Does Rose Have Something to Hide?

By Richard Lacayo

The attorneys at the Rose Law Firm of Little Rock have always liked to operate near the center of power. Their first woman partner was Hillary Rodham Clinton, who got the title in 1979, the same year her husband became Governor. When she became First Lady, she took three other partners with her to Washington, where Vincent Foster and William Kennedy became White House counsels and Webster Hubbell was named Associate Attorney General. The future looked so promising that Rose opened a one-man Washington operation to explore opportunities for establishing a permanent office.

But sometimes it doesn't pay to get too close to the seat of power. The lawyers at Rose have spent much of the past few weeks trying to contend with the tributaries of Whitewater that run straight through their firm -- and the whirring noise of a shredder. Two college students employed as couriers in the Little Rock office say that in late January, after the special counsel began his Whitewater investigation, they shredded materials from the office of Foster, who had handled some of the Clintons' Whitewater dealings, and who committed suicide last July. Senior attorneys are said to be watching miserably as the firm's white shoes are dragged through the mud. "Yeah, it's more tense," says Jeremy Hedges, one of the shredders. "But then, it's always been tense."

With roots going back to 1820, the firm takes its name from U.M. Rose, a founder of the American Bar Association. By the 1980s, when its growth took , off under the direction of C. Joseph Giroir, a securities specialist, it had long been the cream of Arkansas firms. Its list of present and former clients includes some of the state's biggest businesses, including Tyson Foods, Wal- Mart and TCBY, the national yogurt franchiser, as well as Little Rock Airport Commission and the Federal Deposit Insurance Corporation, which oversees banks.

That client roster, mixing businesses with government regulators, sometimes led to conflict-of-interest accusations. In 1988 the firm and its insurer paid $3 million to settle a conflict charge stemming from the failure of FirstSouth Savings and Loan. At the insistence of Senate Republicans, the FDIC has reopened a conflict-of-interest investigation involving Madison Guaranty, the failed S&L headed by James McDougal, the Clintons' partner in Whitewater. In 1989 the firm represented the FDIC in a suit against Madison's auditors, despite the fact that, four years earlier, Hillary had dealt with state regulators on Madison's behalf.

Spokesmen for the firm say it began shredding to protect confidential client information during the 1992 primary campaigns, when reporters were discovered rummaging through office garbage. In late January, after special counsel Robert Fiske announced the start of his Whitewater investigation, Hedges and another courier, Clayton Lindsey, say they spent an hour shredding documents plainly marked VWF. The only lawyer at the firm with those initials was Vince W. Foster. At a meeting with managing partner Ronald Clark and others a few weeks later, they were informed that they would have to answer FBI questions and testify before the Whitewater grand jury. Hedges says they were told to tell the truth and "not to do anything to protect the firm." But when Hedges informed senior partner Jerry Jones that he would tell the FBI he had shredded Foster documents, Jones replied, "Don't assume they were his documents." According to Hedges, when he answered in turn that he was certain, Jones told him, "Don't assume that they have anything to do with the investigation."

Rose partners shrug off the story, insisting, plausibly, that if they had anything to hide, they would not have gotten two lower-rung employees to do their dirty work. Hedges says senior partners would be just as unlikely to risk attracting suspicion by doing something out of the ordinary -- like their own shredding. "People get suspicious."

Tired of the spotlight -- and of being compared to the fishy practitioners in The Firm -- Rose is showing the strain. Some members of the firm have knives out for the big names whose troubles have come back to haunt the firm. They leaked word that Rose was conducting an internal review of Hubbell to determine whether he had overbilled clients and misused his expense account. And politically conservative partners are also said to be itching to undercut Rose alumni attached to the Democratic White House. The Washington Times reported last week that in connection with the expense-account questions, an unidentified group of partners is thinking of filing an ethics complaint against Hubbell with the Arkansas Supreme Court.

The Whitewater fallout is also being felt by Rose's man in Washington, Allen Bird II. But he predicts Rose will pursue plans to open "a legislative practice" in Washington, a term for lawyer-lobbyists. While he promises they won't be selling access, that won't keep them from picking up the phone: "We decided we would feel free to contact anyone in the Administration anytime we felt it was appropriate, legal and ethical." It's hard to know how much comfort to take from that.

With reporting by Richard Behar/New York and Suneel Ratan/Little Rock