The King of Torts
Chapter Seventeen
The Paris adventure cost him $95,300, according to the numbers so carefully kept by Rex Crittle, a man who was becoming more and more familiar with almost all aspects of Clay's life. Crittle was a CPA with a mid-sized accounting firm situated directly under the Carter suite. Not surprisingly, he too had been referred by Max Pace.
At least once a week, Clay walked down the back stairs or Crittle walked up them, and they spent a half an hour or so talking about Clay's money and how to properly handle it. An accounting system for the law firm was basic and easily installed. Miss Glick made all the entries and simply ran them down to Crittle's computers.
In Crittle's opinion, such sudden wealth would almost certainly trigger an audit by the Internal Revenue Service. Notwithstanding Pace's promises to the contrary, Clay agreed and insisted on perfect records with no gray areas when it came to write-offs and deductions. He had just earned more money than he'd ever dreamed of. No sense trying to beat the government out of some taxes. Pay them and sleep well.
"What's this payment to East Media for half a million dollars?" Crittle asked.
"We're doing some television ads for litigation. That's the first installment."
"Installment? How many more?" He peered over his reading glasses and gave Clay a look he'd seen before. It said, "Son, have you lost your mind?"
"A total of two million dollars. We're filing a big lawsuit in a few days. The filing will be coordinated with an advertising blitz that East Media is handling."
"Okay," Crittle said, obviously wary of such large expenditures. "And I'm assuming there will be some additional fees to cover all this."
"Hopefully," Clay said with a laugh.
"What about this new office out in Manassas? A lease deposit of fifteen thousand bucks?"
"Yes, we're expanding. I'm adding six paralegals in an office out there. Rent's cheaper."
"Nice to see you're worried about expenses. Six paralegals?"
"Yes, four have been hired. I have their contracts and payroll information on my desk."
Crittle studied a printout for a moment, a dozen questions clicking through the calculator behind his glasses. "Could I ask why you need six more paralegals when you have so few cases?"
"Now that's an interesting question," Clay said. He blitzed through the pending class action without mentioning either the drug or its maker, and if his quick summary answered Crittle's questions it wasn't obvious. As an accountant, he was naturally skeptical of any scheme that urged more people to sue.
"I'm sure you know what you're doing," he said, suspecting Clay had, in fact, lost his mind. "Trust me, Rex, the money is about to pour in." "It's certainly pouring out." "You have to spend money to make money." "That's what they say."
The assault began just after sundown on July 1. With everyone but Miss Glick gathered in front of the television in the conference room, they waited until exactly 8:32 P.M., then grew quiet and still. It was a fifteen-second ad that began with a shot of a handsome young actor wearing a white jacket and holding a thick book and looking sincerely at the camera. "Attention arthritis sufferers. If you are taking the prescription drug Dyloft, you may have a claim against the manufacturer of the drug. Dyloft has been linked to several side effects, including tumors in the bladder." On the bottom of the screen the bold words: DYLOFT HOT LINE - CALL 1-800-555-DYLO appeared. The doctor continued: "Call this number immediately. The Dyloft Hot Line can arrange a free medical test for you. Call now!"
No one breathed for fifteen seconds, and no one spoke when it was over. For Clay, it was a particularly harrowing moment because he had just launched a vicious and potentially crippling attack against a mammoth corporation, one that would undoubtedly respond with a vengeance. What if Max Pace was wrong about the drug? What if Pace was using Clay as a pawn in a huge corporate chess match? What if Clay couldn't prove, by expert witnesses, that the drug caused the tumors? He had wrestled with these questions for several weeks, and he had quizzed Pace a thousand times. They had fought twice and exchanged sharp words on several occasions. Max had eventually handed over the stolen, or at least ill-gotten, research on the effects of Dyloft. Clay had had it reviewed by a fraternity brother from Georgetown who was now a physician in Baltimore. The research looked solid and sinister.
Clay had ultimately convinced himself that he was right and Ackerman was wrong. But seeing the ad and flinching at its accusation made him weak in the knees.
"Pretty nasty," said Rodney, who'd seen the video of the ad a dozen times. Still, it was much harsher on real television. East Media had promised that 16 percent of each market would see each ad. The ads would run every other day for ten days in ninety markets from coast to coast. The estimated audience was eighty million.
"It'll work," Clay said, ever the leader.
For the first hour, it ran on stations in thirty markets along the East Coast, then it spread to eighteen markets in the Central Time Zone. Four hours after it began, it finally reached the other coast and hit in forty-two markets. Clay's little firm spent just over $400,000 the first night in wall-to-wall advertising.
The 800 phone number routed callers to the Sweatshop, the new nickname for the shopping center branch of the Law Offices of J. Clay Carter II. There, the six new paralegals took the calls, filled out forms, asked all the scripted questions, referred the callers to the Dyloft Hot Line Web Site, and promised return calls from one of the staff attorneys. Within two hours of the first ads, all phones were busy. A computer recorded the numbers of those callers unable to get through. A computerized message referred them to the Web site.
At nine the next morning, Clay received an urgent phone call from an attorney in a large firm down the street. He represented Ackerman Labs and insisted that the ads be stopped immediately. He was pompous and condescending and threatened all manner of vile legal action if Clay did not buckle immediately. Words grew harsh, then calmed somewhat.
"Are you going to be in your office for a few minutes?" Clay asked.
"Yes, of course. Why?"
"I have something to send over. I'll get my courier. Should take five minutes."
Rodney, the courier, hustled down the street with a copy of the twenty-page lawsuit. Clay left for the courthouse to file the original. Pursuant to Pace's instructions, copies were also being faxed to the Washington Post, The Wall Street Journal, and the New York Times.
Pace had also hinted that short-selling Ackerman Labs stock would be a shrewd investment move. The stock had closed the Friday before at $42.50. When it opened Monday morning, Clay placed a sell order for a hundred thousand shares. He'd buy it back in a few days, hopefully around $30, and pick up another million bucks. That was the plan, anyway.
His office was hectic when he returned. There were six incoming toll-free lines to the Sweatshop out in Manassas, and during working hours, when all six were busy, the calls were routed to the main office on Connecticut Avenue. Rodney, Paulette, and Jonah were each on the phone talking to Dyloft users scattered around North America.
"You might want to see this," Miss Glick said. The pink message slip listed the name of a reporter from The Wall Street Journal. "And Mr. Pace is in your office."
Max was holding a coffee cup and standing in front of a window.
"It's filed," Clay said. "We've stirred up a hornet's nest."
"Enjoy the moment."
"Their lawyers have already called. I sent them a copy of the lawsuit."
"Good. They're dying already. They've just been ambushed and they know they'll get slaughtered. This is a lawyer's dream, Clay, make the most of it."
"Sit down. I have a question."
Pace, in black as always, fell into a chair and crossed his legs. The cowboy boots appeared to be of rattlesnake.
"If Ackerman Labs hired you right now, what would you do?" Clay asked.
"Spin is crucial. I'd start the press releases, deny everything, blame it on greedy trial lawyers. Defend my drug. The initial goal, after the bomb goes off and the dust is settling, is to protect the stock price. It opened at forty-two and a half, which was very low; it's already at thirty-three. I'd get the CEO on television to say all the right things. I'd get the PR folks cranking out the propaganda. I'd get the lawyers preparing an organized defense. I'd get the sales people to reassure the doctors that the drug is okay."
"But the drug is not okay."
"I'd worry about that later. For the first few days, it's all spin, at least on the surface. If investors believe there's something wrong with the drug, they'll jump ship and the stock will keep falling. Once the spin is in place, I would have a serious talk with the big boys. Once I found out that there were problems with the drug, then I'd bring in the number-crunchers and figure out how much the settlements will cost. You never go to trial with a bad drug. Each jury can fill in the blank for a verdict, and there's no way to control the costs. One jury gives the plaintiff a million bucks. The next jury in another state gets mad and awards twenty million in punitive damages. It's a huge crap-shoot. So you settle. As you are quickly learning, mass tort lawyers take their percentages off the top, so they're easy to settle with."
"How much cash can Ackerman afford?"
"They're insured for at least three hundred million. Plus they have about a half billion in cash, most of it generated by Dyloft. They're almost maxed out at the bank, but if I were calling the shots I'd plan on paying a billion. And I would do it fast."
"Will Ackerman do it fast?"
"They haven't hired me, so they're not too bright. I've watched the company for a long time, and they're not particularly sharp. Like all drugmakers, they're horrified of litigation. Instead of using a fireman like me, they do it the old-fashioned way - they rely on their lawyers, who, of course, have no interest in quick settlements. The principal firm is Walker-Steams in New York. You'll hear from them very shortly."
"So no quick settlement?"
"You filed suit less than an hour ago. Relax."
"I know, but I'm burning up all that money you just gave me."
"Take it easy. Within a year you'll be even richer."
"A year, huh?"
"That's my guess. The lawyers have to get fat first. Walker-Steams will put fifty associates on the case with meters churning at full blast. Mr. Worley's class action is worth a hundred million bucks to Ackerman's own lawyers. Don't ever forget that."
"Why don't they just pay me a hundred million bucks to go away?"
"Now you're thinking like a real mass tort boy. They'll pay you even more, but first they have to pay their lawyers. That's just the way it works."
"But you wouldn't do it that way?"
"Of course not. With Tarvan, the client told me the truth, which seldom happens. I did my homework, found you, and wrapped up everything quietly, quickly, and cheaply. Fifty million, and not a dime to my client's own lawyers."
Miss Glick appeared in the door and said, "That reporter from The Wall Street Journal is on the phone again." Clay looked at Pace who said, "Chat him up. And remember, the other side has an entire PR unit cranking out the spin."
The Times and the Post ran brief stories of the Dyloft class action on the front pages of their business sections the following morning. Both mentioned Clay's name, which was a thrill he quietly relished. More ink was given to the defendant's responses. The CEO called the lawsuit "frivolous" and "just another example of litigation abuse by the legal profession." The Vice President for Research said, "Dyloft had been thoroughly researched with no evidence of adverse side effects." Both newspapers noted that Ackerman Labs' stock, which had dropped by 50 percent in the three preceding quarters, had taken another blow by the surprise lawsuit.
The Wall Street Journal got it right, at least in Clay's opinion. In the preliminaries, the reporter had asked Clay his age. "Only thirty-one?" he'd said, which led to a series of questions about Clay's experience, his firm, etcetera. David versus Goliath is much more readable than dry financial data or lab reports, and the story took on a life of its own. A photographer was rushed over, and while Clay posed his staff watched with great amusement.
On the front page, far left column, the headline read:
The Rookie Takes on Mighty Ackerman Labs
Beside it was a computerized caricature of a smiling Clay Carter. The first paragraph read: "Less than two months ago, D.C. attorney Clay Carter was laboring through the city's criminal justice system as an unknown and low paid public defender. Yesterday, as the owner of his own law firm, he filed a billion-dollar lawsuit against the third-largest pharmaceutical company in the world, claiming its newest wonder drug, Dyloft, not only relieves acute pain for arthritis sufferers but also causes tumors in their bladders."
The article was filled with questions about how Clay had made such a radical transformation so quickly. And since he couldn't mention Tarvan or anything related to it, he vaguely referred to the quick settlements of some lawsuits involving people he'd met as a public defender. Ackerman Labs got in a few licks with its typical posturing about lawsuit abuse and ambulance chasers ruining the economy, but the bulk of the story was about Clay and his amazing rise to the forefront of mass tort litigation. Nice things were said about his father, a "legendary D.C. litigator" who had since "retired" to the Bahamas.
Glenda at OPD praised Clay as a "zealous defender of the poor," a classy remark that would get her lunch in a fancy restaurant. The President of the National Trial Lawyers Academy admitted he had never heard of Clay Carter, but was nonetheless "very impressed with his work."
A law professor at Yale lamented "yet another example of the misuse of class-action litigation," while one at Harvard said it was "a perfect example of how class actions should be used to pursue corporate wrongdoers."
"Make sure this gets on the Web site," Clay said as he handed the article to Jonah. "Our clients will love it."
At least once a week, Clay walked down the back stairs or Crittle walked up them, and they spent a half an hour or so talking about Clay's money and how to properly handle it. An accounting system for the law firm was basic and easily installed. Miss Glick made all the entries and simply ran them down to Crittle's computers.
In Crittle's opinion, such sudden wealth would almost certainly trigger an audit by the Internal Revenue Service. Notwithstanding Pace's promises to the contrary, Clay agreed and insisted on perfect records with no gray areas when it came to write-offs and deductions. He had just earned more money than he'd ever dreamed of. No sense trying to beat the government out of some taxes. Pay them and sleep well.
"What's this payment to East Media for half a million dollars?" Crittle asked.
"We're doing some television ads for litigation. That's the first installment."
"Installment? How many more?" He peered over his reading glasses and gave Clay a look he'd seen before. It said, "Son, have you lost your mind?"
"A total of two million dollars. We're filing a big lawsuit in a few days. The filing will be coordinated with an advertising blitz that East Media is handling."
"Okay," Crittle said, obviously wary of such large expenditures. "And I'm assuming there will be some additional fees to cover all this."
"Hopefully," Clay said with a laugh.
"What about this new office out in Manassas? A lease deposit of fifteen thousand bucks?"
"Yes, we're expanding. I'm adding six paralegals in an office out there. Rent's cheaper."
"Nice to see you're worried about expenses. Six paralegals?"
"Yes, four have been hired. I have their contracts and payroll information on my desk."
Crittle studied a printout for a moment, a dozen questions clicking through the calculator behind his glasses. "Could I ask why you need six more paralegals when you have so few cases?"
"Now that's an interesting question," Clay said. He blitzed through the pending class action without mentioning either the drug or its maker, and if his quick summary answered Crittle's questions it wasn't obvious. As an accountant, he was naturally skeptical of any scheme that urged more people to sue.
"I'm sure you know what you're doing," he said, suspecting Clay had, in fact, lost his mind. "Trust me, Rex, the money is about to pour in." "It's certainly pouring out." "You have to spend money to make money." "That's what they say."
The assault began just after sundown on July 1. With everyone but Miss Glick gathered in front of the television in the conference room, they waited until exactly 8:32 P.M., then grew quiet and still. It was a fifteen-second ad that began with a shot of a handsome young actor wearing a white jacket and holding a thick book and looking sincerely at the camera. "Attention arthritis sufferers. If you are taking the prescription drug Dyloft, you may have a claim against the manufacturer of the drug. Dyloft has been linked to several side effects, including tumors in the bladder." On the bottom of the screen the bold words: DYLOFT HOT LINE - CALL 1-800-555-DYLO appeared. The doctor continued: "Call this number immediately. The Dyloft Hot Line can arrange a free medical test for you. Call now!"
No one breathed for fifteen seconds, and no one spoke when it was over. For Clay, it was a particularly harrowing moment because he had just launched a vicious and potentially crippling attack against a mammoth corporation, one that would undoubtedly respond with a vengeance. What if Max Pace was wrong about the drug? What if Pace was using Clay as a pawn in a huge corporate chess match? What if Clay couldn't prove, by expert witnesses, that the drug caused the tumors? He had wrestled with these questions for several weeks, and he had quizzed Pace a thousand times. They had fought twice and exchanged sharp words on several occasions. Max had eventually handed over the stolen, or at least ill-gotten, research on the effects of Dyloft. Clay had had it reviewed by a fraternity brother from Georgetown who was now a physician in Baltimore. The research looked solid and sinister.
Clay had ultimately convinced himself that he was right and Ackerman was wrong. But seeing the ad and flinching at its accusation made him weak in the knees.
"Pretty nasty," said Rodney, who'd seen the video of the ad a dozen times. Still, it was much harsher on real television. East Media had promised that 16 percent of each market would see each ad. The ads would run every other day for ten days in ninety markets from coast to coast. The estimated audience was eighty million.
"It'll work," Clay said, ever the leader.
For the first hour, it ran on stations in thirty markets along the East Coast, then it spread to eighteen markets in the Central Time Zone. Four hours after it began, it finally reached the other coast and hit in forty-two markets. Clay's little firm spent just over $400,000 the first night in wall-to-wall advertising.
The 800 phone number routed callers to the Sweatshop, the new nickname for the shopping center branch of the Law Offices of J. Clay Carter II. There, the six new paralegals took the calls, filled out forms, asked all the scripted questions, referred the callers to the Dyloft Hot Line Web Site, and promised return calls from one of the staff attorneys. Within two hours of the first ads, all phones were busy. A computer recorded the numbers of those callers unable to get through. A computerized message referred them to the Web site.
At nine the next morning, Clay received an urgent phone call from an attorney in a large firm down the street. He represented Ackerman Labs and insisted that the ads be stopped immediately. He was pompous and condescending and threatened all manner of vile legal action if Clay did not buckle immediately. Words grew harsh, then calmed somewhat.
"Are you going to be in your office for a few minutes?" Clay asked.
"Yes, of course. Why?"
"I have something to send over. I'll get my courier. Should take five minutes."
Rodney, the courier, hustled down the street with a copy of the twenty-page lawsuit. Clay left for the courthouse to file the original. Pursuant to Pace's instructions, copies were also being faxed to the Washington Post, The Wall Street Journal, and the New York Times.
Pace had also hinted that short-selling Ackerman Labs stock would be a shrewd investment move. The stock had closed the Friday before at $42.50. When it opened Monday morning, Clay placed a sell order for a hundred thousand shares. He'd buy it back in a few days, hopefully around $30, and pick up another million bucks. That was the plan, anyway.
His office was hectic when he returned. There were six incoming toll-free lines to the Sweatshop out in Manassas, and during working hours, when all six were busy, the calls were routed to the main office on Connecticut Avenue. Rodney, Paulette, and Jonah were each on the phone talking to Dyloft users scattered around North America.
"You might want to see this," Miss Glick said. The pink message slip listed the name of a reporter from The Wall Street Journal. "And Mr. Pace is in your office."
Max was holding a coffee cup and standing in front of a window.
"It's filed," Clay said. "We've stirred up a hornet's nest."
"Enjoy the moment."
"Their lawyers have already called. I sent them a copy of the lawsuit."
"Good. They're dying already. They've just been ambushed and they know they'll get slaughtered. This is a lawyer's dream, Clay, make the most of it."
"Sit down. I have a question."
Pace, in black as always, fell into a chair and crossed his legs. The cowboy boots appeared to be of rattlesnake.
"If Ackerman Labs hired you right now, what would you do?" Clay asked.
"Spin is crucial. I'd start the press releases, deny everything, blame it on greedy trial lawyers. Defend my drug. The initial goal, after the bomb goes off and the dust is settling, is to protect the stock price. It opened at forty-two and a half, which was very low; it's already at thirty-three. I'd get the CEO on television to say all the right things. I'd get the PR folks cranking out the propaganda. I'd get the lawyers preparing an organized defense. I'd get the sales people to reassure the doctors that the drug is okay."
"But the drug is not okay."
"I'd worry about that later. For the first few days, it's all spin, at least on the surface. If investors believe there's something wrong with the drug, they'll jump ship and the stock will keep falling. Once the spin is in place, I would have a serious talk with the big boys. Once I found out that there were problems with the drug, then I'd bring in the number-crunchers and figure out how much the settlements will cost. You never go to trial with a bad drug. Each jury can fill in the blank for a verdict, and there's no way to control the costs. One jury gives the plaintiff a million bucks. The next jury in another state gets mad and awards twenty million in punitive damages. It's a huge crap-shoot. So you settle. As you are quickly learning, mass tort lawyers take their percentages off the top, so they're easy to settle with."
"How much cash can Ackerman afford?"
"They're insured for at least three hundred million. Plus they have about a half billion in cash, most of it generated by Dyloft. They're almost maxed out at the bank, but if I were calling the shots I'd plan on paying a billion. And I would do it fast."
"Will Ackerman do it fast?"
"They haven't hired me, so they're not too bright. I've watched the company for a long time, and they're not particularly sharp. Like all drugmakers, they're horrified of litigation. Instead of using a fireman like me, they do it the old-fashioned way - they rely on their lawyers, who, of course, have no interest in quick settlements. The principal firm is Walker-Steams in New York. You'll hear from them very shortly."
"So no quick settlement?"
"You filed suit less than an hour ago. Relax."
"I know, but I'm burning up all that money you just gave me."
"Take it easy. Within a year you'll be even richer."
"A year, huh?"
"That's my guess. The lawyers have to get fat first. Walker-Steams will put fifty associates on the case with meters churning at full blast. Mr. Worley's class action is worth a hundred million bucks to Ackerman's own lawyers. Don't ever forget that."
"Why don't they just pay me a hundred million bucks to go away?"
"Now you're thinking like a real mass tort boy. They'll pay you even more, but first they have to pay their lawyers. That's just the way it works."
"But you wouldn't do it that way?"
"Of course not. With Tarvan, the client told me the truth, which seldom happens. I did my homework, found you, and wrapped up everything quietly, quickly, and cheaply. Fifty million, and not a dime to my client's own lawyers."
Miss Glick appeared in the door and said, "That reporter from The Wall Street Journal is on the phone again." Clay looked at Pace who said, "Chat him up. And remember, the other side has an entire PR unit cranking out the spin."
The Times and the Post ran brief stories of the Dyloft class action on the front pages of their business sections the following morning. Both mentioned Clay's name, which was a thrill he quietly relished. More ink was given to the defendant's responses. The CEO called the lawsuit "frivolous" and "just another example of litigation abuse by the legal profession." The Vice President for Research said, "Dyloft had been thoroughly researched with no evidence of adverse side effects." Both newspapers noted that Ackerman Labs' stock, which had dropped by 50 percent in the three preceding quarters, had taken another blow by the surprise lawsuit.
The Wall Street Journal got it right, at least in Clay's opinion. In the preliminaries, the reporter had asked Clay his age. "Only thirty-one?" he'd said, which led to a series of questions about Clay's experience, his firm, etcetera. David versus Goliath is much more readable than dry financial data or lab reports, and the story took on a life of its own. A photographer was rushed over, and while Clay posed his staff watched with great amusement.
On the front page, far left column, the headline read:
The Rookie Takes on Mighty Ackerman Labs
Beside it was a computerized caricature of a smiling Clay Carter. The first paragraph read: "Less than two months ago, D.C. attorney Clay Carter was laboring through the city's criminal justice system as an unknown and low paid public defender. Yesterday, as the owner of his own law firm, he filed a billion-dollar lawsuit against the third-largest pharmaceutical company in the world, claiming its newest wonder drug, Dyloft, not only relieves acute pain for arthritis sufferers but also causes tumors in their bladders."
The article was filled with questions about how Clay had made such a radical transformation so quickly. And since he couldn't mention Tarvan or anything related to it, he vaguely referred to the quick settlements of some lawsuits involving people he'd met as a public defender. Ackerman Labs got in a few licks with its typical posturing about lawsuit abuse and ambulance chasers ruining the economy, but the bulk of the story was about Clay and his amazing rise to the forefront of mass tort litigation. Nice things were said about his father, a "legendary D.C. litigator" who had since "retired" to the Bahamas.
Glenda at OPD praised Clay as a "zealous defender of the poor," a classy remark that would get her lunch in a fancy restaurant. The President of the National Trial Lawyers Academy admitted he had never heard of Clay Carter, but was nonetheless "very impressed with his work."
A law professor at Yale lamented "yet another example of the misuse of class-action litigation," while one at Harvard said it was "a perfect example of how class actions should be used to pursue corporate wrongdoers."
"Make sure this gets on the Web site," Clay said as he handed the article to Jonah. "Our clients will love it."
