He read it at home where he was, thankfully, alone because Ridley was spending a day or two at her new apartment, one Clay had signed the lease for. She wanted the freedom of living in two places, hers and his, and since her old flat was quite cramped Clay had agreed to put her up in nicer digs. Actually, her freedom required a third place - the villa in St. Barth, which she always referred to as "ours."
Not that Ridley read newspapers anyway. In fact, she seemed to know little of Clay's problems. Her increasing focus was on the spending of his money, with not much attention to how he made it. If she saw the story on page three, she didn't mention it. Nor did he.
As another bad day wore on, Clay began to realize how few people seemed to acknowledge the story. One pal from law school called and tried to cheer him up, and that was it. He appreciated the call, but it did little to help. Where were his other friends?
Though he tried mightily not to do so, he couldn't help but think of Rebecca and the Van Horns. No doubt they'd been green with envy and sick with regrets when the new King of Torts had been crowned, just weeks earlier, it seemed. What were they thinking now? He didn't care, he told himself again, and again. But if he didn't care, why couldn't he purge them from his thoughts?
Paulette Tullos dropped in before noon and that raised his spirits. She looked great - the pounds were off, the wardrobe was expensive. She'd been bouncing around Europe for the past few months, waiting for her divorce to become final. The rumors about Clay were everywhere, and she was concerned about him. Over a long lunch, one she paid for, it slowly became apparent that she was also worried about herself. Her cut of the Dyloft loot had been slightly over $10 million, and she wanted to know if she had exposure. Clay assured her she had none. She had not been a partner in the firm during the settlement, just an associate. Clay's name was on all the pleadings and documents.
"You were the smart one," Clay said. "You took the money and ran."
"I feel bad."
"Don't. The mistakes were made by me, not you."
Though Dyloft would cost him dearly - at least twenty of his former clients had now joined the Warshaw class action - he was still banking heavily on Maxatil. With twenty-five thousand cases, the payday would be enormous. "The road's kinda rocky right now, but things will improve greatly. Within a year, I'll be mining gold again."
"And the Feds?" she asked.
"They can't touch me."
She seemed to believe this and her relief was obvious. If, in fact, she did believe everything Clay was saying, she was the only one at the table who did so.
The third meeting would be the last, though neither Clay nor anyone on his side of the table realized it. Joel Hanna brought his cousin Marcus, the company's CEO, with him, and left behind Babcock, their insurance counsel. As usual, the two faced a small army on the other side, with Mr. JCC sitting in the middle. The king.
After the customary warm-ups, Joel announced, "We have located an additional eighteen homes that should be added to the list. That makes a total of nine hundred and forty. We feel very confident that there will not be any more."
"That's good," Clay said, somewhat callously. A longer list meant more clients for him, more damages to be paid by the Hanna company. Clay represented almost 90 percent of the class, with a few scattered lawyers hanging around the fringes. His Team Hanna had done a superb job of convincing the homeowners to stick with his firm. They had been assured that they would get more money because Mr. Carter was an expert at mass litigation. Every potential client had received a professionally done packet touting the exploits of the newest King of Torts. It was shameless advertising and solicitation, but those were simply the rules of the game now.
During the last meeting, Clay had reduced his demands from $25,000 per claim to $22,500, a settlement that would net him fees in the neighborhood of $7.5 million. The Hanna company had countered with $17,000, which would stretch its borrowing capacity to the breaking point.
At $17,000 per home, Mr. JCC would earn about $4.8 million in fees, if he clung to his 30 percent contingency. If, however, he cut his share to a more reasonable 20 percent, each of his clients would net $13,600. Such a reduction would reduce his fees by roughly $1.5 million. Marcus Hanna had found a reputable contractor who would agree to repair every home for $13,500.
It had become apparent during the last meeting that the issue of attorneys' fees was at least as important as the issue of compensating the homeowners. However, since the last meeting there had been several stories about Mr. JCC in the press, none of them good. A reduction in fees was not something his firm was prepared to discuss.
"Any movement on your side?" Clay asked, rather bluntly.
Instead of just saying "No," Joel went through a short exercise in discussing the steps the company had taken to reevaluate its financial situation, its insurance coverage, and its ability to borrow at least $8 million to add to a compensation pool. But, sadly, nothing had really changed. The business was on the downslope of a nasty cycle. Orders were flat. New home construction was even flatter, at least in their market.
If things looked grim for the Hanna Portland Cement Company, they were certainly no better on the other side of the table. Clay had abruptly stopped all advertising for new Maxatil clients, a move that greatly relieved the rest of his firm. Rex Crittle was working overtime to cut costs, though the culture of JCC had yet to adapt to such radical notions. He had actually broached the subject of layoffs, and in doing so provoked a nasty response from his boss. No significant fees were being generated. The Skinny Ben fiasco had cost them millions, instead of generating another fortune. And with ex-Dyloft clients finding their way to Helen Warshaw, the firm was reeling.
"So there's no movement?" Clay asked when Joel finished.
"No. Seventeen thousand is a stretch for us. Any movement on your side?"
"Twenty-two thousand five hundred is a fair settlement," Clay said without flinching or blinking. "If you're not moving, then neither are we." His voice was hard as steel. His staff was impressed by his toughness, but also anxious for some compromise. But Clay was thinking of Patton French in New York, in the room full of big shots from Ackerman Labs, barking and bullying, very much in control. He was convinced that if he kept pushing, Hanna would buckle under.
The only vocal doubter on Clay's side was a young lawyer named Ed Wyatt, the head of Team Hanna. Before the meeting, he had explained to Clay that, in his opinion, Hanna would benefit greatly from protection and reorganization under Chapter 11 of the bankruptcy code. Any settlement with the homeowners would be delayed until a trustee could sort out their claims and decide what compensation was reasonable. Wyatt thought the plaintiffs would be lucky to get $10,000 through Chapter 11. The company had not threatened bankruptcy, a normal ploy in these situations. Clay had studied Hanna's books and felt that it had too many assets and too much pride to consider such a drastic move. He rolled the dice. The firm needed all the fees it could squeeze.
Marcus Hanna abruptly said, "Well, then it's time to go." He and his first cousin threw their papers together and stormed out of the conference room. Clay tried a dramatic exit too, as if to show his troops that nothing fazed him.
Two hours later, in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania, the Hanna Portland Cement Company filed a Chapter 11 petition, seeking protection from its creditors, the largest of whom were those collected in a class action filed by J. Clay Carter II of Washington, D.C.