Venerable Firm in Spotlight for Holocaust Assets Case Role

Cravath, Swaine & Moore is one of the nation’s most prestigious law firms, with roots reaching back 178 years. An early partner was William Seward, secretary of State under Abraham Lincoln.

During the 1970s, Cravath’s successful defense of IBM against a monumental Justice Department antitrust suit set a standard for handling complex litigation. Its roster of blue chip corporate clients is a who’s who of the Fortune 500.

Over the years, Cravath has handled many high-visibility cases. But few have evoked such controversy as its decision to advise--over the objections of some of its own lawyers--Credit Suisse, a bank accused of laundering millions of dollars worth of gold stolen from Jews by Adolf Hitler and of holding the assets of Holocaust survivors for more than half a century.

Cravath is not representing Credit Suisse in the class-action suit filed against it and two other Swiss banks by Holocaust victims. The Washington law firm of Wilmer, Cutler & Pickering has that case.

A dozen associates wrote a memo to Cravath’s partners protesting its arrangement to give Credit Suisse strategic advice. The leader of one Jewish organization went further, demanding the firm donate its fee from the bank to a humanitarian fund for Holocaust victims.

Experts in legal ethics say there is nothing unusual about lawyers defending controversial clients.

“You can do whatever the law and ethics rules allow you to do, and no disciplinary authority can challenge you,” explained Stephen Gillers, a professor of legal ethics at the New York University Law School. “You can represent John Gotti and the governments of military dictators.”

At the same time, lawyers have a choice about the clients they serve.

“It is entirely appropriate for a lawyer to say I can’t represent you because I dislike your objectives. When a lawyer accepts a client, he cedes a lot of his autonomy to the goals of the client, unless the lawyer limits the scope of the work,” Gillers said.

After some lawyers at the firm circulated the protest memo, Samuel Butler, Cravath’s presiding partner, set out the firm’s objectives in an internal memo.

In the Butler memo, Gillers said, “Cravath told Credit Suisse its work would be to identify a fair solution as measured by world opinion.”

“Lawyers do a variety of things in giving advice, and one of the commonest things they do is lobby,” said Andrew Kaufman, a professor at the Harvard Law School. “Usually they lobby a governmental body to have a favorable result for the client. Here, they are lobbying the court of world opinion.”

Before accepting Credit Suisse as a client, Cravath--which has Jewish partners and associates--consulted lawyers in other firms active in Jewish affairs.

These lawyers were told that a primary goal of any settlement was showing the bank was acting responsibly in coming up with a solution that satisfies the Holocaust survivors.

“The tone of Butler’s memo was, ‘we’re trying to fashion a responsible settlement of a very complex problem and this is a matter which some form of overall resolution is warranted and not have polarization,’ ” said an outside attorney familiar with Cravath’s thinking.

“Winning is having the bank’s reputation intact,” he added.

Frederick A.O. Schwarz Jr., the partner at Cravath in charge of the Credit Suisse matter, said the bank is being advised to make full disclosure about the past and “come cleaner than a hound’s tooth.”

Lawyers at Cravath realized from the start that the class-action suit contained thorny issues of jurisdiction, statute of limitations and choice of law--whether the laws of Switzerland or the United States would govern. Even if the case were thrown out of court, it could be a Pyrrhic victory, with Credit Suisse facing boycotts and other problems.

Cravath--whose fees, outside lawyers note, will be minuscule compared to what the firm would earn advising a corporate client in a merger and acquisition--is “living in a fish tank and can expect scrutiny,” Gillers said.