Phillip Allen Lacovara Interview 7

196
Oral History of Philip Lacovara, Esq.
This interview is being conducted on behalf of the Oral History Project of The Historical
Society of the District of Columbia Circuit. The interviewer is Carrie Johnson, and the
interviewee is Philip Lacovara. The interview took place via Zoom on Tuesday, September 10,
2024. This is the seventh interview.
MS. JOHNSON: Philip, when we last spoke, you were telling me a little bit about the rather
larger-than-life person who was Jack Welch. I don’t know if you have
additional recollections of Jack Welch, but I’d be happy to hear them if
you do.
MR. LACOVARA: I liked Jack a lot. He was a feisty fellow, strong-willed, and he could make
grown men cry, maybe grown women too, although I never saw that. The
amazing thing about him, though, was that, as he said to me explicitly, if I
disagreed with something that he wanted to do or didn’t want to do, I
should tell him. What I found was he was willing to be backed off. He
appreciated, as he really put it, smart lawyers, and that’s the reason he
hired Ben Heineman to be his general counsel, and I think the reason that
he was comfortable hiring me because both of us were strong enough to be
able to push back on him. Jack was not a lawyer but was a very aggressive
businessman. I did find that if he got something in his head that seemed to
me just to be wrongheaded and if I told him why I thought it was wrong,
he would say from time to time okay, I’m not sure you’ve persuaded me,
but let’s do it your way. I think that’s the closest I ever came or saw him
come to admitting that he might have been wrong. He was willing at least
to say alright we’ll do it your way.197
There was one other incident which I found informative. We were
having lunch one day, and it was at a time that there had been a discovery
of a major issue in the GE appliance business. They had come out with a
new line of refrigerators with a new compressor. It turned out it worked
fine in most parts of the country, but in the Southwest, in the dry, hot
climates, the compressors apparently did not work efficiently, and they
tended to overheat as they were trying to dissipate the heat, which is the
way that a refrigerator compressor works I learned. There wasn’t enough
ability to dissipate the heat, so they failed. This was going to be a multi-
million-dollar loss for the company. I said to him, I assume that some
people are going to lose their jobs as a result of this mistake. He said
absolutely not. He said the last thing in the world I want to do is to send a
signal to people that if they make a mistake in good faith, they’re going to
lose their jobs. We want to be a company that innovates and makes
progress, and you have to be prepared to take risks, and if they turn out to
go awry, that’s just one of the costs of doing business. I thought that that
was different from the image that people had of Neutron Jack, as they put
it. The man who could come in and take over a business and nothing
would be left standing but the buildings, not the people. And here he was
sensitive to the psychology of operating a business that has its primary
goal moving forward with novel ideas and new technologies.
MS. JOHNSON: It’s so interesting in part because of the many companies that following in
GE’s wake and got in a lot of trouble in the decades after your tenure at198
GE. They seem to have something in common, which is that chief
executives did not want to hear bad news, and they didn’t want to listen to
the gatekeepers.
MR. LACOVARA: Yes. The reason GE got in trouble was different, and it basically I would
say was more in a way of creative bookkeeping, not in an unlawful sense,
but GE had as one of its major financial engines a business called GE
Capital. It loaned money to an enormous range of businesses and actually
bought a lot of things which it would then lease back to businesses, and
that was the financial model, and it worked out pretty favorably for a lot of
tax reasons for both sides of the transaction.
I remember going to the Inaugural in 1989 I guess it was. It would
have been George H.W. Bush’s inauguration. I was riding in a limo with
the head of GE Capital going to the inauguration, and his wife and my
wife were teamed up in the same car. As we were going down
Pennsylvania Avenue, there was a whole line of port-a-potties because of
the crowds that were expected for Inauguration Day. Gary Wendt, the
head of GE Capital, pointed to them and said I, meaning I being GE
Capital, am the largest owner of port-a-potties in the world. And I thought
here you go. This is GE, the company that owns the most sophisticated
nuclear medicine and exotic defense businesses, and yet GE Capital is
“long” on port-a-potties. It was an illustration of the variety of things
going on at GE. In retrospect, it turned out that a lot of the things that
GE Capital was doing in order to show paper profits turned out to be199
somewhat inflated or more financial engineering than hard assets, and
that’s why GE ultimately fell into disfavor and almost went bankrupt in
the 2008 collapse and has now been thrown out of the Dow Jones 30, even
though it was an original member of the Dow Jones.
At the time, Jack Welch was regarded as the greatest manager of
the 20th Century, and then as it was noted after he became involved with
another person, a somewhat younger woman, he went from being the
world’s best manager to being the world’s biggest disappointment.
MS. JOHNSON: Susie was her name.
MR. LACOVARA: Yes indeed.
MS. JOHNSON: I want to go back a moment in time just to make sure I’ve captured your
recollections of some key figures in the Reagan era, especially the man
who went on to become Justice Scalia. We talked earlier about how the
two of you attended the same high school, military prep school, and how
he had offered you a job in the Office of Legal Counsel which you turned
down because you were no longer a deputy or a staffer. Is there anything
else you wanted to share about that relationship in particular?
MR. LACOVARA: We maintained, I would say, a cordial friendship. We were not intimate
friends. I wouldn’t want to be presumptuous in that way, but we did know
each other. We did see each other from time to time. I did a couple of
mock oral arguments for the Supreme Court Historical Society, for
example, and Nino presided at one or two of those in the Supreme Court
chamber. There was also one that was sponsored by the New York200
Historical Society, and I went up against a law professor from Duke,
Walter Dellinger. We were doing one of the war powers cases, and Nino
was invited to come to that as well. He had been estranged from the high
school that we both attended, a military high school called Xavier High
School in New York City run by Jesuits. It had had a military feature
going back to before the Civil War, so the students were cadets and wore
uniforms. Nino was very intense in his notion that the military feature at
Xavier was essential to the quality of the education.
During the Vietnam War when everything military went out of
favor in some quarters, and some people might say in the trendy quarters,
Xavier dropped the compulsory military feature so that participation in the
regimen became optional. He regarded that as a betrayal, and I think
betrayal is not too strong a word because he insisted that he would have
nothing further to do with the school after that, even though they viewed
him aptly enough as the most distinguished graduate, certainly in recent
decades.
At this event at the New York Historical Society, the president of
the school, a lay person, brought a bunch of cadets in uniform to attend the
argument at this grand hall at the New York Historical Society on Central
Park West. I brought Justice Scalia over to meet with them, and they had a
pleasant enough exchange. One of the cadets, a cadet colonel actually as I
understood it later, wrote to Justice Scalia thanking him for being there,
and they maintained a correspondence. Scalia was then invited back to201
Xavier and went back and there was a rapprochement. By the time he
died, there was a reestablishment of a favorable relationship so much so
that shortly after he died, during a renovation of the school, they got
permission from his wife to name a conference center the Scalia
Conference Center. I was invited to be the speaker at the event at which
they dedicated that conference. So Scalia went 180 degrees around I guess
and came back to being a son of Xavier.
MS. JOHNSON: Whereas you were always a son of Xavier and proud to be described as
such?
MR. LACOVARA: I am true blue, or true maroon and blue, which are the school colors.
Maroon and blue will see you through. We’ll fight for you.
MS. JOHNSON: I love it. You know every word. You have talked with great vibrancy
about your job with the NYPD, the New York Police Department. But
there was another scenario in your life where you might have once again
had a badge, and it involved this idea of you becoming the FBI director.
Can you describe how that came about.
MR. LACOVARA: As remarkable as it may seem, this is still in the 1970s, the late 1970s. The
FBI, of course, had had a rather checkered career thanks to J. Edgar
Hoover and then the immediate aftermath of Hoover. I remember Hoover
had an office down the hall from mine on the fifth floor of the Justice
Department, and I would see him every once in a while walking kind of
stiff-legged between his two colleagues, Clyde Tolson and I forgot the202
name of his other partner. People are still speculating exactly about what
those relationships were, but that’s for another day.
Hoover by that time was at the end of his tenure, it was clear that
he had been more infamous than properly famous. For decades he had
cowed high-level politicians because of the information he had about
everybody both in government and in private life.
After Hoover left, the next couple of people who ran the FBI on a
short-term basis got themselves in trouble, including during the Watergate
escapades when they were not turning square corners. L. Patrick Gray was
one of those people. I don’t remember whether he wound up getting
indicted. He may have, but he was certainly a controversial figure.
There was another interim director, somebody that I served on a
board with later. When President Carter came in, he wanted to go through
a process that would assure that the next FBI director would be a person of
great probity and judgment and all that sort of stuff, so he appointed a
commission that had six or eight or ten people on it, headed by the
chairman of DuPont, a man named Irving Shapiro. They put out a call. It
was basically anybody who thinks he could recommend somebody to be
the FBI director should write a recommendation. As I later learned, the
president of Columbia University put forward my name for this. They did
preliminary screening, and I wound up being among the ten semi-finalists
who were invited for interviews. It was all being done on a very hush hush
basis. The woman who was staffing them was somebody I knew from the203
Office of Legal Counsel when I had been there years earlier, a woman
named Mary Lawton. She was one of the great examples of the
professional civil service, a brilliant woman, totally dedicated, knew
everything about the kind of law that the Office of Legal Counsel focused
on. She was staffing this commission, and she said, you’ve been asked to
meet with the commission, but it’s all being done on a highly secret basis.
We can send a car for you.
They had a meeting room set up in a hotel somewhere in Foggy
Bottom. I can’t remember which one it was. We drove in through the
garage, so I wasn’t even supposed to go in through the front door. I went
up to an elevator, and I met with them. They had a chief counselor, a staff
director with the commission, another estimable character, Fritz Schwartz,
FAO Schwartz Jr., the scion of the famous department store. Fritz was
staffing this, and I don’t remember any of the other commissioners. I went
in there and one of the questions they asked me was what do you think is
the most important qualification that we should be looking for in the next
director of the FBI. I hesitated for a moment, and I said, “a good sense of
humor.” They were all started, understandably so. I don’t know whether
they thought I was being flippant or disrespectful, but Shapiro asked me
why do you give that answer. I said what I’ve found, and I’m sure you
gentlemen, because it was all men at the time, I’m sure what you
gentlemen have observed yourselves is that the FBI director, as shown by
Mr. Hoover, has an enormous amount of power, and in that scenario, and204
in my recent experience, what I’ve seen is people who have a lot of power
tend to take themselves too seriously and think that whatever is good for
them is good for the country. And I said, I think what you want to have is
somebody who doesn’t really take himself too seriously, in the sense that
he recognizes that he’s fallible and can laugh at himself, can admit that he
makes mistakes. That’s really what I was trying to sum up. They nodded
as if at least it was a plausible answer and it wasn’t intended to be
insulting.
The interview went on for a little while, and then I said, I
appreciate your consideration, but I think I should withdraw my
candidacy. I don’t think I should be going any further with this. Either
Shapiro or Fritz Schwarz said why not, and I said, and I remember this. I
said, because if you can’t come up with a better qualified person to run the
FBI than I am, then the country is in a hell of a shape.
As it turned out, they came up with two candidates whom they
recommended to Carter. He rejected both of them. When I saw the names
of the two, and I don’t know whether either of them is still alive, I kind of
doubt it. When I looked at the two candidates, I said to myself gee, the
country must be in a hell of a shape if that’s the two best people they could
come up with. So Carter rejected those. I think he appointed Frank
Johnson, a federal judge from Louisiana, as an interim FBI director, and
then they went back to the drawing board. I don’t think the commission
was reactivated.205
Anyway, that was my acquaintance with possibly being the
director of the FBI.
MS. JOHNSON: Sounds like no regrets on your end.
MR. LACOVARA: No. It would have been an interesting job, but I was truthful when I said I
didn’t think that I was the right person for the job. When I said to them the
answer that I gave, I said you’re obviously looking at people who are
smart, who are learned in one way or another, who have some
administrative skills, and that’s when I said, but what I think you really
need to be looking for is somebody with a sense of humor. That was the
ingredient that I thought they should be looking for, apart from all the
routine things, the obvious things, that they presumably screened for when
they were looking at resumes.
MS. JOHNSON: I don’t know if you’ve read the Beverly Gage biography of Hoover that
came out a year or two ago, but it certainly demonstrated the man had
absolutely no sense of humor.
MR. LACOVARA: No sense of humor. In my limited contact with him, I never saw him
smile. That may have been one of the inspirations for my response.
MS. JOHNSON: Should we talk now about your experience with the D.C. Bar?
MR. LACOVARA: I think it’s probably worthwhile mentioning a couple of other things from
the Reagan years. A person who I’d known who had actually been, I
believe, in the White House counsel’s office in the Nixon years as a very
junior staffer, a man named Richard “Dick” Hauser. Dick was a really
good guy. When President Reagan came in, Dick became deputy counsel206
to the President, and it was probably he who recommended me for an
appointment by Ronald Reagan to be the President’s representative on the
District of Columbia Judicial Nomination Commission. That’s kind of a
peculiar statute, and anybody who’s interested in the D.C. Circuit would
probably be familiar with it. It’s a multi-member commission with a
couple of members appointed by the mayor of D.C., the chairman of the
City Council, some community members, a judge from the United States
District Court, and then the President has one designee on the
Commission. The Commission’s responsibility is to come up with three
candidates for vacancies on the D.C. courts, and the President selects one
to nominate for a possible Senate confirmation. So I was the person
appointed to this role.
Unfortunately, when President Reagan appointed me, there was
already a person in place who had been appointed by Jimmy Carter, and
by statute, the President’s designee had a term of five years. The man who
was in place, a man named William Borders, did not want to leave. It’s a
non-compensation position. I guess he liked the idea of being a
presidential member of a federal commission. The President sent him a
letter saying, thank you very much for your service. You are hereby
removed. And I was given a wonderful commission, signed by the
Secretary of State General Haig and Ronald Reagan, the kind of thing that
I proudly had displayed for many years.207
In any event, Mr. Borders was not heading for the highways
gracefully. He filed a lawsuit in the United States District Court, William
Borders v. Ronald Reagan, Alexander Haig and Philip Lacovara. Reagan,
because he was the appointing authority, Haig because he countersigned
the commission, and Lacovara because I was the would-be successor.
It raised an interesting constitutional issue that Judge John Garrett
Penn resolved in favor of Mr. Borders saying that this kind of appointment
was the sort for which Congress could lawfully create tenure. Anybody
who’s interested in history will remember that Andrew Johnson was
impeached for violating the Tenure of Office Act for trying to remove
people from office whom Congress had tried to insulate from removal by a
president. This led to some constitutional decisions in the 1920s and 1930s
over the scope of the president’s power to remove people from various
kinds of positions, including cabinet positions and agencies. It would
come out very differently today. Anyway, Judge Penn said this is a five-
year term. Borders’s term has not expired, and Congress basically
guaranteed his tenure.
The case went to the D.C. Circuit. I was being represented by the
Justice Department along with my co-defendants Reagan and Haig. At that
point, Mr. Borders was implicated in a bribery scandal for bribing a
federal judge in Florida, a man named Alcee Hastings. At that point, Bill
Borders decided it was time to get going and he had other fish to fry. So208
he resigned, and I duly took office and continued to serve. Indeed, I served
out the balance of the term and was reappointed by Reagan.
If you care, I can tell you about why I resigned in protest in
conjunction with writing an editorial in The New York Times.
The footnote to the Borders/Hastings story is that Alcee Hastings
was impeached, and I believe removed, convicted, by the Senate after
being impeached, one of the few federal judges impeached and removed.
Then politics being politics, he went on to win election to Congress and
served several terms in Congress despite having been removed from office
as a federal judge on the grounds of corruption. But that’s politics for you.
I left that position after being reappointed when I was getting some
mentions when there were impending vacancies for the Supreme Court. I
got at least one mention in the Legal Times and a couple mentions in other
places as among the people who might possibly be candidates for the
Supreme Court or certainly the D.C. Circuit. That was well within reach, it
was thought. But I was told by people in the White House that in order to
demonstrate my bona fides, even though I’d been a life-long Republican, I
had after all been involved in investigating Richard Nixon, so there were a
lot of people who were suspicious of me, people who counted who were
suspicious of me. So, it was said, what you really should do is join the
Federalist Society. We’re talking about the mid-1980s. It’s forty years
ago. At that point, very few people had heard of the Federalist Society.
Today, of course, it’s on the lips of anybody who studies politics,209
especially judicial politics. I said I probably agree with almost everything
they stand for. Indeed, I’m pro-life. I think Roe versus Wade was wrongly
decided as a constitutional matter. But I don’t think it’s right to apply any
sort of litmus test to anybody, and I don’t think you should have to join a
particular political organization in order to demonstrate that you’re
qualified to be a judge. So I resigned from the Judicial Nomination
Commission, and I wrote an Op-Ed that was published in The New York
Times called “the wrong way to pick judges.” I explained that I was
concerned about the increasing use of litmus tests on both sides in
screening people for judgeships, that I thought that was essentially
corrosive, and all it was going to do was force the judiciary to the
extremes.
I would say that I had not thought I was as prescient as I turned out
to be. This was a year or so before Bob Bork. The Bork confirmation
hearings was the critical turning point in the nature of the federal judiciary
because since that time, both sides have been applying very fine litmus
tests, largely on the subject of abortion, but there are some other issues.
You’re either in or you’re out. It’s not relevant how smart you are, how
honest you are, how experienced you are, how wise you are, or whatever.
You’re either in or you’re out, and you’re in or you’re out because of your
views on this one issue or maybe two or three crucial issues. I think things
have gone downhill in terms of the staffing of the federal judiciary
including the Supreme Court of the United States since then.210
So that was the end of my prospects for a judicial career. My wife
regularly reminds me how wise I was, because she says, every time she
hears about the Supreme Court, I would have been as miserable as any
human being could ever be, had I been serving on the Supreme Court. I
think she’s probably right because I don’t think I have the tolerance or the
patience that Elena Kagan has, for example.
Anyway, that’s my nodding acquaintance with both the FBI and a
possible career in the federal judiciary.
MS. JOHNSON: You had told me in one of our earlier sessions, since you brought up the
Bork nomination, that you had actually written a letter in support of Bork I
think, and I wonder if you could explain how that came to be.
MR. LACOVARA: When Bob Bork was nominated, he, of course, was controversial for two
reasons. One was he was quite evidently an extreme conservative, and that
made him a persona non grata to the Democrats or the left, however you
want to define it. But one of the ways that people could conceal or at least
obscure a political partisan or ideological basis for opposing him was to
taint him with the Watergate Saturday Night Massacre brush. It could have
been or was, in the minds of some, a fair criticism. He had made a
decision, which the attorney general and deputy attorney general were not
willing to make. I was asked if I would sign a letter or send a letter on his
behalf supporting him, and I said I was happy to do that, because I thought
he was qualified according to my standards for appointment to the
Supreme Court. The president gets to select people. That’s the way the211
process works, subject to Senate confirmation. Footnote aside here, for the
most part, nominations to the Supreme Court were not controversial. If
people had careers in public life that were otherwise distinguished,
regardless of their partisan identification or their political ideology, the
Senate tended to confirm them. And that was true with the minor
exceptions of Louis D. Brandeis because he was Jewish and Thurgood
Marshall because he was Black, where there was a bit more of a wrinkle.
But for the most part, judicial nominees selected by the president were
affirmed as long as they had the necessary academic and experiential
qualification.
Bork in my view easily satisfied that set of criteria. I said to the
Senate in my letter that, when I called Bork the night of the Saturday
Night Massacre, he explained to me why he thought it was the
constitutionally legitimate and practically appropriate thing to do to
execute the order from the president to fire Cox. I disagreed with him at
the time, but he presented it in a way that seemed to be me to be honest
and honorable, and I did not view that as any basis for viewing him as
disqualified to serve as a justice on the Supreme Court. To the contrary, I
said he’s a serious person and is otherwise an honorable man and I did not
regard what he did as dishonorable. Even if I disagreed with the judgment,
it was well within the bounds of reason as he explained his motivations at
the time and which I took as of the date of his nomination at face value.212
MS. JOHNSON: Thank you for that. I took you on a slight detour. You were going
somewhere else before I asked about your Bork letter.
MR. LACOVARA: Not a detour at all because Bob Bork of course was serving on the D.C.
Circuit at the time and so anyone who’s interested in the oral history
relating to the District of Columbia Circuit might be interested in the
career path that Robert Heron Bork followed before and after the D.C.
Circuit.
I was going to mention one other thing that came up while I was in
Washington. I was approached by a private counsel for the governor of
Alaska, a man named William Sheffield, Bill Sheffield, who was the
subject of a threatened impeachment by the Alaska Senate. What was
interesting about the background for that was that the impending
impeachment proceedings grew out of a grand jury investigation in Alaska
that had been conducted by a special attorney selected by the Alaska
attorney general’s office, a colleague of mine from the Watergate special
prosecutor’s office, George Frampton. The Senate Republicans, who were
in charge of the committee, had appointed as their special counsel to press
the impeachment charges against the governor Sam Dash who had been
the chief counsel for the Senate Ervin Committee, the so-called Senate
Select Committee on President Campaign Activities, which had done so
much of the groundwork in exploring the Watergate break-in and the
aftermath. Sam Dash was a daily figure on national television sitting next213
to Sam Ervin, with his big black glasses and his very I guess New York or
New Jersey accent examining and cross-examining witnesses.
I was asked whether I would consider representing the governor in
these proceedings which would require going up to Juneau, Alaska,
making a number of trips, and then if the proceedings went forward,
representing the governor in the proceedings. I said, gee, this is too good
to be true. It’s like getting the band back together again but not in quite the
same configuration.
So I went up there, and I met with Governor Sheffield and what a
fascinating character. He died just maybe two years ago, well into his 90s.
I was even invited to his 90th birthday a couple of years ago. He had
become quite wealthy, but he had started out as I think a Hoover, or
maybe it was Sears, vacuum cleaner salesman. His territory was the
Pacific Northwest, Idaho, Montana, Washington State, and Alaska. He had
gone out to Alaska in the territorial days, so this gives you a sense of the
history of the area before 1959 when Alaska became a state. So he was up
there wandering around going from native villages to native villages
seeing who would want a vacuum or other appliances that you might be
able to get through the Sears catalog, and he thought Alaska had some real
possibilities. He began buying up land, and he became quite wealthy. At
one point, in fact while I was up there, he owned what was then the best
hotel in Anchorage, the Captain Cook. In fact, I stayed there when I was
with my family on a family trip on a cruise probably five years ago. The214
Captain Cook Hotel is still there, still a fine hotel in Anchorage. Anyway,
I went to Juneau, and this is shortly after the territorial days. Juneau was
still kind of a ramshackle town, isolated and still accessible only by ship or
air, and there were no roads into Juneau from anywhere outside the
immediate area so we had to fly in. It was like a muddy frontier town is
the way I would describe it.
Just a little anecdote. The governor was I think basically an honest
man but a little naïve. I would say innocent in the sense of that
implication, and I don’t mean innocent versus guilty. I mean innocent
versus sophisticated. Some of his friends were not quite as innocent, and at
one point, when I was up there for the hearings, my wife came up and she
was, as she still is, charming and attractive. She met with some of the
governor’s friends at some of the evening events that we went to. At one
point I saw she had come back with a very nicely carved what I guess was
a walnut ivory bracelet and explained who had given it to her, one of the
governor’s cronies. The governor’s chief of staff said you know who he is.
He runs the brothels here in Juneau. Both Madeline and I thought that was
kind of a charming little aside, but that’s the way it was in Juneau at the
time in the mid-1980s.
Footnote here. I went back there, as I mentioned, with my family
four or five years ago, and Juneau is now a city, completely different with
the advent of tourist ships, which were not a significant element forty
years earlier. Juneau is all spruced up, and there are lots of touristy things,215
neat and clean, at least on the surface. Whereas when I was there for the
impeachment proceedings, it was a much more robust kind of honky-tonk
large-scale village.
In any event, I used some of my colleagues from my Hughes
Hubbard office, and we did a lot of research and found out there really
wasn’t much law on impeachment of governors. As far as we could tell,
there hadn’t been a gubernatorial impeachment anywhere in the country
since the 1920s so we were essentially making it up as we went. We
borrowed from some state precedents; we borrowed from some federal
practice and tried to explain what the governing standards ought to be. The
basic allegations were that the governor had been improperly influenced in
awarding government contracts, kind of an everyday allegation of
government corruption. Lots of state governors since then have gone to
prison for doing things that were suspected or alleged.
I remember one exchange that is always brought to mind when I
hear on the news a prosecutor explaining to a jury the analogy that should
make them comfortable finding guilt on the basis of circumstantial
evidence. It’s the old adage that if you’re going outside and you see that
there are people walking around with umbrellas and the street is wet and
it’s cloudy, you may not see that it’s rained, but it certainly would be
reasonable for you to infer from the circumstances that it just rained and
therefore you should convict. This analogy is used every day in criminal
courtrooms.216
Sam Dash used this analogy to try to convince the Senate that they
should convict Governor Sheffield on the basis of circumstantial evidence
about the awarding of these contracts. I said, yes, you certainly could infer
that it rained, but I don’t know whether you have these things here, but I
know back in the cities where I come from, sometimes you’ve got a
sanitation truck, it’s a big truck that comes along with water to go along
the streets and wash down the streets. I said it’s just as possible that right
before you went outside, and you might have seen people carrying
umbrellas and the street might be wet, but if you inferred, after that truck
had gone by spraying down the roadway that it had rained, you’d be
wrong.
They voted 9-11 against the governor, but they needed a majority
to impeach, and he was acquitted by a close vote, but nevertheless was
acquitted.
We had kind of a celebratory party afterwards, and I decided to
give a parting gift. I went to an antique store, and I got a big circular horn,
the kind of air horn that they used to have on the side of automobiles in the
old horse-and-buggy days, and I wrote a little note saying, if you ever
need my help again, governor, just sound the horn. He remembered that
and wrote to me a number of times afterwards saying that he was glad he
didn’t need to blow the horn anymore.
MS. JOHNSON: Splendid. Should we go to the D.C. Bar now and then take a break for the
day?217
MR. LACOVARA: Sure. In the late 1980s, I had been involved in the D.C. Bar for a number
of years. I had served on the Board of Governors. I had served as chairman
of the Code Committee of the D.C. Bar Ethics Committee. I was serving
as the volunteer general counsel of the bar and decided to put my hat in
contention to run for president-elect, which is the way the process works. I
was elected in 1987 as president-elect, and that meant that I would serve in
that role at the elbow of the president of the bar for that year, and then I
would automatically become the president as of July 1, 1988.
The president at that time was a wonderful lawyer from Steptoe
and Johnson. Bob Jordan. In the interim, as I mentioned, I was asked to go
to GE, which would involve moving out of Washington to Fairfield
County, Connecticut. No Bar president had ever been either elected from
outside of Washington, D.C. or been outside of Washington, D.C. during
his term, so the immediate question was whether or not I should resign and
just let the next candidate in line take over the position. I talked to a
number of people about it, and indeed I spoke to Jack Welch about it
during my interview with him. I said I’ve got this role that I’ve been
elected to serve in Washington, and I would like to do that, if at all
possible, but I realize that my primary responsibility will be to GE. One of
the reasons I became so fond of him was he said no, you should do this.
You took on an obligation. He said it would be helpful for you to maintain
your connections with Washington, and indeed, GE has a lot of
connections in Washington and therefore, this should be easy for you. He218
said you can take the time that you need to do it because I have confidence
that you can get it all done.
The principal opponent to my service was a person who remains a
very good friend of mine, now a federal judge, Paul Friedman. Paul and I
had worked together during the Watergate years, and I think he went into
the SG’s Office after that. Paul thought this was a terrible idea. He became
Bar president a couple of years after I was there. He thought it was a
terrible idea and there was no way I could possibly devote enough time to
the job if I was not only working full time for a major company but was
300 miles away from Washington. I told him that I thought I could get the
job done, and I would do whatever was necessary to get it done. So I
stayed, did the job, commuted regularly to Washington, so much so that
when I left, the little caricature that the Bar commissioned for me is a
picture of me sitting on the Eastern Airline shuttle surrounded by loose-
leaf binders marked D.C. Bar with a telephone in my hand and a
stewardess saying “oh Mr. Lacovara, it’s the D.C. Bar calling. They need
you to turn the plane around to get back to Washington.”
One little anecdote. One of the aspects of being a headquarters
officer at GE was that I had the ability to requisition a private jet, part of
the GE fleet, and since this was considered kind of quasi-official, it would
have been possible for me to have used the GE planes to go back and forth
to Washington, which would have been a lot easier than going from
Fairfield County down to LaGuardia and waiting on line at the Eastern219
shuttle to get to Washington and waiting for the shuttle back. Quite
consciously, I said to myself, do not do that. Some day you may leave GE,
and you will have to go back to standing in line like mere mortals. It was a
bit of self-discipline, which I’m glad that I was able to assert. I stayed at
GE about two years, and during this time when a lot of my colleagues
were using corporate planes to do a lot of things that were kind of quasi-
official, I took a car down to LaGuardia and waited online like everybody
else and took the shuttle and got hemmed in my middle seats as often as
anything else, even though I was a person who could have avoided the hoi
polloi and behaved like a senior corporate executive. It turned out to have
been wise because for the balance of my life, I’ve had to wait on lines like
everybody else. So that little bit of self-discipline turned out to have been
a wise bit of restraint.
MS. JOHNSON: Two follow-ups. One is the level of interest and column inches devoted to
this so-called controversy over your living in Connecticut and presiding
over the D.C. Bar in Washington. The legal press seemed preoccupied
with it, and I wonder if that just rolled off your back or what your reaction
was in the moment.
MR. LACOVARA: I would say that I was not surprised. I was more disappointed that the
people who were willing to support or encourage me were not as
outspoken as the persons who were critical. I guess even at the time it
shouldn’t have been surprising because it was a no-win proposition for
people to support me. If I failed terribly, they didn’t want to be tarred with220
my failure, whereas if I was able to do it, as I think I did, there really
wasn’t much upside for anybody. So that was the part that was surprising.
I don’t know that the larger community really cared very much, but
the people who care about the D.C. Bar cared a lot about it. I think we just
had the 75th anniversary of the creation of the D.C. Bar. I think it’s in that
range. I am still the only person ever elected to serve as president of the
D.C. Bar who was either not in D.C. when elected or served his term
outside of D.C. It’s been for the most part, not surprisingly, a kind of
inbred community even though far more members of the D.C. Bar are
non-residents of D.C. I think there are 100,000 members, and only a
fraction of those members are actually practicing in Washington.
MS. JOHNSON: Looking back on that tenure, the controversy seemed to get more attention
than any specific incident or initiative during your tenure. Are there any
things you want to highlight about your actual work in that year?
MR. LACOVARA: As with many of the people who have been bar president, the key was
trying to maintain support for the projects in the courts to serve the
underserved. That is, provide opportunities for defense of indigents. So
you’ve got a lot of effort being put into making sure that there are
adequate resources available for things like the Public Defender Service.
A footnote here. I was chair of the Public Defender Service for
several years while I was in Washington.
Another challenge was just trying to encourage, successfully I
think, more support for law firms for pro bono projects, and that’s221
something I continued many years later. Probably eight or nine years ago,
I was asked to create a new bar project for leadership. There’s now called
the John Payton Leadership Institute at the Bar. We named it for John
shortly after he died. I was asked to organize this as a way of getting
younger lawyers trained for leadership, not only in the bar directly, but
also for taking a greater role of leadership in the profession in the larger
sense. Even despite having gone off to other parts of the world, I remained
active with the D.C. Bar still trying to promote the same basic values that
being a lawyer is not a job, it’s a profession. And that includes public
responsibilities that are different from those of wage earners who can turn
off any thoughts about their jobs after they’ve punched out. Being a
lawyer involves a virtually lifetime commitment to something larger, and
that includes service to the poor and the underserved.
MS. JOHNSON: Thank you for that. Do you want to break now and then get into Morgan
Stanley and some of the mediation stuff next time, or are you able to go
another ten minutes or so?
MR. LACOVARA: I can go more time if you’ve got the time.
MS. JOHNSON: Yes. Let’s do Morgan Stanley and then break, and then I think there’ll be a
lot to talk about. In our earliest session, you talked about your dad, your
dad’s work as a lawyer, your dad’s aspirations, and when it came time for
you to leave GE and you were itching for something more, you wound up
at Morgan Stanley in the heart of Wall Street. What did that mean to you,
and what did it mean to the family?222
MR. LACOVARA: The genesis of the Morgan Stanley opportunity is interesting. I’ve
mentioned my wife a number of times in the course of our conversations. I
think I also mentioned that when we went to New York, or went to
Connecticut, my wife, thanks to a dinner party that Fritz Heimann, not to
be confused with Ben Heineman, at GE had arranged, we met with Ira
Millstein, the head of Weil Gotshal. Ira then recruited her to be the
director of a committee to do something about Central Park, something
that was enormously successful. On that committee were some of the rich
and powerful of New York. One of the people on the committee was a
man named Lewis Bernard. Lewis had been the first Jewish partner at
Morgan Stanley, which was itself notable. Lewis at the time was the chief
administrative officer of the firm. Morgan Stanley had just gone from
being a private partnership to being a public company, and Lewis had the
idea that Morgan Stanley should, as he put it, upgrade its general counsel’s
position because it was now not only undertaking the responsibilities of a
public company, but also needed to be a larger player in the public arena,
including especially Washington.
At some Central Park Committee meeting, Lewis apparently said
to Madeline, your husband is a lawyer, isn’t he? Yes, she said. I don’t
know whether he knew anything about my Watergate experience or
whatever, but she must have described my role at GE, my experience in
government, my Washington law firm experience. Lewis called and asked
me if I would like to talk to him about perhaps coming to work at Morgan223
Stanley as general counsel. I talked to him, and I liked him a lot, and I
kept saying no. I don’t want to do this. At some point, to be crass about it,
it was simply something that I couldn’t say no to.
MS. JOHNSON: An offer you couldn’t refuse.
MR. LACOVARA: He made me an offer that I could not refuse. That was at a time when
almost anything seemed reasonable. I was still reluctant because I loved
GE, and I loved the job that I had, and I loved working with Welch and
some of the other senior people. I was uncertain about whether I would
actually say yes, once I got an offer that was sufficiently tempting. I made
a tactical mistake, or maybe it was a Freudian way of abdicating
responsibility for having to make a decision. I told Ben, my nominal boss,
I’ve got this offer from Morgan Stanley to become the general counsel
there, and I’m uncertain what to do. The next thing, I got within minutes a
call from Jack Welch. Can you come over and see me. Okay. Jack
basically said, congratulations, good luck, I hope you’re really successful
there. As I reconstructed it, Ben felt that he had to let Welch know that I
was even considering this. I probably did not want that to have been the
way it unfolded. I was actually looking for a conversation rather than for a
fait accompli to be delivered. But anyway, Welch, having invested in me. I
didn’t mention how I was sent to INSEAD, the European institute of
business administration in Fontainebleau for the executive development
program. Welch had said you’re a smart lawyer, but if you want to go
further in the GE universe, you need to know more about business. That224
was also a fascinating experience. I think Welch may have felt that the
mere fact that I was even thinking about some other job meant that it was
not going to work any longer, so essentially the decision was made for me.
I then went to Morgan Stanley and took on a role there that
included being a member of the management committee, which was pretty
fun, and corporate secretary. I was a managing director, general counsel,
and member of the management committee, which consisted of six or
seven people from inside the firm, not including the outside board
members. It was a major position, and I had a lot of learning to do because
I had not been primarily a finance guy, and so I had to do a lot of catching
up. Included in my portfolio was government relations, so I oversaw the
government relations group, which was headed by a former Morgan
Stanley general counsel. So that was kind of an awkward situation, but the
man who had had that position and headed government relations while I
was there was extremely cooperative and very gracious and knew a lot of
people and was able to introduce me to a lot of people in Washington
whom I hadn’t known, including a young Chuck Schumer.
I don’t know whether I mentioned to you, but one of the things that
I admired so much about Schumer was that he had a gift that any politician
should have, and it’s the ability to remember names and connections. I
saw him occasionally while I was overseeing government relations for
Morgan Stanley because he was on the Financial Services Committee in
the House. He was in financial services. Years and years later, maybe ten225
years later, I was on an airplane walking down the aisle past him, and I
sort of looked at him and nodded, and he said, “Phil, how are you. I
haven’t seen you in a long time. How have you been.” He meets thousands
of people a year or more, but he remembered my name and remembered
my connection long after we had any dealings. I thought that was a great
insight into one of his qualifications to be the Senate Majority Leader in
2024.
The issues were quite interesting. It was an era of turmoil in the
financial services industry. A lot of competition was emerging. Banks
were recasting their own roles of the old depression era. Distinction
between commercial banking and investment banking was beginning to
blur. The reason that the House of Morgan had to split in the 1930s was
because of something called the Glass-Steagall Act, which was a kind of
pro-competitive financial regulatory measure that tried to distinguish
investment banking, where people are at least nominally using their own
money to make investments, from commercial banking, where banks are
lending other people’s money and having to take risks with other people’s
money rather than their own. By the time that I got to Morgan Stanley, this
was beginning to blur, and commercial banks were becoming bigger
players in the lending for capital markets purposes. There’s a major
distinction.
One of the things that I was put in charge of was strategic planning
for the firm. This was a major initiative trying to figure out during this226
time of transition who were Morgan Stanley’s likely competitors going to
be in the next five to ten years and what areas needed to be strengthened
and which not. So I organized a group of young managing directors,
figuring I could draw on their experiences and their hopes and their fears
to put together a strategic plan, which we did.
I did a few other things that I thought were useful. I deputized
specific members of my staff to be in charge of subject matter areas that
people throughout the firm could contact when they needed legal advice.
We did a summary of major legal concepts that everybody from top to
bottom in the firm needed to know about and then designated in an index
which persons to call for specific areas. We had this thing bound up. It
looked beautiful. I went to bring this directory or manual to the chairman
of the firm. Dick Fisher. It looked great all printed up. I went and I said,
Dick, this is something we’ve prepared. We’re going to be distributing it
as kind of a playbook or manual for everybody in the firm. He shook his
head and said, it looks awfully nice. He said, just tell me one thing. You
haven’t created a logo, have you? I said no. This was before Morgan
Stanley had a logo. He said, because I’ve noticed that the two signs of a
business in decline are first, when it changes its name for its personnel
department to human resources, and second, when it creates a logo. I said,
Dick, you don’t have to worry. No logo, although we have already
changed the name of personnel to human resources. Anyway, that was a
good run.227
MS. JOHNSON: Thank you so much. Let’s take a break for the day here. When we return,
I’m going to ask you about the movie posters that you showed your
classes that describe things like KoreaGate and ABSCAM, and we can
pick up maybe with a little more Morgan Stanley and then your experience
in arbitration and mediation if that makes sense to you. Does that sound
good?
MR. LACOVARA: We can go quickly through Mayer Brown. After I left Morgan Stanley, I
went to Mayer Brown. We can do the next twenty years pretty quickly.
MS. JOHNSON: Okay. That all sounds great to me.