The Players

 With the governor’s office up for grabs, law firms across the state are opening their wallets in an effort to open doors to the next administration.

By Lauren Otis

Published in New Jersey Monthly magazine, June 2001

Winner of the Rutgers/CIT Award for Distinguished Business and Financial Reporting of New Jersey Issues.

 

ON A BLUSTERY FEBRUARY EVENING at the Hilton East Brunswick, the traffic jam at the parking garage and clusters of well-groomed men and women arranged along the curved hotel drive and inside the lobby indicate that something big is afoot. Up the lobby escalators the dark sea of expensive suits grows dense. A few steps farther is the entrance to the hotel’s ballroom, in which shortly some 1,500 people will loudly show their support for state Senate president Donald DiFrancesco as he seeks to make permanent his temporary status as acting governor come election day.

A five-piece brass band plays in one corner of the ballroom, drowned out and ignored by the throng. Everyone has paid $1,300 to attend (still two months away from bowing out of the race, DiFrancesco will raise close to $2 million for his gubernatorial campaign from this fundraiser alone). Amid balloon displays and buffet tables roils a mass of well-tailored humanity, clasping hands and trading high-spirited greetings. Later, when DiFrancesco finishes his brief but rousing speech, a wide arc of people surrounds him near the stage, each waiting to press his hand and exchanges a few words. Few attendees of this gathering of the state’s Republican elite have their cell phones to their ears, perhaps because anyone they might need to call is already in the room.

Among them is John P. Sheridan Jr., who works the room both for DiFrancesco and himself. Sheridan, co-chairman and head of governmental affairs at the Morristown-based law firm Riker, Danzig, Scherer, Hyland & Perretti, is a vice-chairman of the DiFrancesco for Governor finance committee—and a registered lobbyist. “I think you view it as not only an obligation but an opportunity,” Sheridan says later, reflecting on the fundraiser. “You get to see a lot of people in one place, not only people in government but others involved with government.” Over the course of the evening, Sheridan touches base with a wide assortment of old contacts. “And I met a few new people too, which is good,” he says.

Of his and his law firm’s political involvement, Sheridan says, “We’ve just had a history here of being fairly significant contributors to both parties. Making contributions is the way you get into those events.”

In the world of New Jersey’s politically connected law firms, generous campaign contributions reveal more about a firm’s business imperatives than about its civic interest. And in a state in which the governor holds far and away the most powerful elected office, every four years politically savvy law firms, like virtually every other large business in the state, vie to gain the good graces of the would-be winner. This year the prospect of a close race and the promise of a new administration only generate a faster flow of money. There’s nothing unlawful, of course, about law firms making political contributions. But critics contend that such overt involvement perpetuates a “pay to play” system of government, one that provides to the most generous donors access to the most profitable state contracts.

Prominent law firm partners who provide major support to a successful candidate, for example, might have some say in the makeup of the new administration. They certainly place members of their firms in a better position to receive a handful of highly coveted positions as counsel to independent state agencies such as the New Jersey Turnpike Authority. And because these firms act as advocates for some of the state’s largest corporate clients, they stand to benefit immensely from an ability to offer clients access to all levels of state government right up to the governor’s office.

THE STAKES FOR PICKING A WINNER are high enough for lawyers from most prominent firms simply to dump cash into the campaign coffers of both Republican and Democratic candidates. When the state Democratic committee holds its own fundraiser, headlined by Woodbridge mayor Jim McGreevey, the party’s likely gubernatorial nominee, at the Convention and Exposition Center in Edison, the same lawyers who attended DiFrancisco’s bash a month earlier in East Brunswick will be right back in there, writing checks, schmoozing, professing their support.

“Our firm is involved on both sides, so it doesn’t matter to us which party is in power,” says Michael Horn, a partner at Newark-based McCarter & English, New Jersey’s largest law firm. A state banking commissioner and state Treasurer under former Republican governor Thomas Kean, Horn is also a registered lobbyist and has personally donated more than $20,000 to Republican campaigns and state committees over the past twenty years. “On a personal basis, I happen to enjoy the political involvement,” says Horn, a former chairman of the state Pension and Health Benefits Review Commission. “Not everyone does.”

Dale Florio enjoys it too. The chairman of the Somerset County Republican Party and a partner with Princeton Public Affairs Group in Trenton, one of the state’s largest lobbying firms, Florio often works closely with prominent law firms on behalf of clients. “I don’t know how you can avoid politics if you are a law firm that is doing business or labor work in the state,” Florio says. “You would just want to know the people that make the decisions on all sides.”

As a group, trial lawyers garner the most attention among legal professionals for their political donations, but New Jersey’s well-connected law firms far surpass them in combined giving. According to a study on special-interest giving by the Princeton-based Center for Analysis of Public Issues, between 1993 and 1997 the Trial Lawyers Association of America contributed $845,835 to state party committees, legislative leadership political action committees, and individual candidates, tipping the list for the legal profession.

But the study also listed six politically savvy law firms, most of whom routinely receive hefty state contracts, among New Jersey’s largest special-interest donors. Call them The Players: Riker Danzig ($359,845), DeCotiis, FitzPatrick Gluck Hayden & Cole ($277,700), McCarter & English ($273,395), Sills Cummis Radin Tischman Epstein & Gross ($258,466), Wilentz Goldman & Spitzer ($220,700), and Lowenstein Sandler ($210,275).

Although most firms tend to split their donations fairly evenly between Republicans and Democrats, others align themselves with a particular party. Riker Danzig, for example, maintains close ties to Republicans. And since its founding in 1919 by Democratic power broker David T. Wilentz, the flamboyant state Attorney General who in the 1930s prosecuted Bruno Richard Hauptmann in the Lindbergh kidnapping case, Wilentz Goldman & Spitzer, based in Woodbridge, has sided with the Democratic camp. Warren W. Wilentz, a distinguished 77-year-old partner and the founder’s son, is a member of McGreevey’s finance committee.

Since the 1970s, when state Attorney General William Hyland joined Riker Danzig, the firm has employed a steady stream of erstwhile state government officials, among them former deputy attorneys general Mark S. Rattner and Dennis J. Krumholz, and John M. Pellecchia, who was assistant counsel to Governor Kean. Recently, Sheridan says, Riker Danzig hired John Kohler, former governor Christine Todd Whitman’s deputy chief of staff, as a lobbyist.

Riker Danzig has even opted not to take on casino-industry clients so that its government recruitment efforts won’t run afoul of state law, which bars senior state officials from working for any organization with ties to the gambling industry for two years after they leave state government. As a result, Sheridan says, Riker Danzig has developed a broad range of contacts in Trenton and a reputation as a firm that specializes in state government affairs. “It is something that differentiates us from other firms. And while there may be other firms who are also active, we are probably the most prominent,” says Sheridan. “We know and understand New Jersey state governance better than anybody.”

SINCE 1994, WHEN WHITMAN TOOK OFFICE as governor, Riker Danzig has held the state’s single most prestigious and lucrative legal contract: general counsel to the Turnpike authority. Last year alone the authority paid Riker Danzig legal fees of $4.3 million, an amount that dwarfs that of any other public-sector legal contract in New Jersey.

The outside counsel position at the Turnpike authority, like similar positions at the New Jersey Sports and Exposition Authority and the New Jersey Highway Authority, which operates the Garden State Parkway, is often viewed as a patronage appointment doled out by the governor. Asked whether donations to Whitman’s gubernatorial campaign in 1993 by lawyers from Riker Danzig led to the firm’s winning a contract with the Turnpike authority, Sheridan responds, “I think we got considered because of that. I don’t think we got it because of that.” Rather, he says, it was the firm’s experience in pertinent areas of the law and his own experience as New Jersey’s commissioner of transportation that cemented the appointment.

“Contributions are a significant factor—I won’t deny that,” says McCarter & English’s Horn, “but personal involvement is important—being present at [campaign] strategy meetings. And I should say abilities do count.”

Former governor Jim Florio says that independent state Authorities make their own decisions on outside legal counsel, though he acknowledges that a governor can exert influence over such appointments—“if one wanted to.” A firm’s competence is the key to receiving state positions, says Florio, adding that there is “most assuredly not” any quid pro quo for guaranteeing a big law firm donor a political sinecure. “There are folks who have ambitions to those positions far in excess of their abilities, and they are not treated seriously by those authorities,” Florio says. A Democrat, Florio says he never bypassed a law firm because of its ties to the Republican party. Sheridan concurs, saying, “I had a very active practice during Governor Florio’s administration.” And while Sills Cummis maintains active ties to Democrats, the firm managed to conduct more than $340,000 worth of business with the state Banking and Insurance Department in fiscal year 2000, when Republicans served in the governor’s office and held sway in both houses of the state Legislature.

“Obviously the big ones—the Turnpike authority, highway authority, sports authority—are plums to get,” says Horn. “But to be very frank, they are often at vastly reduced rates, so it is a mixed blessing. Although obviously it’s nice to get legal assignments out of being involved, access is, in my mind, even more important than the assignments.” The sort of access to which Horn refers brings clients face-to-face with officials in the legislative and executive branches. “The ability to arrange those meetings is even more important than any [government] assignments we might get,” he says. In one case, Horn recalls, a business client was not being treated appropriately by a state agency. “I was able to bring it to the attention of the commissioner, who looked into it and rectified the situation,” Horn says.

Many law firms employ partners who are registered lobbyists, and often their legal work on behalf of clients bleeds into lobbying activity, whether it’s steering them through a regulatory process or actual legislative advocacy. Law firms that work for the state also may lobby state agencies on behalf of other clients, but they need only to disclose their lobbying relationships with the state Election Law Enforcement Commission (ELEC), as any other lobbyist must do.

In its ELEC filings, Riker Danzig simply files total fees received from its private clients rather than attempt to untangle what percentage paid for legal work and what paid for lobbying. The firm’s most recent annual report of legislative activity filed with ELEC lists among lobbying fees $104,495 from Newark Sports & Entertainment LLC. But an asterisk directs readers to a note: “Includes fees for legal services, some of which may not be specifically reportable under the [lobbying disclosure] Act and Regulations.”

ALTHOUGH NOT OF THE MAGNITUDE of Riker Danzig’s position as general counsel to the Turnpike authority, a handful of other law firms win state contracts worth hundreds of thousand of dollars a year. And like Riker Danzig’s, these contracts typically date to the arrival of the Whitman administration in 1994.

Last year Courter Kobert Laufer & Cohen of Morristown, general counsel to the sports authority, took in over $295,000 in fees. As general counsel to the highway authority, Teaneck-based DeCotiis FitzPatrick & Gluck received more than $380,000. As a conflict counsel to the Turnpike authority, Lakewood-based Bathgate Wegener & Wolf earned more than $470.000.

Riker Danzig is also the standard-bearer among New Jersey’s leading public bond counsels. Bond counsels furnish legal opinions on the tax status of public bonds and the legal implications of trading them for the issuer and purchaser. And unlike general counsels for state authorities, bond counsels are subject to a formal bid process.

According to a ranking compiled by Thomson Financial Securities Data, last year Riker Danzig served as counsel for the state on sixteen bond issues, with a total princepal amount of more than $2.4 billion, nearly a third of the principal amount of all bonds issued in New Jersey in 2000. The New York firm of Hawkins Delafield & Wood ranked second, with just under $2 billion in principal amount, followed by McCarter & English with nearly $1.4 billion. The state Attorney General’s office reported that in fiscal year 2000 Riker Danzig managed to earn $958,500 fees from an assortment of state agencies. For the same period, McCarter & English received fees of $824,000 and several other firms received more than $400,000 for state bond work.

“You can’t deny that there is a nexus between political support and government work, but it’s not illegal,” says John L. Kraft, a prominent bond attorney who recently left Lowenstein Sandler of Roseland to start his own practice. “This is the way our society works, and it is all public because it is reported to the Election Law Enforcement Commission.”

Yet critics like Curtis Fisher, the executive director of New Jersey Public Interest Research Group, would rather see law firms—even the most generous ones—bid openly on state contracts. “The professional services provided to municipalities and to the state should be open bid,” Fisher says. “New Jersey citizens would receive reduced taxes and in some cases better services.”

But the manner in which law firms ingratiate themselves with high-ranking state officials illustrates just one aspect of New Jersey’s so-called pay-to-play political system, one largely driven by money. “It is a problem that goes beyond lawyers,” says Harry Pozycki, chairman of Common Cause New Jersey, a citizens’ advocacy group.

DECOTIIS FITZPATRICK & GLUCK may not rank among the biggest firms in the state, but it’s one of the best examples of how deeply intertwined government and private law firms can become. Like few other firms, DeCotiis FitzPatrick & Gluck aggressively cultivates personal ties to government on a bipartisan basis and profits from a vast amount of government-awarded business. As recently as 1995 the firm derived more than 90 percent of its revenue from public sector business, although last year that percentage fell to about 50 percent, co-managing partner Robert DeCotiis told the New Jersey Law Journal last year.

In addition to its state government business, DeCotiis FitzPatrick & Gluck performs a substantial amount of legal work for municipal and county governments and for public authorities throughout central and northern New Jersey. County contracts can be more lucrative than state contracts, bringing in hundreds of thousands of dollars a year. Pozycki says these contracts almost exclusively depend on political contributions to county and local elected officials. Should a local or county official’s political fortunes grow, he says, any professional with long-standing ties to them tends to benefit financially.

If there’s any doubt that government business can be profitable, DeCotiis FitzPatrick & Gluck erases it. For two years running, the Law Journal has ranked the firm as the most profitable of the twenty top-grossing law firms in the state. The firm averaged $781,800 in profits per partner in 1999, the highest recorded by the Law Journal since it began its annual survey in 1987. “They play the game to win,” says Dale Florio.

DeCotiis FitzPatrick & Gluck also has been hired to defend the state police against nineteen lawsuits brought by minority troopers and civilians. During the fiscal year that ended June 30, 2000, the firm earned more than $1.6 million, according to the state Attorney General’s Office. Michael Cole, a DeCotiis FitzPatrick & Gluck partner and a chief counsel to former governor Kean, leads the firm’s defense team in the state police litigation. Cole is married to state Supreme Court justice Jaynee LaVecchia, a Whitman appointee who previously served as state banking and insurance commissioner. But while the firm maintains a high profile in Trenton’s corridors of power, apparently it prefers not to advertise its position of influence. DeCotiis, a former chief counsel to Governor Florio, said neither he nor any member of his firm would comment for this article.

Michael Gluck, who runs the firm’s Trenton office, handling public bond and healthcare business as well as lobbying for clients, is the son of Hazel Gluck, a Whitman confidante and president of GluckShaw Group, a prominent Trenton lobbying firm. Hazel Gluck notes that she sometimes works in concert with her son’s firm and sometimes competes against it, as she does with other law firms. “Interestingly enough, when I work with DeCotiis FitzPatrick & Gluck, I rarely work with him,” she says of her son, “because he does mostly bonding work and he does some health work. I usually work with the firm’s office up in northern New Jersey.” Gluck says she sees her son regularly at Republican fund-raising events “and when I go see my grandchildren,” but makes a point of not always talking politics with him.

After a nice run during the Whitman years, DeCotiis FitzPatrick & Gluck, like many other law firms, must now brace for a period of uncertainty. Michael Gluck is firmly behind DiFrancesco’s gubernatorial bid; he and his mother serve as campaign finance committee vice-chairs. DeCotiis, meanwhile, prefers to play both sides of the political aisle. The McGreevey campaign identifies him as a member of its finance committee, though DeCotiis says he’s raising money for Democrats and Republicans.

As all politically connected law firms in the state know, nothing beats long-standing financial support of a politician as he or she rises from local to statewide prominence. But scads of money thrown his or her way late in the game is a good substitute. Last December, as the governor’s race was just beginning to heat up, no fewer than sixteen members of DeCotiis FitzPatrick & Gluck, including staunch Republicans like Gluck and Cole, donated a collective $23,500 to the McGreevey campaign’s primary election fund, almost edging out Wilentz, Goldman & Spitzer’s quarterly tally of $26,000. And a whole new round of giving begins after this month’s primary.

From now until election day, the political heavyweights of New Jersey’s legal profession will keep busy rewiring their networks of potential executive-branch contacts. No matter who is sworn in as governor next January, they’ll be looking on contentedly, positioned right where they want to be.