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Doris Duke’s Will Evolves Into Ultimate Probate Fight

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TIMES STAFF WRITERS

In expressing her wish to be buried at sea, Doris Duke bluntly told a friend she wanted to be “eaten by sharks.”

What the eccentric heiress did not count on was that the sharks would feed on her $1.2-billion estate as well.

But two years after Duke’s death, at 80, in her gated home above Beverly Hills, the legal fight over her riches has evolved into the Super Bowl of probate battles, eclipsing such courtroom free-for-alls as the recent ones here over artist Andy Warhol’s estate and the Johnson & Johnson pharmaceutical fortune.

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By one estimate, $50 million in fees could easily be rung up by attorneys challenging and defending the tobacco heiress’ will while not a penny has gone into the foundation Duke intended to be one of the nation’s largest charities.

When an official of the New York attorney general’s office recently spoke before 225 lawyers crammed into a banquet room near Wall Street, he joked that it looked like “a meeting of all the attorneys involved in the Duke estate.”

But Deputy Atty. Gen. John H. Carley had a serious point: After two years, allegations from “murder to mayhem” continue to tie up Duke’s fortune while two dozen law firms, and some of the nation’s most prominent attorneys, scramble for pieces of the pie for clients ranging from former servants to top establishment banks.

“What does this expensive and inefficient process say about our system of justice?” Carley asked. “Would anybody be involved in this if it was a $50,000 estate?”

He’s not the only one questioning conduct in the case. A court-appointed investigator suggested that the firm representing the Duke estate, which collected $9.2 million in 15 months, ran up fees by “multiple lawyering,” sending several attorneys to every conference. Meanwhile, the investigator himself has been criticized for billing $620,000 for his work; the attorney general’s office for perhaps playing politics in trying to assist one faction; and the judge for giving a piece of the action to an election supporter.

Even the lawyers challenging the will hope to have the estate pay their fees--something the court can order if lawyers have performed “a service.”

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Where Fault Lies

Some say the costly process is the fault of Duke for churning out a series of wills. Others defend it as the price of seeking the truth on key issues: whether Duke was of sound mind when she scrawled her signature on her last will from a hospital bed in 1993, and whether her unconventional choice as executor, her ponytailed former butler, Bernard Lafferty, is competent to assume such duties.

“You have someone making a will late in life with . . . enormous sums of money [and] no natural heirs,” said Yale Law School probate expert John H. Langbein. “It brings out the enterprise of lawyers [who can] raise doubts about just about everything . . . a recipe for disaster.”

There’s no guarantee the fighting, and billing, will end soon.

“What they’re fighting about is the opportunity to earn money managing this estate,” said Thomas D. Barr, who represents United States Trust Co. of New York, which became caretaker of Duke’s fortune, until challengers embroiled the case in scandal.

“As long as this huge pile of filthy lucre is sitting there and there’s a chance of getting a piece of it,” Barr said, “these people are going to continue.”

Wary of Lawyers

Doris Duke, of course, was wary of the legal profession. The “richest girl in the world” had been raised by her father, James “Buck” Duke, founder of American Tobacco Co., to “trust nobody.”

So Duke treated lawyers as she treated two husbands, doctors and potential executors. She would embrace them, then toss them off.

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Using new lawyers each time, she named five different individual executors in her last years: Chandi Heffner, a Hare Krishna she met at a dance class and adopted as her daughter (1987); Dr. Harry B. Demopoulos, a New York doctor who became her confidant (1991); her accountant, Irwin Bloom (later in 1991); her closest blood relative, half-nephew Walker P. Inman Jr., and Lafferty, her Irish butler (1992); then, finally, Lafferty alone.

Duke’s last lawyers fell into the job after she was hospitalized in Los Angeles, suffering from a stroke and anemia. As the parties tell it, one doctor wondered if she had “her affairs in order.” Duke then “requested to see an attorney,” and her plastic surgeon mentioned this neighbor. . . .

The neighbor was in the Los Angeles office of Chicago-based Katten Muchin & Zavis, a 400-lawyer firm seeking national influence.

Within 24 hours, William M. Doyle Jr., the firm’s top trusts and estate expert, jetted in to tend to the secretive new client, who was given a code name, Mary Newport.

A retainer signed March 4, 1993, spelled out that Doyle and a partner were to get $275 and $325 an hour. And the suspicious Duke was to be told if “rates went up.”

The firm produced a will mandating that virtually all her fortune go to a Doris Duke Charitable Foundation to benefit art, wildlife and other causes, and provide Lafferty $500,000 a year plus $5 million in executor fees.

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The will also was full of language disinheriting Heffner, the now 42-year-old adopted daughter whom Duke decided had only been out for her money.

“I understood immediately that we had . . . a big-time will contest on our hands,” Doyle recalled. Indeed, Heffner had already filed a suit claiming Duke promised to support her for life.

On Her Deathbed

The two sides were strategizing even as Duke lay dying on Oct. 28, 1993 at Falcon Lair, the old Rudolph Valentino estate. Doyle was on hand to have the body cremated (and the ashes scattered at sea) before Heffner could “gain control of Miss Duke’s remains.”

Meanwhile, lawyers for Heffner were poised to block filing of the will in California, Hawaii and New Jersey, where Duke had mansions--only to have Katten Muchin file it in New York, where she merely had a Park Avenue apartment.

On Jan. 20, 1994, the firm signed a retainer with Lafferty for the job of guiding the estate through probate: fact-finding in five states, tax returns, general advice. The fee? $8 million. And extra for litigation--$1.3 million for fighting Heffner’s suit alone.

The two sides reached a $65-million settlement by that summer. Though the deal still needed court approval (finally issued last week), the estate seemed in the clear by the end of 1994.

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The only grumblings were from Demopoulos, the antioxidant specialist briefly named Duke’s executor in 1991, and a suit by three former servants--left by the will with $25,000 and a puppy--seeking $30 million and alleging they were illegally fired after Duke’s death.

So Katten Muchin saw little need to worry, even when it started getting odd calls from one of Duke’s nurses.

According to internal memos, Tammy Payette phoned Dec. 14 to say someone was threatening her, saying, “you better cooperate” and “there is going to be a big murder trial.”

A Katten Muchin lawyer reassured her “the Duke estate would of course provide security protection for her,” the memos added.

But Payette phoned again to say she was still being pressured and finally revealed by whom: the New York attorney for Duke’s former servants, Raymond J. Dowd.

Overwhelmed by Scene

Later, after the case grew into a donnybrook, Dowd would express awe at the scene in Surrogate’s Court, built when municipal architecture was intended to inspire confidence in government: the huge chandeliers and marble fireplaces at each end of the courtroom; the high-back wooden chairs in the waiting room, with hooks for another era’s top hats, and, of course, the lawyers--renowned senior partners who marched in like cardinals in the church.

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No one confused Dowd with one of those. Two years out of Fordham Law School, he was a solo practitioner in a cubbyhole on Broadway. He didn’t even have a computer when he fell into the case.

Raised on Long Island, Dowd had spent summers waiting tables at the posh Inn at Quogue. There he befriended a chef, Colin Shanley, who later worked for Duke.

They stayed in touch and when Shanley griped about how he had been fired, Dowd took him as a client, along with a former Duke housekeeper and caretaker.

Dowd became the self-proclaimed “gadfly” of the case, pushing his advocacy with such breathlessness that one judge would sanction him for making “frivolous” claims in a bid “to obtain a cash recovery from the deepest pocket.”

Another time, Dowd asked for naming of a guardian for Duke’s Shar-Pei, Rodeo, the animal promised his clients but not delivered.

“This court has rarely appointed a guardian for any type of puppy,” Judge Eve Preminger replied.

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“These happen to be puppies . . . worth at least $100,000,” Dowd said.

“I’m not going to continue this discussion,” Preminger responded.

It was the sort of exchange that led rivals to dismiss him “like someone coming up on the street asking you for money,” one noted. “You look away and walk off.”

But this hardly deterred Dowd, whose clients unleashed a series of charges: Duke had been duped. Lafferty danced a jig when Duke named him “executive assistant.” He went to town with her credit card as she lay dying. As for the death, enter the nurse.

Dowd insisted that he never coerced Payette to spotlight morphine doses given the heiress. “Immediately she said Duke did not die of natural causes,” he said.

Eventually, the woman’s credibility would be battered when she was jailed for stealing from patients. But that was far off when Dowd first brought news of his new witness to two lawyers in Los Angeles who were leading the fight to topple the will.

Don Howarth and Suzelle Smith had resumes: He had three Harvard degrees, she one from Oxford. They were active in the Christian Legal Society too--though no one mistook them for turn-the-other-cheek types. For they saw themselves as “blood and guts” litigators who “go for the viscera.”

They specialized in “big cases,” defending asbestos firms sued by lung disease victims, or representing leukemia victims suing a nuclear plant. In each, they used Demopoulos as their expert witness. He rebutted accusations against asbestos firms and linked the power plant to leukemia.

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In turn, when Demopoulos grew close to Doris Duke in 1991, they became the heiress’ lawyers, helping prepare the codicil that named the doctor her executor for fees up to $25 million. But soon “it was [our] time to fall out of favor,” Smith noted, and Duke moved on to new lawyers and new wills.

After her death, they teamed up with Demopoulos again. They insist that the doctor was concerned about which charities Duke’s wealth would go to, but they also are candid about the realpolitik.

“The estate fight is about how an awful lot of money will be distributed,” Smith said. “Whoever that person is, they’re going to have a lot of financial power.”

Howarth and Smith hope to be paid down the line, arguing that they are doing a service to the estate by “exposing” Lafferty and U.S. Trust.

In this, they joined with Dowd.

So it was that he stood up last Jan. 13, Friday the 13th, to declare: “This is a possible homicide” and set off the chain of events that cracked open the Doris Duke estate in Manhattan Surrogate’s Court.

La Guardia Description

Former New York Mayor Fiorello La Guardia once called Surrogate’s Court “the most expensive undertaking establishment in the world.”

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Old-timers recall how a lawyer billed $1,000 for work on an estate and got word back, from a clerk, that $60,000 was more appropriate.

The judges have broad power, from approval of fees to naming guardians for the infirm.

It’s a place of “enormous windfalls,” summed up Yale’s Langbein.

As the Duke case began, for example, Judge Preminger awarded two lawyers $7.2 million for work on Warhol’s estate, over protests from the head of a foundation created by the artist.

The billing bonanza in the Duke case began in earnest after Preminger, niece of film legend Otto Preminger, appointed a former district attorney to conduct a “limited inquiry” into the allegations despite objections by Katten Muchin that they were “fabrications.” The investigator wound up taking three months and issued a report that lambasted virtually every aspect of the estate management.

On May 22, Preminger removed Lafferty and U.S. Trust and appointed temporary new executors: Morgan Guaranty Trust Co. and Alexander D. Forger, who had represented Jacqueline Kennedy Onassis and now heads the Legal Services Corp.

The removals were later put on hold by an appeals court, but all that meant was there would be two sets of executors. In addition, Forger and Morgan Guaranty brought in their own law firms. So did financial giants Bank of New York and Chemical Bank, which were both in line to handle Duke’s money under old wills.

“Everyone’s gathering,” said Howarth, “now that the wounds have been opened and the blood’s on the water.”

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Big Gun Brought In

The biggest gun was brought in by U.S. Trust, eager to defend its reputation for handling “estates of the nation’s wealthiest families.” Tom Barr, an ex-Marine partner at Cravath, Swaine & Moore, had set a new standard for litigation in the 1970s by assembling an army of lawyers for IBM to turn back a huge government antitrust suit.

Also stepping up was Carley, the deputy attorney general in charge of charities. He came down on the side of the original executors, Lafferty and U.S. Trust, expressing outrage that they were ousted without a hearing “one would insist upon in a traffic accident,” in which they could cross-examine witnesses.

Carley challenged $620,000 in fees requested by Preminger’s investigator, accusing him of editing his bills “to conceal the identity of those he talked to.” He also questioned the judge’s appointees, noting Duke once “fired” Morgan Guaranty and that Forger was “a stranger” to the heiress.

Forger, however, was no stranger to the judge. A 1990 election ad listed him as a chairman of “Justice Eve Preminger for Surrogate Lawyer’s Committee.” Forger is indignant at any suggestion of a patronage appointment, saying he was no “major player” in the campaign, merely “designated to hold a coffee or something.”

But no one’s motives were off-limits now.

Challengers to the will ask whether the attorney general is favoring U.S. Trust because of politics: An influential figure in the state Conservative Party--George Marlin, head of the Port Authority of New York and New Jersey--had been a manager at the bank. Again, there were denials all around.

This fall, with many issues before appellate courts, Carley asked all the lawyers for an accounting of their fees.

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At a bar luncheon in November, Carley estimated $25 million in billings had been rung up.

“If it goes to full-blown litigation? $50 million.”

Looking to Get Out

These days, there are barely enough chairs in Preminger’s court to hold all the lawyers.

Some, however, want out.

“It’s become a tar baby,” Barr said of the case. “Even with an estate of this size, there’s a question: Who needs it?”

His client, U.S. Trust, is one of the players open to a settlement.

So is Demopoulos. He wants to be in charge of scientific grants from the Doris Duke Charitable Foundation. Dowd also wants something before he stops litigating: money. “We’ve asked for millions,” he said. “Believe me, we’d be much more reasonable.”

But such suggestions enrage attorneys at Katten Muchin, who say they will not agree to a penny for Dowd, or to power for people rejected by Duke in her lifetime.

“This is a classic attempt at a rape,” said firm founder Michael Zavis. “We’re going to fight ‘em.”

Demopoulos’ zealous litigators are ready for that.

“We’re several million dollars down the road in time,” Howarth said. “[But] a part of us relishes the idea of trying the Doris Duke case before a jury. It would be the probate case of all time.”

As the parties square off, Yale’s Langbein doesn’t relish the sight.

“There is what I would call a perverse incentive to over-litigate in large, contested-estate matters,” he said. “A good time is had by all lawyers at the expense of the decedent, who is now beyond caring.”

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