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Posts Tagged ‘AIG’

After Steve Spierer invited me to be a guest on his radio show on Talk Radio One, he told me we’d probably do a 30-minute segment.  Then he added a caveat:  “If we’re really on fire, we could go the full forty-five.”

Apparently we achieved ignition, because we ran the full forty-five.  Steve’s a terrific host, and kept things moving with perceptive, challenging questions.  He also arranged  for a caller – Matt, a young first-year lawyer at a top-100 firm.  It was a first – the People’s Therapist live on the air with one of the sort of people he’s always writing about, talking about what he’s always writing about.  A moment of truth.

To hear the show, click here.

For the show’s website, click here.

Steve’s a fascinating guy – a real estate lawyer with decades of experience, who also hosts a radio show about books and authors, issues of personal growth and – sound like the People’s Therapist? – the law.  I couldn’t have asked for a better match between interviewer and interviewee.

For more information on Steve and his show, click here.

I’m on for the first forty-five minutes, but stick around for the final fifteen, where Steve provides his listeners a savvy take on trends in the real estate market. His opinions might not be what you’re expecting, but he knows what he’s talking about and he leaves you thinking.

Thanks for having me on the show, Steve – and thank you, Matt, for calling in and keeping The People’s Therapist on his toes.

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If you enjoy The People’s Therapist, check out his new book!

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I’ve always been awestruck by tax lawyers. They are the dudes.

As a transactional attorney, you can’t make a move without a tax guy. M&A is based on IRS consequences. It’s the tax guy who hands you a chart with boxes and arrows, holding companies and off-shore limited partnerships buying and selling and re-selling and issuing and repurchasing and spinning off. Everything starts there.

Tax lawyers do stuff no one else would attempt. They swagger out the door at 5 pm.

“Don’t start with me. I’m in tax.

Way back when, I took an advanced tax course in law school – to see if I could roll with the gangstas. I even took it the wrong semester, so instead of JD students, it was LLM’s snickering at my desperation. I received my lowest grade ever. I also discovered tax law is like higher mathematics: there is no big picture. Tax is not intuitive or guided by over-arching principle; it’s a mess of staggering, intimidating complication.

What I’ve come to realize lately, as a therapist working with tax lawyers, is that these seemingly unapproachable superstars are human. And being “the expert” can exact a toll.

One guy – a senior tax lawyer from a big city firm – walked into my office last week. He had the usual frustrations. In an ordinary economy he’d be making partner soon, but business was terrible, so even the partners at his firm were being laid off. He was expecting a pink slip.

There was a deeper issue, too: He didn’t like being a tax lawyer.

I gave him a speech about my admiration for his kind.

He appreciated the fawning worship, but his expression remained grim.

“What you describe is actually what I hate about it.”

It turns out being “the expert” can be isolating – and scary. From where he’s sitting, there’s incredible pressure to know everything and solve every problem.

He clued me in to his experiences, and in the process brought me down to Earth. Tax lawyers aren’t a race of super-beings from Planet Krypton. Tax is incredibly complicated for them, too. The job is about helping rich people avoid the IRS, which translates into “gaming” each tax law to create loopholes that the government closes up in the next version the following year.

There isn’t just a “tax code,” either. There’s an endless labyrinth of fine print: contradictory court decisions, administrative regulations, IRS guidances, state and local and international consequences for every move you make…it goes on and on and on, twisting and turning like something from the imagination of Borges or Kafka.

The mind reels. At least my mind reels. I always believed that – by some miracle – if you were a tax lawyer, your mind didn’t reel.

My client was a senior tax guy at a top firm. His mind was beginning to reel.

“They want to hear you say it’s possible – whatever deal they dream up. So you’re under massive pressure to find a way to do it. And it’s all riding on you. If you screw up… I try not to think about it.”

I thought about it. The entire deal blows up – probably in the papers. Millions of dollars lost by your client, who might try to sue you. Criminal penalties. Malpractice. Disbarment. All that bad stuff.

It’s like writing an opinion letter. No lawyer wants to write an opinion letter. Why? The same reason no one wants to step into the sights of a high-powered rifle.

“I can’t do this anymore,” this guy said. “I feel like I’m wracking my brain, dealing with incredible complexity, holding on by my fingertips – all to save billionaires from paying their due.”

It isn’t only tax lawyers who end up “the expert.” We had a bunch of experts at Sullivan & Cromwell. I remember an environmental guy whose only job was to review deals for pollution issues. There was an ERISA guy, too, who only reviewed stuff for ERISA issues (whatever they are).  And there was a strange tall guy with a mustache who always smiled and whistled to himself. He was the ’40 Act guy. I once sat through a CLE presentation he gave, and remember thinking it wasn’t that I didn’t understand the details – I couldn’t figure out what the ’40 Act was.

Sometimes the role of expert seems like a hot potato – everyone wants to pass it off to someone else. I remember doing a deal with AIG – some complicated nightmare with a dozen side agreements and sub-corporations selling and repurchasing their own holding corps. At the umpteenth drafting session, a banker scribbled down a formula on a napkin – no kidding, it was a mathematical formula, and he said “stick this in there.” They’d been arguing for days about some clause in the back of the contract and this is what he told us to stick in there. I looked at it. There was what I recognized as a numerator, and a denominator, and a bunch of letters.

The partner glanced at it and told the of counsel to stick it in there. She handed it to me, and told me to stick it in there. I stuck it in there, but I didn’t know what it was.

Of course, I knew the general rule that you’re not allowed to put math into a contract, you have to put it into plain English. So that’s what I tried to do: “the Pre-determined Selling Price shall be determined by a formula in which the numerator shall be the amount of the Settlement Price and the denominator shall be one added to the amount of the Sales Price multiplied by the First Pre-Settlement Price minus the Third Sub-Corporation Preliminary Offering Variable…”

You get the idea. I had no idea what I was doing. I tried, a few times, inserting numbers, just to see what would happen. The first time I got something like one hundred billion dollars. I knew I’d done something wrong. The second time I got something like 0.000125782 dollars.

I should add that it was late at night and I’d been wearing the same wool suit for 17 hours.

I gave up and handed it nonchalantly to the of-counsel. No biggie. I’d “taken a stab at it.” She might yell at me, but she’d know what to do. If she had to, she’d fix it herself.

But she didn’t.

I watched her disappear into the partner’s office, then return. Her face was set. She approached my desk and plopped the offending passage down in front of me.

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There comes a time in every big law firm lawyer’s career when things take a turn for the deeply serious. After two or three years, someone turns to you and says “okay – you own this,” and suddenly you’re no longer a glorified secretary or paralegal or guy/gal Friday – you’re an actual lawyer.

That’s when most biglaw attorneys think seriously about fleeing for their lives.

For me, the moment of truth arrived after a meeting near the top floor of the skyscraper at 70 Pine Street in Lower Manhattan, one of New York City’s iconic spires.

Nowadays we all know AIG as a smoking crater owned by the US government, but back then it felt pretty good to get waived past the guard in their Art Deco lobby and take the special elevator all the way up to the executive suite, stroll into the boardroom and help myself to a cheese danish.

My job that morning, as I understood it, was to play the part of a little second year along for the ride. I was accompanying an of-counsel from S&C, who actually knew what was going on. I worked hard to look the part, act serious and important and try my best to figure out what they were talking about.

The meeting lasted a couple hours – something to do with deciding on a structure for a deal involving the purchase and simultaneous sale of some smaller companies in the insurance business. The guy doing most of the talking was Howie Smith, AIG’s CFO. I smiled and played along.

Afterwards, we admired the view out the window – eighty-five floors up – traded gossip about Hank Greenberg’s palatial mansion, and chatted with Howie Smith’s son, Mikey, who was visiting the office and wanted to become a lawyer. Then we stepped back into the fancy elevator for the ride back down.

As the doors closed, I felt a chill. The of-counsel handed me a heap of papers.

“Okay, she snapped. “You own this deal.”

I gaped at her, uncomprehending. Didn’t she realize I was a mere child? A babe in the woods? Totally unprepared for such weighty responsibilities?

“Uh…really?” I sputtered.

She was already gazing at the flashing lights indicating descending floors, unaware of my existence.

That was that. I was screwed.

I had absolutely no idea what I was doing.

It’s one thing to be a first or even a second year corporate attorney. Pretty much anyone can handle setting up closing tables and “running changes” and setting up meetings and “taking a stab” at drafting this or that. But then someone turns to you in an Art Deco elevator and hands over the whole mess.

Generally speaking, that’s your clue to run for the hills.

I know – you still have loans, and each and every paycheck is one more step towards freedom, but let’s get serious – you either are one of those people who can turn into a biglaw senior associate, or god forbid, a partner – or you’re not. You can’t fake it – and someone in a position of power is going to figure it out eventually.

I don’t know what the precise equivalent of that elevator ride is for litigators. Maybe it’s “owning this deposition” or “owning this brief.” I honestly have no idea. But you’ll know it when you see it. Whatever it is, if you’re not really one of them, and you’ve been faking to get by – well, that’s your clue to hit the highway.

Of course, it’s always possible you are one of them.

I knew a guy at Sullivan & Cromwell, a few years ahead of me, who clearly fit the bill. After our first day working together, it was apparent I was in for hell, but when he didn’t seem to need me at 7:30 pm, I slipped out of the office and made it home. I was walking my dog in a mood of mournful introspection when the cell phone rang. An icy trickle of sarcasm leaked from the receiver.

Yep, it was him.

“Umm…Will? You comin’ back?”

“Right away.”

And back I went. We stayed up the entire night while he ran around like a speed freak, mumbling to himself and ordering me to alter documents, print them out and fax the whole mess to Bahrain, London, Beverly Hills, Budapest, Paramus, wherever.

This was a fourth year associate, “running his own deal.”

Nowadays this guy’s a partner, and from the reports I’ve received, even at S&C he’s considered a little nuts.

For me, it was that night – and the long unbroken chain of nights like it that followed – that drove home the reality I’d never be someone who “ran my own deals.”

To become a senior associate, you have to drink a fair amount of Kool-Aid. It means taking the plunge – going in deep, and actually assuming responsibility for very very serious things. You turn into the person who calls terrified first-years and sarcastically tells them to get their asses back in for another all-nighter. You become the person who curses everyone else for being useless and not working hard enough. You become the guy faxing side agreements to Bahrain at 5 a.m.

Eventually, if lightning strikes – at least in the old days when lightning still struck – you turn into the partner who terrorizes everyone around you. You enter the heart of the beast.

But that probably won’t happen.

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