COLUMN ONE : A Firm Focus on Diversity : When it comes to lawyers, there’s a widespread presumption that blacks and blue-chip don’t match. But Arnelle & Hastie has prospered by concentrating on corporate clients from the start.

The plaintiff, an elderly black man, got in trouble at work and was fired just before retirement. He accused his employer, a big corporation, of race and age discrimination. Defending the company was an up-and-coming law firm named Arnelle & Hastie.

Although the fired man’s actions had jeopardized the safety of other workers, the company’s lawyer, William Hastie, feared that the court might sympathize with the plaintiff against the rich corporation.

“We told our client, ‘You don’t want to push this.’ We made a generous settlement offer. But opposing counsel said he was gonna whip our butt. He insisted on going to trial, and the (plaintiff) did not get one nickel.”

For Hastie, an African American who used to be on the other side of such cases, the outcome was poignant--but legally sound. And his role in defending the company is a measure of society’s progress in the vital matter of assimilating minorities into the professions and the corporate world.

The advancements have been insufficient in general, perhaps. But the phenomenon has reached full expression at Arnelle & Hastie.

Arnelle & Hastie was founded nine years ago by Hastie, a former public interest lawyer, and by seasoned, imposing San Francisco trial lawyer Jesse Arnelle. It is the largest minority-owned law firm on the West Coast and the second biggest in the nation.

But it stands apart even from the larger Lewis, White & Clay of Detroit because, at a time when minority attorneys are battling for access to the business world, its clientele has been corporate America from the start.

“Blue-chip but black,” was the idea, Hastie says.

Minority lawyers traditionally handle public sector law, criminal defense cases, civil rights work and other cases that often involve plaintiffs suing deep-pocket companies.

But Arnelle, now 60, and Hastie, 46, determined that their firm would rise or fall on its ability to attract corporate clients. In effect, they proposed to represent the white business Establishment despite the widespread presumption that black and blue-chip don’t match.

Today, from offices in San Francisco and in Los Angeles, New York, Philadelphia and Cherry Hill, N.J., Arnelle & Hastie’s 31 lawyers work for dozens of America’s biggest corporate names. A few examples: Shell, Arco, Levi-Strauss, Johnson & Johnson, Chrysler, Pepsico, United Airlines, Lockheed, Coca-Cola, DuPont, Bank of America, Wells Fargo, First Interstate, McDonald’s, Burger King and Denny’s.

By hiring experienced attorneys who know their way around a courtroom, the firm has established a first-rate track record in litigation--a foreign arena to many corporate lawyers but one that accounts for 70% of Arnelle & Hastie’s work.

“They’re a good, solid firm,” says Robert Williams, managing corporate counsel of Chevron’s corporation law department. “They’re not all things to all people. But they’ve tried a lot of cases, that’s one of their selling points.”

To get through the corporate door in the first place, the firm has seized every opportunity that the American Bar Assn. and other groups have created to encourage the hiring of minority lawyers. As such, they seem to provide real-world evidence that racial quotas can work. In fact, Hastie says unapologetically, the firm’s racial and ethnic diversity was a clear advantage in winning the initial corporate assignments. The firm currently includes whites, Latinos and women.

“Then you have to prove yourself,” he says, “and that’s fine.”

The lawyers at Arnelle & Hastie are passionate about the advancement of minorities in the legal profession. But practicing law often makes for strange bedfellows, especially for minorities representing white economic interests at a time when economic rights--as distinct from social rights--have become a civil rights battleground.

In fact, Arnelle & Hastie got its first big infusion of cash in the late 1980s by defending R.J. Reynolds Tobacco Co. in numerous lawsuits in which plaintiffs claimed that their cancers were caused by cigarette smoke. The tobacco industry has been vilified by black activists for marketing strategies that target African Americans, who suffer disproportionately from smoking-related diseases. The industry has also lavishly supported black politicians and organizations, linking the right to smoke with civil rights.

Hastie is philosophical.

“You’ve got to be fairly thick-skinned if you want to represent major corporations,” he says. “Sometimes their interests are going to be different from your own. Am I going to refuse to represent someone who is allegedly on the other side of black people? I can conceive of such cases. But that is a broad restriction I am not prepared to put on myself or the firm. I mean, we are lawyers. If we are not able to do that, we are doing something different than lawyering, definitionally.”

Minority lawyers representing white corporate clients against minority plaintiffs face no more of a personal dilemma than any lawyers who represent clients they might disagree with, says Linda Mabry, a law professor at Stanford University.

“You start with the premise that everyone is entitled to effective counsel. It’s marvelous and long overdue that minority lawyers are getting a chance to represent mainstream clients,” says Mabry, an African American ex-partner of a leading San Francisco firm. “The other point is that issues (in a lawsuit) are not that clear-cut. It’s never black and white when you’re representing any client, pardon the pun.”

Arnelle & Hastie is not crossing this unfamiliar terrain alone, but there aren’t many others. Though the number of minority attorneys has doubled since 1980--to about 56,000--Black Enterprise magazine last year could turn up just 36 black-owned law firms with 10 or more lawyers and some corporate clients.

The magazine identified 12 of those as having significant corporate practices. In addition to Arnelle & Hastie, they included Wilson & Becks of Los Angeles and McGee, Lafayette, Willis & Greene of San Francisco.

The private sector is an all-important destination for minority barristers because that is where wealth is traditionally generated.

Lawyers interested in business and corporate law have traditionally had two realistic choices: joining the staffs of in-house attorneys employed by corporations or latching on to the countless large private law firms that the corporate world turns to for most legal help. Chevron Corp. alone uses about 500 outside law firms.

Minority-owned firms, meanwhile--including many of those identified by Black Enterprise--have tended to hitch their wagons to the political firmament. Their biggest growth came with the ascension of blacks to mayoralties and other top state and municipal positions. Like most politicos, they awarded legal business, notably municipal bond underwriting contracts, to their friends and supporters.

Arnelle followed a different path. He spent 15 years in an eclectic one-man practice in San Francisco handling “whatever came in the door.” But like many men, he says he was professionally restless as his 50th birthday neared in the mid-1980s.

Not that he had anything more to prove. The gracious, accomplished Arnelle seems an embodiment of traditional American virtues and drive.

Born in the housing projects of New Rochelle, N.Y. Raised by parents who made him stand and salute in the living room when the national anthem came over the radio. Mentored by hard-nosed teachers. Football and basketball star at Penn State, almost a Los Angeles Ram. Law school. Peace Corps. Husband, father, college trustee, climber of Mt. Kilimanjaro.

“Hey,” the white-haired, 6-foot-6 Arnelle says with a laugh, gazing at a 1980 photo of himself atop the mountain, “it’s the highest peak in Africa. Every black kid ought to climb the highest peak in Africa.”

Hastie, whose father, the late William H. Hastie, was a noted jurist and the nation’s first black federal appeals judge, had a comfortable middle-class upbringing that included Amherst College and UC Berkeley’s Boalt Hall School of Law. He co-founded a public interest law firm in 1971 and focused on employment discrimination, suing various companies that today are clients. When Arnelle called in 1985, he was struggling as a solo practitioner and part-time professor.

On the wall of Hastie’s cluttered office is a snapshot of him with his sister, Karen, at a dinner with Supreme Court Justice Thurgood Marshall shortly before Marshall’s death last year. Karen Hastie Williams, a civil rights attorney under President Jimmy Carter, eulogized Marshall at the funeral.

In his Berkeley days, Hastie says, he was a radical. But he disdains today’s “lock-step climate” and the “Nazi overtones” of political correctness. Although the firm mostly supports Democratic candidates, its commercial instinct--to win public bond business, for example--is alive and well.

“We supported both Giuliani and Dinkins,” the bearded Hastie chuckles, referring to New York’s white Republican Mayor Rudolph W. Giuliani and David Dinkins, the black Democratic incumbent he defeated in November.

And the virtue of blacks arguing the case for corporate America?

Hastie recalls an epiphany of sorts when he was serving as an attorney for U.S. Leasing Corp., a subsidiary of Ford Motor Co. He found himself in heated closed-door negotiations in Chicago with the general counsel of GE Capital Corp., a black attorney named Winston Lowe, while their white staffs looked on.

“It was a moment of reflection. I got this chill up my spine,” he says. “I thought, ‘Isn’t this something.’ Here we were going at each other so hard, the only blacks in the room. I thought, ‘Isn’t this what lawyering is all about?’ It sends a narrow but hopeful message about opportunity and making it.”

When Arnelle and Hastie got together, the conservative political climate was hardly pressuring corporations to hire black lawyers. But there were other, friendlier things going on. Attitudes and generations were changing, the first big wave of minority law students from the 1970s was gaining legal experience around the nation, and cost-conscious corporations were taking a hard look at their big, expensive law firms.

They were hired for the RJR cases on the recommendation of a black corporate counsel at another big company, illustrating why minority attorneys attach such importance to contacts and networking. The cases were among many tobacco liability lawsuits that never went to trial, but preparations kept the young firm busy for three years and pumped in cash, enabling it to add lawyers.

After showing an initial willingness to accept tiny assignments from skeptical corporations tossing bones to minority lawyers, the firm soon grew to become the attorneys of choice for bigger cases.

Arnelle’s world view seems to be that people, including those in corporations, want to do the right thing. He says the business world deserves more credit than it gets in such matters, and he does not feel “used” when the firm is retained partly because a plaintiff or key witness is black.

“They made the same kind of value judgments I would have made: ‘Where can I best use the talents of this firm?’ ” Arnelle says. “That’s logical, good, lawyer-like reasoning. I don’t look on that as disparaging at all.

“The only reason for our existence is to provide quality legal service for our clients . . . and the rewards are demonstrable: It helps you raise a family, build a house and educate your kids, and gives you tremendous professional satisfaction.”

With the RJR Tobacco experience under its belt and the firm having grown to 10 lawyers, it was ready to exploit new corporate minority programs being pushed by the black bar’s National Bar Assn. and then by the American Bar Assn., which leaned on corporations to hire minority attorneys.

Arnelle & Hastie also ventured into the public sector to take advantage of one of the biggest windfalls for lawyers in years: the great savings and loan scandal. It triggered thousands of lawsuits by and against the Federal Deposit Insurance Corp. and the newly created Resolution Trust Corp. Again, the young firm was at the table as public agencies set out to fill quotas for using minority attorneys.

The firm has since handled about 350 related cases, including a 50-50 joint venture with one of California’s top firms, Brobeck, Phleger & Harrison, in the most complex West Coast case of all. A team from Arnelle & Hastie spent nearly three years successfully defending the FDIC, as bankruptcy trustee, against a claim by American Savings & Loan that the government had caused its financial woes.

“They did a great job. They played a very big role,” says Al Karel, litigation partner and FDIC specialist at Brobeck, Phleger & Harrison’s Los Angeles office.

Arnelle & Hastie will not divulge its total billings, but last year the firm billed the RTC alone for $1 million. Hastie says savings and loan work--chased by countless majority-owned firms, such as Little Rock’s Rose Law Firm--is “a significant portion of our revenue but nowhere near half. And it has given our attorneys exposure to serious commercial matters.”

Arnelle & Hastie’s ranks have fallen from a peak of 40 because of the recession, an expired contract with the state of California and raids by other firms seeking minority lawyers. For example, its first woman partner, Joann Russell, is now associate general counsel at Levi-Strauss.

Still, the firm is painstakingly diverse: There are 21 African Americans, seven whites, two Latinos and a Native American. Nine of the lawyers are women.

The firm is a magnet--increasingly so as it attracts attention nationally. There was a flattering profile last year in the New Yorker magazine. And the firm’s prominence in the Black Enterprise article was eye-opening to minority law students around the country.

“A lot of students didn’t even know there were minority firms doing corporate work,” says Arnelle & Hastie’s only rookie, African American Stephanie Johnson, the daughter of a government patent attorney and a recent law graduate of the University of North Carolina. “Now I hear from friends almost every day who yearn to work at a place like this.”

She is one of three attorneys hired in the last nine months, and all say they were attracted by the unique feel of the place because of its minority ownership.

Evelio Grillo, a 1985 graduate of Harvard Law and son of Afro-Cuban and Italian parents, spent eight years at white-owned corporate law firms before finally tiring, he says, of a constant presumption of incompetence. He was recruited by Arnelle & Hastie.

“There has to be a certain sympatico in the practice of law,” says Grillo. “There is a shared experience here, and we are not second-guessing each other. We’ve all gone to good schools and done well and there is a presumption of competence about each other.”

Nor does it hurt to have a role model like Arnelle.

“Jesse Arnelle is a good lawyer who is impressive under any circumstances,” says Robert McNew, senior counsel who oversees U.S. litigation for Cleveland-based Eaton Corp.

Eaton, a $4-billion-a-year industrial manufacturer with no minority attorneys of its own, investigated Arnelle & Hastie five years ago and liked the results. Over the years, it has hired the firm for product liability cases, asbestos lawsuits and environmental matters.

So when a local electrical contractor in the small, mostly white northern California town of Santa Rosa sued Eaton for $6 million last year because a large Eaton-built electrical transformer fell and permanently injured him, the company ignored conventional wisdom and sent in Arnelle.

Large, distant corporations accused of maiming small-town folks are advised to use local lawyers, or at least have one sitting next to the big shooter from the city. And if the big-city lawyer is absolutely necessary, he should at least be the same race as everyone else in town.

After a 10-day trial, the jury awarded the injured man nothing.