had developed, but the terms he demanded were hard to swallow for an institution deeply rooted in its Scottish Presbyterian past. Pilzmaker wanted an immediate partnership, a big share of the profits, and a corner office. Blakes, he said, would also have to pay for the chauffeur of his Rolls-Royce Corniche convertible. (The firm’s chairman, the revered Alec MacIntosh, drove a second-hand Ford.) It was not a good fit, and Blakes didn’t hire Pilzmaker. Perhaps it was his demand for an immediate corner office that was hardest for the firm’s senior partners to swallow. They had waited many years, working hard and assiduously staying out of trouble, to move into their own corner offices. They weren’t about to hand one over to a parvenu.
Rebuffed by Blakes, Pilzmaker went across the street to see Eddy Goldenberg at Lang Michener, another prominent Canadian law firm, also run from offices high up in a bank tower at the intersection of Bay Street and King Street in Toronto. Goldenberg and Pilzmaker had been contemporaries at the McGill law school. (After his stint at Lang Michener, Eddy Goldenberg became Jean Chrétien’s chief political advisor while Chrétien was prime minister; Chrétien himself was counsel at Lang Michener from March 1986 until June 1990.) Pilzmaker, described by Michael Crawford in a Canadian Lawyer article as a “cocky lawyer with a penchant for flashy jewellery,”2 was an unlikely recruit to a firm painted by the well-known investigative reporter Victor Malarek, in his book Gut Instinct,3 as “a stuffy, upper-crust, old boys’ firm where grey suits, silver hair and orthopedic shoes ruled the boardroom.”4 Malarek reported that Pilzmaker showed up at his first meeting with Lang Michener wearing a $20,000 fox-fur coat and a frizzy perm. Roland Michener, one of the two founders of Lang Michener, who returned to his old firm in 1974 after being Governor General of Canada, told Malarek, “I recall meeting this Pilzmaker chap only once, and I found him to be a rude and brash individual.”5 Fox-fur coat and frizzy perm notwithstanding, Lang Michener, perhaps more attuned to the bottom-line possibilities of Pilzmaker’s immigration law practice than Blakes had been, made Pilzmaker a partner in January 1985.
Less than two years later, in September 1986, Pilzmaker was gone. For almost two years afterward, few people outside Lang Michener knew what had happened. Then, on June 21, 1988, Victor Malarek published a front-page story in The Globe and Mail about an RCMP raid on Lang Michener’s Toronto office and the seizure by the police of 148 firm files.6 The search warrant referred to forged documents, the fraudulent aiding and abetting of Hong Kong citizens who came to Canada illegally, and counselling persons to make false representations when applying for Canadian citizenship. On July 6, in another front-page story, Malarek reported that the Law Society of Upper Canada was investigating the way senior Lang Michener lawyers had dealt with irregularities in Pilzmaker’s immigration practice.7 Two days later, yet another front-page article by Malarek reported a bizarre twist: “At about the time police began an investigation into the immigra
tion activities of a former partner in a top Canadian law firm this year, the firm learned that some of its members had smuggled substantial amounts of expensive jewellery and other items into Canada from Hong Kong.”8 At least one Lang Michener lawyer later made a voluntary customs declaration and paid several thousand dollars in outstanding duty.
On July 5, 1989, Pilzmaker was arrested. The RCMP charged him with fourteen charges of conspiracy, forgery, making false declarations, and uttering forged documents. Malarek wrote in The Globe and Mail on July 7, “Looking drawn and dishevelled after a night in jail, Martin Pilzmaker … was ordered yesterday to post a $75,000 cash bond.”9 Some months later, on March 28, 1990, forty-three new charges were laid against him, of theft, fraud, forgery, and conspiracy.
It was alleged that Pilzmaker had helped Hong Kong businessmen, worried about what would happen when China took control of Hong Kong in 1997, pretend that they lived in Canada. These businessmen wanted Canadian landed immigrant status and eventually citizenship, and needed to establish Canadian residency. Pilzmaker bought three houses in suburban Toronto and rented them at low rents to his secretary and to junior lawyers who worked for him. He arranged for Hong Kong clients to use these addresses to get Ontario driving licences and list telephones. Ontario Health Insurance Plan and other bills for these clients were sent to Pilzmaker’s houses and were paid by his subordinates living there. Pilzmaker helped his clients use multiple Hong Kong passports to conceal from Canadian authorities that they only visited Canada. It was also alleged that he helped clients pretend they were making investments in Canada, in order to take advantage of the federal government’s entrepreneur immigration program that gave preference to immigrant businessmen investing in Canada.
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