White-Knuckle Time

Stock prices that sound more like postage stamp values. Pension funds barely worth the paper they’re written on. Corporations that can’t get the loans they need to operate.

The horror stories of this year’s economy translate into crises for real people. No one knows that better than the attorneys whose clients are caught in the downward spiral.

Gayle Bush Tends to Business

It’s hard to believe that back in the day, Gayle Bush was among the writers suspended from his college newspaper at Seattle Pacific University for, as he tactfully puts it, “espousing more liberal views than the conservative administration was comfortable with.” Of course, that was in the era of tumultuous student politics, 40 years ago. (“It was a very interesting time.”) Today, Bush, a partner at Seattle’s Bush, Strout & Kornfeld, helps companies large and small overcome their financial challenges. Right now, he has his hands full. 

Bush works with a lot of single-family home developers—smaller operators who can’t sell their properties or get mortgages in the current climate. Their situation is complicated by plummeting real estate prices and the flood of low-priced, foreclosed houses just waiting for buyers.

So far, Bush says, the Puget Sound region hasn’t seen as many bankruptcy filings by developers as some other parts of the country—though he thinks that might change as the economic crisis widens. 

But for Bush, this latest turn in the economy is not so new. He ticks off the clients he’s helped navigate through economic storms in the past: Olympic Peninsula loggers and mill operators stymied in the 1980s by restrictions on old-growth timber sales spurred by concerns over disappearing trees and spotted owls; small Yakima Valley orchard owners undercut in the ’90s by cheaper imports under the North American Free Trade Agreement; fishermen in the increasingly stressed Alaska fishery, where the Pacific Northwest fleet harvests fish. His admiration for hard-working, fast-disappearing blue-collar professions is plain—a product, perhaps, of his childhood in Oregon’s rugged Rogue River Valley.

Of all the clients who’ve come through his door, Bush says, the one he remembers most was a talented mill operator in Sappho, on the Olympic Peninsula, named Larry Mason. The mill Mason ran specialized in shipping large old-growth trees to Japan; when that business was wiped out by environmental restrictions and a changing marketplace, Bush says, Mason nearly lost his home and became something of a media poster child for a disappearing species of outdoor worker. An avid fisherman, Bush went fishing with Mason and gained a lasting appreciation for his intimate knowledge of the land. 

“It was sometimes awkward for me as a fisherman to represent old-growth loggers,” Bush says, “but I came to understand that these folks understand forests way better than the rest of us.” Bush helped save Mason’s home. The former logger went back to school and is pursuing a new career at the University of Washington College of Forest Resources. And that, Bush says, is the sort of payoff that he enjoys.

Banking on Ronald Beard

Ronald Beard, a shareholder at Lane Powell, shares Gayle Bush’s love of the outdoors. He worked nights to put himself through school—with a seven-year break in which he worked as a commercial crab fisherman in Alaska. 

“I’m glad that I left Alaska with all of my fingers and toes,” he laughs. With the money he saved, Beard went back to the University of Washington and—free of the need to simultaneously pull graveyard shifts—got good grades and put himself through law school.

Today, Beard applies the same tenacity he exhibited in Alaska to his work representing banks in the worst banking environment in generations. The long hours spent working in Alaska’s cold waters have morphed into long hours spent helping banks navigate rough seas. “People are desperate,” he says, “and some of the lawsuits show that desperation.” Beard cites one Pierce County builder who sued his lender for not extending a loan, after having been able to get the terms he wanted in the past. “Bankers are asking for documentation they’ve never asked for before,” he observes.

Beard is the first to admit that bank practices in recent years have helped contribute to the current turmoil. “Banks who were easier [to get loans from] during boom times are now doing what they should have been doing all along,” he notes. “A lot of these projects that look risky now were once profitable in the short term.” He recognizes the impact of these changes in his clients’ practices on their already troubled commercial customers: “A lot of small- and even moderate-size builders will go out of business.”

In his work, Beard says, he applies the lessons of Alaska—where there was never time off, and a moment of inattention could cost you a body part. “I live and breathe this stuff,” he says. “The reason I’m successful is because I’m there when clients need me. Like in Alaska, you can’t leave things to chance. That’s what I do here: pay attention to details.”

Derek Loeser: A Class Act

Derek Loeser (pronounced LOHZ-ier) with the complex litigation group at Keller Rohrback’s Seattle office looks out for the little guy. 

Loeser specializes in major class-action suits—and his firm’s current targets include many of the big financial-services companies that have figured in the economic meltdown. Cases in which Loeser’s shop is either lead or co-lead counsel—representing consumers or employees—include Washington Mutual, Bear Stearns, Merrill Lynch, Countrywide and Wachovia Bank—a veritable dishonor roll of financial companies.

A particular concern for Loeser these days is retirement plans. “The current climate has decimated them,” he says. “We have a number of cases against financial services companies that packed their retirement plans with their own stock, reminiscent of Enron.” 

That stock, in many cases, is now nearly worthless. “These folks are in the worst shape,” Loeser explains. “Most have lost both their retirement and their jobs. There are obviously limited funds in the world, but we’re doing what we can” to recover clients’ money.

Loeser also cites a case his firm is pursuing against Wal-Mart as an example of the type of practice he believes helped contribute to today’s financial train wreck. Wal-Mart, he says, has one of the largest 401(k) plans in the world—once worth some $10 billion. It was managed by Merrill Lynch, which allegedly steered Wal-Mart employees into one of about a dozen plans, all featuring companies favored by Merrill Lynch insiders. “Wal-Mart is very good at not spending their own money,” Loeser says dryly, “but they’re not as vigilant with others’ money.” 

Big-name targets and complex cases are nothing new for Loeser; his first case with Keller Rohrback, in 2002, was against Enron. What the retirement plan cases have in common is the Employee Retirement Income Security Act, legislation that makes the people and companies managing pension plans responsible for the safety and soundness of the plans’ investments. “It’s a fairly specialized practice area,” Loeser admits. “I enjoy protecting and helping employees, people who are treated as less important than the corporations they work for. Maybe it’s naive, but I find it offensive that high-and-mighty corporations are abusing people who can’t do anything about it.”

Like Bush, Loeser got a taste for social justice in college; a classic liberal-arts kid, he majored in American literature at Middlebury College before going on to UW’s School of Law. At Middlebury, he discovered a passion for civil rights; and, in law school, for constitutional law. “I see class action as for-profit public interest work,” he says. “It’s a very effective tool. It hits where the pocketbook is.” 

Nancy Isserlis and the Not-So-Great Divide

On the other side of the mountains, Nancy Isserlis, a principal at Spokane’s Winston & Cashatt, is also an old hand at helping distressed businesses. A 1980 graduate of Gonzaga University School of Law, she has deep roots in Spokane; her experience and connections have made her a go-to resource for Eastern Washington companies in trouble.

“The scope of our work hasn’t changed, but the volume has increased exponentially,” Isserlis says. She doesn’t see much difference in how the economy’s struggles have hit the two sides of the state. “Spokane and Eastern Washington’s home values don’t have the big peaks that Seattle has experienced in recent years, so the percentage of adjustment is different,” she says. But on both sides, credit has become much tougher for businesses to get. Auto dealerships have been especially hard hit, she says, but so have many other types of businesses that require credit for their operating capital. “This credit crisis has been an equal-opportunity experience for Eastern and Western Washington,” she says. “Smart folks come to me ahead of time and work it out.”

Isserlis was hired in 1981 to do bankruptcy work—and she stuck with it. “It’s fascinating [to work with] the amount of money a bankruptcy court administers on any given day. It involves commercial loans, borrowing, taxes, real estate law, psychology.” After 28 years, she’s lost none of her enthusiasm.

Her other passion is volunteer work, which has won her widespread recognition. Among other things, she’s the immediate past president of the Legal Foundation of Washington; spent nine years on the board, including a stint as board chair, of Spokane Neighborhood Action Partners; is a founding board member of Access to Justice, which provides legal services to the poor; and has served on numerous other nonprofit boards.

“I would encourage people to, whenever times are tough,” she says, “remember their obligation to give back to their community.”  L&P