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It’s been almost five years since the demise of the law that empowered Kenneth Starr and almost 20 other independent counsel to probe allegations of government misconduct. But to the former Clinton administration officials and other figures from that era’s scandals who were targeted under it, the law remains very much alive. The special three-judge panel overseeing the statute is still ruling on requests by those caught up in IC probes who are seeking government reimbursement of their legal fees. And it is taking a consistently hard line on Clinton-era fee petitions. In contrast, nearly a decade ago, the court frequently agreed to award fees under the independent counsel law to people who got caught up in investigations but were never indicted. In 1996, for example, former President Ronald Reagan was awarded $562,111, and in 1995 the first President George Bush won $272,352 — reimbursement for money they shelled out to pay private lawyers during the Iran-Contra scandal in the 1980s. But the court more recently has changed its approach. And the result is that virtually all of the fee petitions filed by Clinton officials and others ensnared in the 1990s probes of alleged wrongdoing in government have been rejected. Former Cabinet members Bruce Babbitt and Alexis Herman, former intern Monica Lewinsky, presidential friend Vernon Jordan Jr. and many others, including Bill and Hillary Rodham Clinton, have seen their reimbursement efforts fall flat and have been forced to pay for their lawyers themselves. The Clintons were on the hook for nearly $3.5 million in fees, mostly paid to David Kendall and other lawyers at Williams & Connolly. On Dec. 31, Lewinsky failed in her request for reimbursement of nearly $1.2 million in fees. On Sept. 30, Jordan’s request for just over $300,000 in fees was denied. Several observers say it’s hard to miss a pattern: Republicans who were scrutinized in Iran-Contra and other scandals of the 1980s often got their fees paid by the special court, while for Democrats, the reimbursement provision has proved an empty promise. “I don’t think the nature of the cases has changed. The court has changed the standard that it applies,” says W. Neil Eggleston, a partner at Howrey Simon Arnold & White who represented Herman, the former labor secretary who was investigated for alleged political corruption during the second Clinton term. Eggleston, who worked in the Clinton White House, has been on the losing side of a fee request. After the investigation of Herman by Independent Counsel Ralph Lancaster Jr. ended in 2000 without an indictment, she sought fees of nearly $336,000. Herman was awarded less than $13,000 in a 2002 ruling by the special three-judge panel. “The fee provision was essentially not applied rigorously when Republicans were under investigation,” says Eggleston. “The court has now essentially read the fee-recovery provision out of the statute.” The composition of the court — housed at the U.S. Court of Appeals for the D.C. Circuit — hasn’t changed much over the years. The court has been presided over since 1992 by D.C. Circuit Judge David Sentelle. And most of the fee requests, including those filed by targets of Reagan/Bush-era probes, have come to the court under Sentelle. Sentelle, who was appointed to the bench by President Reagan, drew headlines in 1994 when he picked Starr as Whitewater independent counsel, displacing Robert Fiske Jr., who had already begun an investigation. Allegations swirled that the selection of Starr, a conservative Republican, was politically motivated. Sentelle declines comment. Laura Miller, a criminal defense lawyer at Nixon Peabody who has represented people in IC investigations, says she has “no doubt” that Sentelle does not base his fee rulings on anyone’s political affiliation. Instead, she says, the judge rules “entirely on the basis of an objective determination on the merits.” Perhaps the most visible change in the panel in recent years was the departure in 2002 of Senior Judge Richard Cudahy. An appointee of President Jimmy Carter who sits on the 7th Circuit, Cudahy was an occasional dissenter from the special court’s rulings. Cudahy, for example, said the majority had applied “excessive zeal” in denying Babbitt’s fee request in 2002. Cudahy was replaced by Senior Judge Thomas Reavley of the 5th Circuit, a Carter appointee. Currently, the third member is 11th Circuit Senior Judge Peter Fay, a Nixon appointee who joined in 1994. Members of the panel are appointed — and also reappointed — for two-year terms by Chief Justice William Rehnquist. Although Congress let the independent counsel provisions of the Ethics in Government Act expire in 1999 and is unlikely to renew the law anytime soon, the special court still has the task of parsing its intricacies in ruling on fee petitions that continue to come in. The decision on reimbursement turns on an amendment to the law that permits reasonable attorney fees to be paid to people who are subjects of independent counsel investigations and are not indicted. In fact, most of the change in the court’s approach results from its handling of a prong of the reimbursement provision that has come to be known as the “but for” test. Under that test, fees can be paid to independent counsel targets only if they would not have spent the money on lawyers in the absence of the independent counsel law. So the special court asks the question: Would a regular Department of Justice prosecutor have pursued this probe if there had been no independent counsel? If the answer is yes, the court denies the fees — and lately, the court has been saying yes nearly all the time. For example, in the Babbitt investigation, the former interior secretary was investigated for 21 months by Independent Counsel Carol Elder Bruce for allegedly denying a license for an Indian tribe’s gambling casino in exchange for a campaign contribution, and then allegedly misleading Congress about it. Bruce closed the probe without indicting anyone. In 2002, however, the special court denied nearly all of Babbitt’s fee request of $206,265. The court wrote: “Babbitt has not satisfied the ‘but for’ requirement … . The allegations concerning both the perjury and false statements by the Secretary of the Interior as well as the corruption of the underlying casino decision would in all probability have been extensively investigated by the Department of Justice in the absence of the independent counsel statute.” The court said that the correct standard to apply was not whether an ordinary citizen would be investigated on those charges by DOJ in the same manner that Babbitt was, but whether a Cabinet officer would have been probed in a similar fashion by a DOJ prosecutor. In contrast, the court regularly granted fees to Reagan administration officials and others caught up in the Iran-Contra investigation under Independent Counsel Lawrence Walsh. A key case was the 1993 fee request of retired Air Force Col. Robert Dutton. The court granted Dutton nearly $40,000 in fees, finding that the Justice Department had never criminally prosecuted violations of the Boland Amendment, which prohibited expenditures for the purpose of overthrowing the Sandinista government of Nicaragua. The court thus found the “but for” test to be satisfied. The court cited the Dutton precedent in 1996, when it granted former President Reagan $562,111 of his about $754,000 request for reimbursement of his fees to lawyers at Gibson, Dunn & Crutcher in the Iran-Contra matter. Similarly, in 1995 the court granted the first President Bush $272,352 out of the $461,000 he had claimed for his fees to King & Spalding. The allegations that Walsh was pursuing had to do with the Christmas 1992 pardons of former Reagan Secretary of Defense Caspar Weinberger and others for their roles in Iran-Contra. The court found that Bush’s exercise of the pardon power was not likely “to have triggered an investigation of the President” were it not for Walsh’s role as independent counsel. In his unsuccessful fee petition on behalf of the Clintons, Williams & Connolly’s Kendall cited the Reagan and Bush precedents. But the court ruled last July that the Whitewater allegations against the Clintons “would have been similarly investigated and prosecuted by the Department of Justice” and denied nearly all the Clintons’ fees. The special court has denied fee applications by Republican appointees. For example, in 2000 it rejected a request by former Reagan Housing Secretary Samuel Pierce Jr., finding that the broad allegations of abuses and mismanagement at the Department of Housing and Urban Development at issue would have been pursued by a DOJ prosecutor. And not all Clinton officials have lost out. In 1998, Eli Segal, the Clinton-appointed former CEO of the Corporation for National and Community Service, received nearly all of his $102,500 fee request. The court noted that in making the referral to an IC, then-Attorney General Janet Reno specifically noted that the conflict-of-interest charges against Segal would not have been criminally prosecuted by the DOJ. But, for the most part, Pierce and Segal are exceptions. Howrey’s Eggleston says the court’s “tougher reading” of the “but for” test “has in effect set up a general rule that these fees are not awarded. “In every case, the court is concluding that the DOJ would have conducted just as rigorous an investigation as the IC would have, and I think there’s a general perception that this simply isn’t correct,” says Eggleston. E. Lawrence Barcella Jr., who represented both Democrats and Republicans, in a host of IC investigations, says the court “has a naive view of how investigations are conducted. “There’s no question that the people who were investigated by independent counsel in the last several years would not have been investigated at all, or would not have been investigated in similar depth, by the Justice Department,” says Barcella, a D.C. partner at Paul, Hastings, Janofsky & Walker. “The special division has been substituting its own prosecutorial judgment for that of the DOJ and everyone else.” Plato Cacheris of Baker & McKenzie, who is Lewinsky’s lawyer, says, “There has been a trend towards less reimbursement, but this will not be a problem anymore. The statute is no longer in effect.”

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