"No shit. Art was telling me you guys were going to get a big fat fee for Vince Russo's deal. Now, he says you guys may not get anything. Helluva thing."
"Looks that way, Perry. Maybe I should take down some more life insurance. How much was the firm carrying on Bob?"
He smiles. "They were carrying two and a half million until December. Lucky for them, I talked them into taking down a big term policy on some of the heavy hitters right before all the excitement. The policy on Bob went effective only a couple weeks before the end of the year. Art knew about it."
Hello? "Yeah, Perry. Sure is a good thing they got that big policy in place when they did. Do you recall how much the policy was for?"
He laughs. "Hell, you should know. It was a big, fucking deal, Mike. The damn thing's worth twenty fucking million. Biggest fucking policy I've ever sold. Art says it's going to save his ass."
Twenty fucking million dollars? Jesus. "Perry, another client of mine was asking about key-man insurance. Do you have a copy of the key-man policy on Bob?"
"If my secretary were here, I'd be able to pull it up for you. I'm lost without her."
"Maybe you can messenger it to me in the morning? The client's in sort of a hurry."
Big smile. "Sure, Mike. First thing."
I give him my business card. "Perry, how soon can you get those quotes to me?"
"End of the week sound all right?"
"Sounds great to me."
"There was a twenty-million-dollar life insurance policy on Bob?" Rosie asks. There's something wildly erotic about talking life insurance with a naked woman. I've stopped by her house for a meeting on the way home a little after midnight. Grace is asleep. Dave Brubeck's on the stereo. She rubs my back with her long, thin hands.
"Yeah. Twenty million bucks. It all goes to the firm." I turn over and kiss her ear. "Does any of this strike you as a little odd?"
"How's that?"
"I'm not sure. Something just doesn't feel right."
She runs her fingers through my hair. "Maybe this will feel better," she says.
50
"EXACTLY WHAT DOES THE ADMINISTRATIVE PARTNER DO?"
"Friedman Defense Grasping at Straws."
—SAN FRANCISCO LEGAL JOURNAL. THURSDAY, APRIL 9.
The next morning, Chuckles sits uncomfortably on the witness stand, gulping water. "Exactly what does the administrative partner do at a large law firm?" I ask.
He gives me a sour look. "The administrative partner handles all aspects of day-to-day operations." He gestures with his reading glasses. "Finances. Personnel. Facilities. Computers."
"Sort of the glue that holds the firm together as an institution?"
He almost smiles. "Why, yes."
"And how many years have you served as administrative partner?"
"Eleven," he says proudly. He sits up. "I sit on the executive committee, too."
I glance at the accountant, who nods with admiration.
"Could you please tell us about the current financial situation at the firm?"
"Objection," Skipper sings out. "Relevance."
"Overruled."
"Your Honor," Chuckles pleads, "this information is highly confidential."
She glares at him. "I don't expect you to reveal the details of how much money each of your partners makes. Answer the question."
"We have filed for bankruptcy protection," he acknowledges. "We are in the process of reorganizing our finances and negotiating with our creditors." He arches an eyebrow, as if to say, "Are you happy, now?"
"Thank you, Mr. Stern," I say. I leave out, "You condescending ass." I look at Rosie, who gives me the "cheap shot" scowl. I add, "I'm sure it hasn't been easy." I pause. "Mr. Stern, you were at the Simpson and Gates offices on the night of December thirtieth, weren't you?"
"Yes."
"What time did you go home that night?"
"About two in the morning."
"And when was the last time you saw Mr. Holmes?"
"About twelve-thirty."
"After twelve-thirty, did you see Mr. Friedman together with Mr. Holmes or Ms. Kennedy?"
"No."
I bore in. "Did you see anyone else there that night?" Let's see who he's willing to implicate.
He pauses and looks at the clock. Then he rattles off the names of Vince Russo, Art Patton, Ed Ehrlich, Dan Morris, Jack Frazier and Martin Glass. "Of course," he says, "I don't believe any of them had anything to do with the tragedy."
Of course not. "Anybody else?"
He purses his lips. "Not that I can think of."
"Mr. Stern," I say, "you didn't perhaps see Mr. Gates at the office that night, did you?"
His eyes dart toward Skipper. "Why, yes. We had a reception for him. It was his last day at the firm." I see the accountant frown.
"But did you see him later that evening? After the reception had ended?"
He looks helplessly at Skipper. "I saw Mr. Gates at about one o'clock in the morning. He was in our suite for a few minutes."
I walk over to the evidence cart and pick up a copy of Bob's will. "Mr. Stern," I say as I hand it to him, "do you recognize this document?"
"Yes. It's the will of Mr. Holmes. I prepared it. It is a matter of public record."
"Mr. Stern, would you mind turning to page thirty-four?"
He puts on the reading glasses. He flips to the correct page.
"Would you mind telling us the names of the beneficiaries of the will?"
He glares at me over the top of the reading glasses. "I'll have to refresh my memory."
Bullshit. You can recite all eighty-nine pages by heart. "Take your time, Mr. Stern."
He pores over the entire will, pausing briefly to lick his index finger to turn the pages. Finally, he says a third went to Beth, a third to the kids and a third to the International Charitable Trust. He takes off his reading glasses and puts them back into his pocket.
"Mr. Stern, you're aware Mr. Holmes was served with divorce papers on December thirtieth."
"Yes."
"Did Mr. Holmes ever ask you to prepare an amendment to this will to change the beneficiaries?"
His eyes dart momentarily. "No," he says.
Rosie hands me three copies of a document. I hand one to Skipper, one to the judge and one to Stern. "Your Honor," I say, "we'd like to introduce this document into evidence."
"Any objections, Mr. Gates?"
He's trying to speed-read. "I don't think so, Your Honor."
I turn back to Stern. "Do you recognize this document, Mr. Stern?"
He studies it. "Yes." He takes a drink of water. "It's a draft of an amendment to the will."
"Really?" I'm trying for biting sarcasm. "And did you prepare this amendment?"
"No. One of my associates prepared it."
"And did she do so at your instruction?"
"Yes."
"And which associate was it that prepared this document?"
"I believe it was Ms. Wendy Hogan."
"I see." You'd never believe what may turn up in somebody's files when she leaves the firm. "And could you please tell us what this amendment purports to change in the will of Mr. Holmes?"
His shoulders slump. "It was intended to change the beneficiaries of the will."
"Really?" I scowl melodramatically. "When was this amendment prepared, Mr. Stern?"
"In December of last year, I believe."
"Why do you suppose Mr. Holmes asked you to prepare this amendment?"
"Presumably because he intended to change the beneficiaries of his will."
I get right in his face. "Did he tell you who the new beneficiaries were going to be?"
"No."
"Any hints?"
"Objection. Speculative."
"Sustained."
"Did he tell you which of the beneficiaries were going to be replaced?"
"Yes. His wife."
"But if he proceeded in the manner that you've suggested, Mrs. Holmes stood to lose a substantial sum of money on the
death of Mr. Holmes."
"Yes, she did."
I shift focus. "Could you please tell us what you know about the International Charitable Trust, Mr. Stern?"
He grimaces. "It's a charity organized in the Bahamas by Mr. Holmes."
"It does good things for mankind?"
"Yes."
"What sorts of good things?"
"The annual income of the trust is donated to various charitable causes. Schools, day-care centers, community centers, that sort of thing."
Prostitutes, drug dealers, that sort of thing, too. "And the charities that receive funding every year are called the income beneficiaries, right?"
"Yes."
"And the same income beneficiaries will divide the trust assets upon the death of Mr. Holmes, right?"
"No. Upon the death of Mr. Holmes, the remaining assets, or corpus, of the trust are divided among various designated individuals called the remaindermen."
"Could you tell us which charities received the most money last year?"
"I don't recall."
"Schools? Day-care centers? Community centers?"
"I'm not sure."
"Could you tell us the names of the remaindermen?"
"I'm afraid I don't know. That information was confidential. The trustee in the Bahamas was the only person who knew the names of the remaindermen."
"Mr. Stern, did you assist in setting up the trust?"
"Yes."
"Yet, you don't know the names of the income beneficiaries or the remaindermen?"
"That's true."
That's bullshit. "Why did you choose to set up the trust in the Bahamas?"
"Mr. Holmes enjoyed vacationing there. He became very involved in various causes over the years. Ultimately, he wanted to retire there. And, to be perfectly honest, the tax laws were favorable."
The accountant perks up. The lawyers look at each other.
"When you set up the trust, I'm sure you investigated the income beneficiaries very carefully, right?"
"Actually, the trust administrator in the Bahamas handled it," he replies. "I'm not involved in the day-to-day management."
He's tap-dancing around my questions. "I see." Rosie hands me another document. It has the seal of the Commonwealth of the Bahamas at the top. I hand copies to Skipper, the judge and Stern. I ask that it be introduced into evidence. Skipper doesn't object. "Mr. Stern," I say, "do you recognize this document?"
"Yes. It's the charter for the trust. It sets forth the rules for the governance of the trust. It names First Bank Bahamas as the sole trustee."
"It also names the income beneficiaries and the remaindermen, doesn't it?" I'm setting him up. I know the names of the income beneficiaries and the remaindermen are set forth in a confidential addendum which I've not yet seen.
"Well, no. That information is in a separate document. It's confidential."
"And do you now recall the names of the income beneficiaries and the remaindermen?"
"As I said before, I don't know."
Sure. "There are two individuals who serve as the so-called trust protectors, aren't there?"
"Yes. The trust protectors have the authority to take action on behalf of the trust and change the trustee. The trust protectors are Mr. Holmes and myself."
Now, we're getting somewhere. "As trust protector, Mr. Stern, I presume you would know the names of the income beneficiaries and the remaindermen of the trust?"
"I'm afraid not, Mr. Daley. As I said, that information is in a separate document. Under the laws of the Bahamas, it's confidential. I don't know."
Liar. "You mean to tell us the trust protector doesn't know who gets the money when Mr. Holmes died?"
"That's true. It was all handled in the Bahamas."
"So though you are the attorney who helped set this thing up, you don't know who gets the money?"
"Objection. Asked and answered."
"Sustained."
I glare at Stern. "Did you get a fee for acting as trust protector, Mr. Stern?"
"Yes."
"How much?"
"Objection. Relevance."
"It is relevant, Your Honor. Unless Mr. Stern wants to tell us that he doesn't know how big his fee is, either."
"That's enough, Mr. Daley. The objection is overruled. Answer the question, Mr. Stern."
"It depends," he says.
"On what?"
"On the value of the assets in the trust at any given time."
"You get a percentage of the value of the assets?"
"Yes."
"What percentage?"
"Your Honor," he implores. "This is highly confidential information."
"Answer the question, Mr. Stern, or I'll hold you in contempt."
"Five percent," he grumbles.
"Now, Mr. Stern, how much was your fee last year?"
He looks at the judge. She stares him down. "About four hundred fifty thousand dollars."
"Four hundred fifty thousand?" I repeat loudly. "If my high-school arithmetic is correct, this means the trust had about ten million dollars’ worth of assets. Is that about right, Mr. Stern?"
"Yes," he says. "That's about right."
"Your Honor," Skipper says, "this is all very interesting. But I fail to see the relevance."
She turns to me. "Mr. Daley, are we going to see a point to this anytime soon?"
"Yes." Here goes. "Mr. Stern, isn't it a fact Mr. Holmes was unhappy about your fee?"
"I don't know what you're talking about, Mr. Daley."
"Let me be more specific. Isn't it a fact Mr. Holmes thought your fee was excessive?"
"No."
I turn to Rosie, who hands me three copies of a letter. I hand one copy to the judge, one to Skipper and the other to Stern. I introduce it into evidence. "Do you recognize this letter, Mr. Stern?"
"I don't recall."
"Let me refresh your memory. It's a letter dated September third of last year addressed to a Mr. Trevor Smith at First Bank in the Bahamas. As you'll see, you were copied on this letter."
He studies it and shrugs.
"Would you please read the sentence I've highlighted, Mr. Stern?"
On go the reading glasses. " ‘I believe that the fees paid to the trust protector are extravagantly high. I would like to terminate the services of Mr. Stern at the end of this year.’ "
"Who signed the letter?"
He takes off the reading glasses and exhales. "Mr. Holmes."
"It appears that Mr. Holmes wanted to fire you. Isn't that about right?"
He clears his throat. "From time to time, he expressed some reservations about the amount of my fee. I don't believe he intended to implement the terms of this letter."
"You mean you don't think he would have fired you?"
"No. The trust was in place for many years. But he certainly could have done so if he wanted to."
I glance at the jury. I turn back to Chuckles. "What happens to your fee now?"
"It is paid until the trust is liquidated."
"When is that supposed to happen?"
"It will probably take two or three years."
"So, at half a million a year, the death of Mr. Holmes will result in your receiving an additional million or million and a half dollars. Isn't that right, Mr. Stern?"
"I have no choice, Mr. Daley. I have a contractual obligation to act as trust protector. When the trust was put in place, my fees were tiny. Over the years, the assets in the trust have grown considerably. It's not my fault that it turned into a very favorable contract for me."
"And if Mr. Holmes had lived, he would have terminated your deal, and you would have lost out on another million and a half dollars."
"As I said, Mr. Daley, I don't believe he intended to terminate my services."
Bullshit. "That's terribly convenient, isn't it, Mr. Stern?"
"Objection."
"Sustained."
Rosie hands me a thick legal-size document. I hand it to Chuckles. "Mr. Stern," I say, "you're familiar with t
his life insurance policy, aren't you?"
He puts on his reading glasses and glances at it. "Yes."
"It's what's called a key-man life insurance policy, isn't it?"
"Yes."
"It was taken out by the Simpson and Gates firm, wasn't it?"
"Yes."
"And the firm paid all the premiums, right?"
He looks over the top of his glasses. "Yes. That's how key-man insurance works. A business such as ours buys life insurance policies on the lives of important members of the firm. In our case, we took down this policy on the life of Bob Holmes. We had similar policies for all of our partners."
"I see. And would you mind telling us how much this policy was worth to the firm?" I've set the trap. At least I hope so.
He looks at Skipper. "Two and a half million dollars."
I pause. "Mr. Stern," I say, "I believe you've misread the policy value. Would you mind looking at the policy again?"
He flips open the policy. He adjusts his reading glasses. He stops stone cold. He takes off the reading glasses and looks at me.
"Mr. Stern? Would you mind telling us how much the policy was worth?"
Our eyes meet. "Twenty million dollars," he says quietly.
"Twenty million dollars," I repeat. "That's a lot of money, isn't it? That's even more money than Bob Holmes had in that hokey trust you set up for him in the Bahamas."
"Objection."
"Sustained. Let's stop the editorial comments right now, Mr. Daley."
I don't stop. "Mr. Stern, if the firm had a twenty-million-dollar policy on Mr. Holmes, how come it had to file for bankruptcy protection?"
"The insurance company hasn't paid us yet. These things take time, Mr. Daley."
"And then all of the firm's financial difficulties will be worked out?"
"We think so, Mr. Daley."
"When was this policy issued, Mr. Stern?"
He puts on his reading glasses and glances at the cover page of the policy. "December fifteenth of last year."
"Mr. Stern," I say, "you've read this policy pretty carefully, haven't you? You were a partner in a big law firm, after all. So you read the fine print, right?"
There's only one possible answer. "Yes, Mr. Daley."
"Would you please turn to page six of the policy?"
He shuffles through the first pages. "Yes, Mr. Daley."
MD01 - Special Circumstances Page 38