One evening in November, about 170 attorneys gathered for a cocktail reception at the Georgetown University Law Center. Unlike at most swanky D.C. lawyers' events, an unmistakable scent of chlorine and perspiration lingered in the air: The event took place in the foyer of a gym. But the smell of sweat was strangely appropriate. The lawyers had come from a seminar on "Defending the White Collar Case," a timely opportunity to burnish their arsenal of strategies. Barely months into the financial crisis, the lawyers could already smell federal prosecutors gunning for their patrons in financial services. Several attendees compared notes on whose clients had been hauled before Henry Waxman's House oversight committee, a sure sign of a coming indictment. One well-known jurist from a big D.C. firm told a small circle of North Carolinians that he didn't have any new cases, yet. "They only start to call me when the fire reaches the second floor," he said.

But the flames are already licking the first-floor ceiling. So far, reports have surfaced of at least three grand juries investigating failed financial institutions, including Lehman Brothers, where several executives received subpoenas less than two weeks after CEO Richard Fuld testified before Henry Waxman. Other possible targets include AIG, Bank of America, Bear Stearns, Fannie Mae, Freddie Mac, and Washington Mutual, plus a few dozen earlier defendants linked to the mortgage crisis. Using charges of financial fraud, the cases will place a slice of blame for the current economic crisis at the feet of CEOs, like Fuld, and individual investment managers, like the two Bear Stearns fund mangers indicted in June. Members of the white-collar bar say they're already getting flooded with calls from clients who've received subpoenas and summonses, or who simply want to cover their butts.

In the post-Enron, post-Martha Stewart world of celebrity trials and widespread glee over convictions, defending a white-collar defendant has now become an extensively multi-disciplinary art, involving everything from voice coaching to hiring high-paid "image consultants" to website creation. As Wall Street heats up, lawyers and clients alike are taking some unconventional approaches to staying out of the fire.


Past white-collar criminals, such as "Junk Bond King" Michael Milken, who got off with only two years jail time after a 98-count indictment for racketeering and fraud in 1989, benefited from living in the era of Gordon Gekko and Patrick Bateman, when cutthroat financial geniuses were still sexy. In this era, by contrast, as New York Times reporter Thomas Landon wrote in 2007, there's little "substitute for the pleasure a reader"--and, by extension, a juror--"feels when a Wall Street executive flies too close to the sun."

Therefore, an early task in representing a Master of the Universe is to cut him (and it almost always seems to be "him") down to size. Gerald Lefcourt, a defense attorney who represented one of Milken's codefendants and, earlier, Abbie Hoffman, says the first thing he does when debriefing a white-collar client is disabuse him of any notion that he'll get special treatment in the courtroom. "First thing is, they ain't getting any respect," he says. "They will be treated very similarly, although probably more cordially, than a street crime potential defendant." A wealthy, pompous defendant who acts entitled in the dock won't receive much sympathy from anyone.

The next task, also beginning at the very first whiff of a subpoena, is media management. In a highly publicized investigation, there's no such thing as an un-tainted jury pool. Prosecutors are masters at pumping up indignation, using tricks like perp walks and press leaks; Rudy Giuliani usually gets credit for starting the drama in the 1980s, with mid-day arrests on the trading floor and handcuffed brokers duck-walked up the courthouse steps. Recent federal appellate court decisions validating the legality of most perp walks have only made the spectacles more popular.

When smeared in the press, the defendant must respond. "'No comment' is no longer an option," says Stephanie Martz, director of the White Collar Crime Project at the National Association of Criminal Defense Lawyers. Crisis consultant Jim McCarthy, for example, takes a close-combat approach to dealing with the press. When Eliot Spitzer began investigating New York Stock Exchange director Kenneth Langone for advocating a cushy compensation package for the exchange's chairman, McCarthy thought the press sacrificed accuracy in their rush to get the story. He fought for and won corrections in The New York Times and the New Yorker. "By consistently confronting every error, distortion, bias, and so on, you send a strong public signal that you will scrutinize and police all coverage of the client," McCarthy says.

Outside of manhandling editors, defense attorneys and crisis managers--who have become more common in these high-profile cases--have other, more direct ways of making their clients palatable to jurors. Some defendants have embraced the total-makeover approach. In the early 2000s, HealthSouth CEO Richard Scrushy responded to a federal investigation into accounting practices at his failed company by finding Jesus. Following the guidance of his legal and p.r. team, the white native of Selma, Alabama, joined a black evangelical church and started a morning TV talk show that covered media bias and the Bible. He knew his audience: A Birmingham jury acquitted him on all 36 counts of fraud and insider trading. (Scrushy was later indicted and convicted on unrelated corruption charges in state court.)

Scrushy's churchy strategy might not go over so well in D.C. or Manhattan, where white-shoe defendants don't know the knave from the apse. And that sort of wholesale revamping can backfire if it looks gimmicky. As McCarthy says, "If you want to put lipstick on Quasimodo, you can. But I don't think it will help."

So some crisis counselors opt for softer methods, such as helping a defendant write an op-ed for a newspaper or build a personal website to set matters straight. Many lawyers complain that p.r. fixers like McCarthy, with all their communicating, could set clients up for self-incrimination. There's also the price tag: Crisis counselors charge anywhere between $500 and $750 an hour, about the same as a good legal team. But the flourishing of crisis managers has forced defense lawyers to take on less-traditional duties for clients who now expect the whole package. Lefcourt even hired a speech coach for one of his clients, whom he describes as the second-most powerful politician in New York State at the time. In taped practice sessions, certain tics emerged. For one: "He had a habit of looking immediately away from the questioner, usually up," Lefcourt says, "which on video tape came across as so sneaky."

Of course, no amount of coaching can overcome the shadow of guilt cast by physical evidence. By the time a trial begins, defense attorneys are focused entirely on fiddling with the details of the case to make the defendant seem hubristic instead of criminal. Securities fraud is less black and white than, say, check fraud. If you tell investors you have faith in a fund, and choose not to share negative assessments to the contrary, that could be enough for a conviction. It all comes down to peering inside the defendant's head and discovering what he or she meant to do.

When it comes to this blurry question of intent, the absolute bugbear of defense attorneys is e-mail, which can't be destroyed unless you want to face charges for obstruction of justice. "The e-mails have been devastating," says Ellen S. Podgor, a professor at Stetson University College of Law. "It used to be they'd wire someone up and go get information. Now they go in and get the e-mails." When the feds arrested two fund managers at Bear Stearns this summer on charges of misleading investors, for example, the indictment included several mortifying e-mails that no one had dared delete, like this note from manager Ralph Cioffi warning a colleague to stay mum on a fund's lousy performance: "Don't talk about [the February results] to anyone or I'll shoot you. ... I can't believe anything has been this bad." Faced with embarrassing missives like these, defense attorneys try to paint their clients as back-slapping good ol' boys instead of criminal manipulators. "We all tend to be wise guys in e-mail," says Lawrence S. Goldman, a Manhattan defense attorney. "We say things to our buddies that aren't meant to reflect our thoughts." If only the boys from Bear Stearns could cast their overzealous faith in crappy hedge funds as the equivalent of frats boys sharing exaggerated stories of sexual conquest.


The best role model for pulling off a post-conviction makeover may be none other than good old Milken, who now goes by Mike. Once blamed for billions of dollars in losses at failed savings and loans, he has remade himself as a financial innovator, health care crusader, and philanthropist. Milken's personal website (no doubt set up for him by someone a bit like Jim McCarthy) includes an essay on how the Watts riots in his hometown of Los Angeles inspired him to change his major at Berkeley from math to business, because "civil rights wasn't just about where you could sit on a bus; it also meant equal opportunity to ... own and build a business." He goes on to take credit for the "financial revolution" that helped create much of the new wealth of the last 20 years.

As it turns out, Milken was an early advocate of securitized debt, the repackaged loans and mortgages many people blame for toppling financial institutions. But efforts to blast Milken with some of the heat for the current crisis haven't worked so far. He's even won the praise of his old nemesis, Giuliani, and is waiting to hear back from President Bush about a pardon. If the fire reaches up to the top floors, it seems, the best thing to do is remodel your kitchen.

Angela Valdez is a freelance writer in Arlington, VA.

By Angela Valdez