Peter J. Kiernan, who is of counsel at Schiff Hardin, was the governor’s principal lawyer from 2008 to 2010, one of the most turbulent periods for state government in recent memory.
Kiernan says he was a close advisor and “sometime confidante” for David Paterson, the lieutenant governor who became governor after Eliot Spitzer resigned in a prostitution scandal. Kiernan served as counsel in an administration that faced a credit crunch and recession that drove state revenues down and political maneuvering in the Senate—including a ‘coup’ in which several Democrats joined Republicans to take control—that well nigh paralyzed the work of government.
Kiernan graduated from Cornell Law School in 1968 and earned an MBA from its management school in 2009. He also has a master’s degree in public administration from the Kennedy School of Government at Harvard University.
He practiced corporate law and commercial litigation at various firms from 1969 to 2009 and worked as CEO of a Mexican-owned waterfront development and investment firm.
He also accepted several government assignments. One of those jobs—counsel to the city’s deputy mayor for finance from 1975 to 1977—gave him useful experience in governing in lean times.
In addition to his current practice, Kiernan is the chairman of the state’s Law Revision Commission, which is tasked with ‘discovering defects and anachronisms in the law and recommending needed reforms.’
Q: Throughout your career, you have alternated public service with private practice. What attracted you to government lawyering? It couldn’t have been the money.
A: I have always been attracted to government, the politics of governing, and to public service. During my law school summers I worked in the Rockefeller and Lindsay administrations in New York, and as soon as I satisfied my military commitments, I joined the last year of the Lindsay administration. During the infamous New York City fiscal crisis, I was appointed counsel to the deputy mayor for finance, a position created in response to the fiscal crisis. Thereafter, I served as counsel to the state Senate Democrats and then accepted a fellowship at the Kennedy School of Government at Harvard.
Government is exciting and enervating. It is infused with significant purpose. Most people one meets in government are highly motivated and hard working. Government service offers a psychological income stream that cannot be replicated. The classic definition that politics is the struggle for power also means that it is a struggle for a larger share of psychic income. I have never known anybody who had served in a significant position in government who regretted it.
Q: Did you ever think of working full-time as a government lawyer?
A: No. I admire government professionals very much and I salute them for their service. Many of them are extremely able lawyers. But I wanted to experience the challenges of private practice and business as well. To have important private experience makes one a better informed government official. But as I was taught at the Kennedy School, ‘inners and outers’ are mostly outers.
Q: How did you come to work for Governor Paterson as his counsel?
A: I knew David Paterson slightly due to my connection to the state Senate and my support of the Spitzer campaign. He initially selected former Justice Jim Yates as his counsel but Jim declined. I let it be known that I would be interested. The governor knew of my fiscal crisis experience and was facing an unprecedented revenue collapse in the state. Persons that the governor relied upon advised him to talk to me and when he did, he asked me to be his counsel, and to begin immediately.
Q: What was it like advising Paterson during what were difficult times in Albany. In particular, what was it like working with the Legislature?
A: Governor Eliot Spitzer’s resignation was announced on Friday, March 14, 2008 and Paterson was sworn in on Monday, March 17, 2008. During the weekend hiatus between those remarkable political events Bear Stearns lost 90 percent of its value in astonishing speed and was sold to JPMorganChase. The Great Recession was on, and the credit crunch was engulfing New York state. Every day that David Paterson was governor was a day of fiscal crisis. When I became counsel, the state’s revenues were in an unprecedented free-fall and a reason the governor asked me to be his counsel is that I had had a substantial involvement in the New York City fiscal crisis. I was familiar with the unrelenting pressure that accompanies such a crisis and I understood the need to act under the most difficult fiscal constraints.
Some of the decisions that confronted the governor were excruciatingly difficult and were bound to put him at odds with members of the Legislature. There is a natural denial reflex in legislatures. The Legislature did not want to believe that things were as bad as the governor kept saying. They may have thought that there would be only one bad budget year and assumed that the governor would have to bear responsibility for all the unpleasant news that inevitably was going to occur. In all events, the Legislature knew that the governor was constitutionally required to submit a balanced budget at the beginning of each calendar year and so there was never a lot of motivation for the legislators to take the blame for bad news during the budget year.
Nevertheless, the bad news never ceased and that strained relations between the governor and the Legislature. In 2009 the Democrats assumed control of the Senate for the first time in 43 years. They had a one vote margin so every Democratic senator effectively had a veto.
The Republicans had made the tactical decision to vote no as a bloc on all the tough fiscal issues which put the Democrats in a very unenviable political position and increased their frustration with the unending budget cuts and vetoes. When the so-called Senate coup occurred in June 2009, the Legislature became paralyzed. We had to sue the senators to compel them to convene at the extraordinary sessions we called every day for three weeks including Saturdays, Sundays, Fathers Day and July Fourth, and we blocked their paychecks.
That led to the unprecedented appointment of a lieutenant governor to break the deadlock. The ensuing constitutional litigation was a dispute about power and prerogatives and it did not contribute to a collaborative legislative environment. Yet the fiscal situation continued to deteriorate and more hard choices were presented. Ultimately, the fiscal year 2010-2011 budget had to be adopted through extender bills which imposed upon the Legislature the unwelcome choices of voting yes for cuts it did not want or shutting down the government.
It took 11 weeks to do all the extenders because the governor never abandoned hope for a negotiated agreement. It was not achieved, and ultimately the governor had to veto $485 million in new education aid and 6,719 member items in an election year. So the dynamics never were good.
The governor’s withdrawal as a candidate in early 2010 affected his political power but nothing could have changed the effect of the worsening fiscal climate and the opposition of the public employee unions to change and the influence that had on legislators.
With respect to advising the governor, he was very action-oriented in the sense that he was willing to make the very difficult choices and to act upon them. When the Senate was paralyzed and was having dueling sessions and refusing to convene together, he had no hesitation in suing them, declaring special sessions, and meeting with the press daily to underscore the seriousness of the situation.
When I explained the constitutional crisis that was presented by having two senators simultaneously claiming to be performing the duties of the lieutenant governor, two senators poised to exercise gubernatorial power if the governor were to be effectively absent from the state, and two senators claiming to be in the line of succession, he did not hesitate to authorize the research and to appoint a lieutenant governor, something that never had been done.
Q: How did you see your role as counsel?
A: The counsel to the governor has very broad responsibilities. Among them are developing and coordinating the governor’s legislative program and legislative initiatives; negotiating legislation and advising the governor on approving or vetoing legislation; approving proposed regulations of the executive branch and the processing of judicial appointments. Paterson had a very deliberate policy of increasing the diversity of the judiciary so we devoted a lot of time to that. Certain investigations with respect to non-judicial appointments come to the counsel for sign off. Issues of procurement and contractual interpretation often are presented and the counsel coordinates all major litigation with the attorney general or outside counsel when the AG is conflicted or not involved. There also are innumerable legal and policy development issues that arise on a daily basis and certainly in connection with the budget negotiations. Unhappily, in the Paterson administration there were several investigations including the wrap-up of TrooperGate which required involvement of the counsel’s resources. I also authorized the governor’s signature on all documents. This included all of the governor’s official correspondence.
Equally important to the counsel’s official responsibilities are the assignments that the governor gives to his/her counsel. A particular assignment I had was to coordinate relations with the state’s nine sovereign Indian nations and tribes. This included Paterson’s decision to end the Pataki era policy of forbearance with respect to cigarette taxation which occasioned intense negotiations and litigation, but, thankfully, no violence.
The counsel also manages the very elaborate clemency and pardon process. In 2010, the governor decided to create a special immigration pardon process to make a statement on the harshness and arbitrariness of the implementation of the immigration laws. We were astounded that we received 2,000 applications that presented many gut-wrenching decisions.
The counsel enjoys attorney/client privilege with the governor with respect to legal matters. That occasioned many lengthy discussions with the governor and provided the opportunity to give the governor choices and advice on matters that he was confronting. So, I saw myself in the classic role of the lawyer: counselor, advisor, sometime confidante.
Q: How would you describe your relationship with the governor? Were you ‘in the loop’ for all important decisions by the executive branch?
A: My relationship with the governor was excellent. I was in the loop for all important decisions by the executive branch and the governor consulted me privately on many matters.
Q: How do you think Paterson will be remembered as governor?
A: I think Paterson will be treated kindly by history. He made many courageous decisions that cost him a lot of anguish and the pain of hostile reaction from his natural constituencies. He had no opportunity to prepare for his administration. Because he was not elected, he had no residue of political power or a party apparatus of his selection. Most importantly, he was confronted with an unprecedentedly severe revenue crisis. New York was the epicenter of the Great Recession; it profoundly affected the state’s most important industry—Wall Street—that had provided the state with huge prosperity in prior years. The governor was forced to make enormous cuts to the state’s spending programs and many of those reductions adversely impacted the vulnerable and the poor whose causes he had advocated his entire legislative career. In the initial months of his tenure he achieved a record number of bipartisan bills but then the revenue plunge took its toll. I think in the run-up to the 2009-2010 budget, the state lost $4 billion in anticipated tax receipts in March alone. There was no room to maneuver, yet New York fared much better than many other large states. Budget contrivances largely were avoided and there was no irresponsible borrowing to finance operations. The crisis was met head on and successfully weathered despite a chaotic legislative climate.
Paterson never abandoned his agenda for social justice. He committed to repeal of the harsh Rockefeller Drug laws despite nearly unanimous opposition from law enforcement and he prevailed. He used his pardon power to demonstrate the cruelty of the immigration laws and he made enormous strides with respect to diversity and MWBE (Minority and Women-Owned Business Enterprise) hiring in procurement. Although he had to veto a routine pension extender bill to the shock and dismay of organized labor, he achieved pension reform that cost him the political support of labor which he needed in order to be a viable candidate for election in his own right. He paved the way for same-sex marriage and all of his successors will be grateful to him for solidifying the power of the governor in the budget negotiation process. As the state’s first African-American governor and one of the nation’s only visually impaired governors ever, he provided inspiration to millions of people and overcame tremendous obstacles.
I think the press very early constructed an unflattering narrative about Governor Paterson that he sometimes clumsily played into to his disadvantage. There was frenzy about scandal that did not exist. There were unfounded rumors that were given a credence that proved to be harmful to everybody. The Yankee investigation was ridiculous and an enormous distraction at a time of awful financial circumstance. There never was any substance to allegations of witness tampering which an exhaustive but unnecessary investigation proved. The governor was two years ahead of the Occupy Wall Street agenda and he did not need to be convinced of the sense of what is now referred to as the Buffett Rule, but he tried mightily to avoid new taxes (which hurt him badly politically) and did so only because the state was starved of revenue.
Q: Governor Paterson worked hard to create a judicial compensation committee before he left office. How was that accomplished?
A: The judiciary had not received a pay raise in eleven years and that was a disgrace. Qualified judges were being punished for their commitment to public service. Some were leaving the judiciary and others who might otherwise have sought judicial office were dissuaded from doing so.
Both Chief Judge Judith Kaye and Chief Judge Jonathan Lippman had made the indisputable case that judges deserved a raise and that it was in the best interests of the state that they get one. But the legislature had refused to act, insisting that pay raises for the judiciary, legislature (which were politically unpalatable) and the executive (which the governor did not seek) be linked. There had been litigation asserting that such linkage was unconstitutional and in the spring of 2009 the Court of Appeals so ruled. We immediately prepared a bill that would create a commission to determine judicial pay raises every four years and take the issue out of politics and root it in sound public policy. What is not realized is that the afternoon of the day the governor submitted the legislation the Senate coup occurred, which ended responsible legislative deliberation. To demonstrate commitment, I placed the measure on most of the daily extraordinary session agendas we prepared during the post-coup period. Because we had to submit 18 copies of the bill every time we put it on a special agenda, that bill must have been copied hundreds of times. The legislature did nothing, but we did not give up, and in a special session called at the end of the administration to enact certain emergency budget measures that had been agreed, I included it again but this time made the commission effective in 2011 so it would not have fiscal effect until 2012. The legislature said it also wanted a commission to determine legislative pay raises and the governor said that if such a bill were to be passed, he would sign it thereby calling the legislature’s bluff. With intense lobbying and clever maneuvering, the judicial pay commission bill got passed. In the end, a semblance of justice that was long overdue was attained.
I remain concerned that there was so much political and bureaucratic resistance to something that was so obvious on its merits and it is a reminder to all lawyers that they are the watchpersons and advocates for a healthy judiciary. Governor Paterson did not need to be reminded. The key fact was the determination of the Court of Appeals that linkage was unconstitutional. That allowed us to break down political resistance. The creation of a similar commission to determine reasonable legislative salaries also should be considered.
Q: What do you think of the job Governor Cuomo has done in Albany?
A: Governor Cuomo has tremendous political power and he is not afraid to use it. That is the key to gubernatorial success. He also has great political skill. Many gubernatorial decisions are tactical and the governor appears to be a consummate tactician. I admire and applaud his accomplishments.
Q: You currently serve as unpaid chairman of the state Law Review Commission. What is this body’s function?
A: The nonpartisan Law Revision Commission was created in 1938. Its primary function is to identify laws that have become obsolete and need revision. The commission often is given assignments from the legislature and occasionally from the Court of Appeals. It provides important research and seeks to find consensus in the legal community on matters that affect the conduct of laws. Currently the commission is working with others on the whole sale revision of the Not-for-Profit Corporation Law which has not been revised since 1970 and before then, 1896. The not-for-profit community is a huge segment of the New York State economy. The commission also is working on revisions to the Uniform Commercial Code. New York is one of only two states in the country not to have made significant revisions that were made by most states more than 10 years ago. This adversely affects the New York legal community.
Q: The commission is currently analyzing the effectiveness of a formulaic approach to temporary and permanent maintenance. Do you expect to recommend changes?
A: There have been some inconsistencies in the implementation of the guidelines for temporary maintenance that the legislature enacted in 2010 and there have been some unintended consequences. For example, it is not clear as to what is the relationship between temporary maintenance and other Domestic Relations Law provisions with respect to carrying charges for jointly held assets. There also can be aberrant results with respect to the intent of the law that the payor spouse be responsible for the attorney fees of the payee spouse after the guidelines have been applied. But these are soluble problems. On the whole the formulaic approach seems to have created consistency and equity particularly for couples at the lower end of the income spectrum. The commission believes that some changes may be desirable to maximize the good the new approach has achieved and to minimize some of the confusion it may have engendered at the highest ends of the income spectrum.
Q: What is your private practice like? Do you often work with people you met while in government?
A: I am a member of Schiff Hardin’s Public Practice Law Group. I am doing work on problems of public pensions, distressed local governments, government debt restructurings, and addressing policy issues in my work with the Volcker/Ravitch Task Force on the States’ Fiscal Crisis. By training, I am a corporate transaction lawyer.
Due to the state’s strict ethics laws, I generally cannot deal with New York State government matters and government personnel for a two-year period. So I have limited contact with persons I dealt with as counsel . But I always welcome the chances to be involved with elective and appointive politicians that I have met throughout my governmental career.
Q: Do you anticipate taking any more government assignments?
A: I am very content at Schiff Hardin and I do not anticipate additional government assignments.
@|Joel Stashenko can be contacted at firstname.lastname@example.org.