ADDITIONAL COMPENSATION TO SPECIAL COUNSEL IN CASE OF DOHENY EXECUTORS

MONDAY, MARCH 20, 1939

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE No. 2 OF THE COMMITTEE ON THE JUDICIARY,

Washington, D. C.

The subcommittee met, pursuant to notice, at 10:30 a. m., Hon. Zebulon Weaver presiding, for further consideration of H. R. 4366. Mr. WEAVER. The committee will come to order.

STATEMENT OF HON. HAROLD M. STEPHENS, ASSOCIATE JUSTICE, UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA-Resumed

Justice STEPHENS. Mr. Weaver, I should like to briefly supplement the statement I made the other day. If I may, I should like to be heard first, so that I can get back to other matters to which I have to attend.

Mr. WEAVER. All right, Judge Stephens, we will be glad to have you make any additional statement you desire to make.

Justice STEPHENS. My name is Harold M. Stephens. I testified in this hearing on Friday. At the last hearing, gentlemen, Mr. Chandler asked me if I wished to make a statement concerning the reasonable value of the services rendered by Mr. Martineau and Mr. Lewinson. I told him at that time that I felt I ought not to do so, because I had understood that the policy of Mr. Cummings had been that we should leave that matter to the judgment of the Congress.

Saturday afternoon, however, I decided I ought to call up the former Attorney General, Mr. Homer S. Cummings, by long-distance telephone. I talked to him over the telephone in his hotel in Augusta, Ga., and told him what was transpiring here, and I asked him what position he wished to take, and what position he thought I ought to take in respect of our testimony on this subject. He stated that his testimony and his point of view last year was that while it was not proper for himself or myself to voluntarily go into a matter of congressional jurisdiction, at the same time, if the committee wished to know his views or my views as to what was the reasonable compensation for these gentlemen, he said he would be glad to respond by telegram or by letter or he would come here before the committee next Friday when he returns to Washington, and testify personally. He also authorized me, if you wish me to do so, to state what his views are in the matter with respect to the reason

ableness of the compensation, and I am also willing, if you wish me to do so, to express my own views on reasonable compensation. Mr. WEAVER. Yes; we should be glad to have you do so.

Justice STEPHENS. Do you wish me to state what Mr. Cummings said, or do you prefer that I state my own opinion and to communicate with him directly?

Mr. WEAVER. I am sure that will be all right.

Justice STEPHENS. It is at your pleasure, Mr. Chairman, because he will be glad to confirm it by wire or by letter or by his personal appearance before the committee.

Mr. WEAVER. Tell us what he said, and then we would like to have your views, Judge.

Justice STEPHENS. He stated to me, that, in his opinion, and he authorized me to say this to you in his behalf, the reasonable compensation for the services involved in this matter would be 10 percent of the amount of recovery. He also stated that Mr. Blair, who is here this morning, might express his views as a former official of the Department of Justice if he wished to do so.

Now, so far as my own views are concerned, you will remember I stated in answer to Mr. Chandler that I did not have personal contact with the detail of the litigation, and that I went on the Federal bench at about the time the litigation was commenced. Therefore, except by informal contact with Mr. Martineau and Mr. Lewinson, I have not had detailed acquaintanceship with the litigation. I have, however, had occasion to read carefully the statement prepared by Mr. Lewinson and by Mr. Martineau which had been submitted to this committee and the Department, describing their work that was done in connection with this case. I have also listened to the testimony of Mr. Hogan and Mr. Hurley descriptive of the services rendered and the results obtained. I have been at the bar myself for 26 years, part of the time as a practicing lawyer and part of the time as a public officer, as a trial judge, as assistant prosecuting attorney, and in the Federal court of appeals. I have also been in responsible civil practice for a substantial period of years. My opinion of the reasonable compensation for the services rendered in view of the results accomplished in this case would be 10 percent. of the amount of recovery, crediting thereon what has been paid heretofore.

I feel also that I ought to say this in addition, gentlemen, that I feel very earnestly that the Government in fairness ought to augment the compensation of these gentlemen in such substantial degree as seems fair to Congress in view of the testimony given, because they came into the litigation with reluctance, and because at the time they came into it it was an emergency situation which made it impossible to await the enactment of special legislation to fix compensation. Instead, they went ahead and relied upon the policy or the precedent Congress had established in the similar litigation that preceded this. I think that in fairness to them and in view of the general policy of the United States Government in the oil fraud cases that they should be adequately compensated for the work they have done. I submit these opinions very respectfully and very earnestly, and I thank you very much. Unless there are some questions you desire to ask, that is all I have to say.

Mr. MASSINGALE. Judge, of course, as you are aware, the members of this committee think they are lawyers. They have been admitted to practice. I feel that is more applicable to me, probably, than the others, because I have only been a country lawyer with a limited practice, but I have the same inclination that you have, I believe, in compensating lawyers for such service as these gentlemen have evidently rendered to the Government of the United States. I think it has been a marked kind of service and denotes the very best of ability and legal fitness to handle a job of this size. However, I think we ought to put ourselves in the attitude of not necessarily defending against the claim, but of putting ourselves in a position to advise the other Members of Congress how we arrived at the fee. Now, if you do not mind it I will just ask you this question: Would you hesitate to give to the committee what you regard in money as a fair and reasonable and adequate compensation to these gentlemen who have rendered this service for the time they have put into the work on the basis of fees generally put in work of like character?

Justice STEPHENS. I have no hesitation in doing that, and I have, in effect, done that by stating 10 percent of the amount of recovery less the amount already paid. I think that $300,000 taking into consideration the amount recovered and the services rendered and the time involved and the responsibility involved and the difficulty of the litigation, that $300,000, less substantially the $25,000 previously paid, would be reasonable compensation.

Now, you as a lawyer, and I also as a lawyer know that there is no rule of thumb by which you can estimate a lawyer's fees, but I took into consideration the usual canons of charging fees, and my own experience in both local and national litigation, and my own experience as a lawyer and judge in connection with the fixing of and the charging of fees, and I took into consideration the rules or canons of charging which are fixed by the American Bar Association, such as the responsibility involved, the results obtained, the difficulty and the novelty of the litigation, the question of whether or not the employment is casual or on a regular retainer basis, and the standard of charging in similar matters, and what the responsible, or lawyers of first-class ability in large cities of the country charge, and based upon that experience and upon those standards of a general nature I think that the fee I mentioned would be a reasonable fee.

Mr. MASSINGALE. Now, let me ask you this question: Do you think that half the amount claimed plus the approximately $25,000 that these gentlemen have already received would be adequate compensation to these gentlemen for the time and ability that they have given to the Government of the United States in this case?

Justice STEPHENS. Well, of course, Mr. Massingale, it is difficult to fix fees down to a particular dollar.

Mr. MASSINGALE. I know it is, Judge, and that may not be a fair question.

Justice STEPHENS. I am perfectly willing to answer it. I wish only to preface it by the statement that when you mention a particular sum or a particular percentage you realize that there may be a difference of opinion, and it perhaps will fluctuate between a major and a minor figure, and that lawyers might differ upon the percentage, between 7 percent on one side and 15 percent on the

other side, something to that effect. But, I really feel, Mr. Massingale, answering you as fully and as directly as I can that 10 percent, in view of the time spent, and the extraordinary difficulty of this litigation, and in view of the fact that the Government really had no real hope until these gentlemen took charge of this case, of getting more than $400,000 out of it at the outset, and instead of that they got through their especially skillful services, $3,000,000, it seems to me that $300,000 is a reasonable fee and less than that would not be adequate compensation.

Mr. MASSINGALE. Thank you.

Mr. GUYER. I think that Mr. Massingale shares the feeling that I have too, that the Government of the United States is the worst paymaster in the world. I have been on the Claims Committee for some years, and I have become very angry sometimes at the pusillanimity of the Government of the United States in refusing to pay claims that there cannot be any question about, where the Government might just as well put up a pistol against a man's belly and take $20,000 out of his pocket. For instance, there was a claim. at Fort Funston, and I finally shamed the House out of it, and they voted for it, and then the President vetoed it. It seems to me in this case that if we are going to give anything we ought to give a reasonable fee. Now, of course, Mr. Massingale is correct about that other feature, that you will be more apt to get it through the House the other way. That is what was in your mind, Mr. Massingale? Mr. MASSINGALE. Yes.

Mr. WEAVER. We have heard all of these gentlemen, and they have made very clear statements about it, and I think we can get the full committee together and just discuss the matter. Thank you very much, Judge, for your additional statement.

Justice STEPHENS. Thank you. If I can be of any further help to you I will be glad to make any additional statement.

Mr. WEAVER. Thank you very much, Judge. Whom will we hear

next?

Mr. LEWINSON. Mr. Blair.

STATEMENT OF HON. HARRY W. BLAIR, FORMER ASSISTANT ATTORNEY GENERAL IN CHARGE OF THE LANDS DIVISION, DEPARTMENT OF JUSTICE

Mr. BLAIR. Mr. Chairman and gentlemen of the committee, my name is Harry W. Blair.

At the time these gentlemen first became connected with the case I was Assistant Attorney General in charge of the Lands Division, Department of Justice, and shortly after I went into that division this case came up for consideration. It was one of the important cases in that Division, and the situation in regard to collecting the $9,000,000 judgment was almost hopeless, as I viewed it at that time. There was a pending suit by the receiver of Richfield and Pan American against Doheny, but the suit was not progressing. It was in charge, of course, of the attorneys for the receiver. There were questions involved there as to how much could be recovered by the receiver in his action. There was also the question of limitations. I

then started a new suit against Doheny, and it was filed by the United States attorney. He had one man assisting him. The United States attorney, of course, was very busy, and he did not have the time to give this case attention, and neither did his assistant. The matter was rapidly approaching a crisis. It looked very much as though we were not going to be able to collect.

I then took the matter up with Justice Stephens, who was then First Assistant to the Attorney General, and I told him what the situation was; that, as I viewed it, the case was not moving along at all; that we did not know what to do; and that we could not get at the facts of the situation out there satisfactorily, and that we needed immediately some outstanding attorneys to take hold of the situation.

Mr. Martineau had been previously connected with the Antitrust Division of the Department on some special work.

I then saw Mr. Martineau and finally got Justice Stephens to come down, and we talked the matter over. Mr. Martineau was exceedingly reluctant to undertake the work. He was anxious to continue his private practice. This was in the summer of 1935.

More than a year before these discussions the question of obtaining the payment of $5,500,000 had come up. We did not know what the assets were at that time. We were not satisfied with the picture we had of them. I asked Mr. Martineau if he would not look into that, gave him part of the files in June 1934, and kept insisting on his getting into the case. He did not want to accept responsibility for the litigation, but he did check upon the matter and make reports to me. The $5,500,000 was paid sometime in May of 1935.

Justice Stephens shortly after that was going to San Francisco. I asked him if he would not get in touch with Mr. Martineau out there and do whatever was necessary to get Mr. Martineau into the case, because collecting the balance of that judgment looked utterly hopeless. Justice Stephens came back and told me of his talk with Mr. Martineau. Then, along in October, or September, I think, Mr. Martineau came on here. In the meantime I had talked to the Attorney General about it. The Attorney General had at an earlier date talked to Mr. Martineau about it, endeavoring to get him interested in it. He finally said that he would accept the work but he would have to have someone with him in the matter, someone out there who could assist in the large amount of work, and even appear in court at times when he could not appear because of conflicting court calendars, and that, anyway, it was at least a two-man job. He suggested Mr. Lewinson. It happened that Mr. Lewinson was in town on some tax matter. We saw Mr. Lewinson then, and Mr. Lewinson could not go into the matter because he had some tax litigation against the United States, but, very fortunately, that was setfled a short time afterward, and then Mr. Lewinson entered the case also.

At the time that Mr. Martineau finally consented, which, I think, was along in December 1936, the matter of compensation, of course, was again taken up. It was explained to him, and he understood that $10,000 was the maximum that could be directly paid, but in the discussion of the matter it also was explained to him that there had been precedents in other cases of allowances being made in addition to that,