Speculations on Law, Lawyers and the Process

The drama promised at the beginning of the Tuesday afternoon session did not play out quite as expected. Major moves were indeed made, (See “Tedium and Great Drama”) but what they actually add up to is still a little mysterious. It turns out, in fact, that even at this late stage, prediction is a fool’s game in a bankruptcy proceeding of this magnitude and complexity. There are rules, of course, and conventions, but as Judge Richard Schmidt (“Open mind is my middle name”) informed all present today, there are many situations that don’t easily fit the rules. What we all seem to be up against here is a business structure that was patched together arbitrarily and inconsistently, out of motives not to build value but to extract it, not to try to follow the rules but to circumvent them.

Timber is such a beautiful deal, really. It has the capacity to define an environmentally righteous capitalism like no other industry. Investors’ assets grow and increase in value more or less of their own accord.. You have options to manage more or less actively and invest in treatments and biotechnologies which will enhance future production and profits significantly. If you are careful and patient, the asset will sustain you indefinitely.

There is one basic fact, though, that is extremely simple but still so hard for some people to grasp. You, the investor, don’t set the basic limits, nature does. You can play along with it, divert it thoughtfully, augment it, enhance it, restore it and you can take quite a lot from it, but if you fail to adhere to its limits as if it is yours to do with absolutely as you please, you lose. That’s the rule. Sorry. I assure you I take no pleasure in sounding like a pious earth thumper (the environmental equivalent of a bible beater) but that’s the way it is.

One should never forget, after all, that many if not most people in Humboldt predicted back in late l985 when Houston-based Maxxam took over PL, that it would end this way. The debt burden they took on and the rates by which they promised to service that debt doomed the enterprise from the start. What few of us could have foreseen, though, is into just how complex a ball of knots this grand old jewel of Humboldt could be tied in the process of depleting the timber base.

Charles Hurwitz’ unwavering determination to extract maximum value from land and trees and his uncanny strategic capacity produced an end result which must confound his advisors now. Every effort, often wildly creative, to sidestep restrictions and game the rules added another layer of complexity, another knot.. When it finally came to the long-predicted conclusion what we were left with was a structure and a history so ornate, so lacking in rationality that it would take the combined mental weight of scores of the nation’s best lawyers (and one smart, open minded Judge) to even begin the unraveling.

There have been a few less than perfectly uncharitable words in these reports about the substantial tribes of barristers gathered here in Corpus Christo to do battle. Most troublesome, perhaps, is how many of them there seem to have been. Could the $40,000 to $ 50,000 that’s getting burned up daily in a trial that goes on and on really be justified? It seems especially troubling relative to the fact that many working people in Humboldt are waiting in anxious uncertainty to learn their futures.

It must be said, though, in defense of the lawyers that it has taken a combination of patience, nimble-footed intelligence and long research on the their parts and those of their firms and staffs to get us even to this point.

They have learned, these guys, the almost Talmudic complexity of forest financing and regulation (Talmudic because it takes the arcane wisdom of a wise old Rebbe to sort though dense data and misleading opinion to penetrate to the value of a piece of timberland). They have learned the language and the metrics of forestry and logging enough to be able to dig into abstruse expert testimony and ferret out contradiction and misinformation. For most of them, this was Timber 101, a medium-to-advanced course in forestry, forest finance and forest-speak. It takes a certain gall—something good lawyers do not lack—to challenge conclusions and underlying assumptions of expert witnesses, with long schooling and, say, 30 years or more of professional experience.

Can a process still governed by an ardent competition and desire for profit—driven by the potent will of advocates to protect their clients’ economic interests– achieve the rationality necessary to sever the great Hurwitzian knot and release us into the future? How much, after all, can we expect of the Invisible Hand? But if in the end it works out right for land and people and gives our community a second try at it without too great damage to investors, the lawyers will have earned their pay and this long expensive process vindicated itself, One must keep in mind, by the way, that no one forced the investors to put their money in these bonds. They should have done a little research, maybe even asked us hicks from Humboldt. Run, we’d have told them. Don’t walk away, Run! But what do the hicks know about business?



One Response to “Speculations on Law, Lawyers and the Process”

  1. Speculations on Law, Lawyers and the Process | Right Lawyers Says:

    […] Nandita wrote an engrossing place today onHere’s a hurried excerptWhen it yet came to the long-predicted approaching what we were mitt with was a plot and a news so ornate, so abstracted in quality that it would avow the compounded noetic coefficient of scores of the nation’s best lawyers (and … […]

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