Monday, September 20, 2010

On Serving Two Masters: Part VII of "The Runaway Train"

[N.B.: This is the seventh of a multi-part series entitled: "ECUSA and its Attorneys: a Runaway Train". The previous posts are the Introduction, Part IPart II, Part III, Part IV and Part V.]

"No servant can serve two masters."

--Luke 16:13 (from Sunday's Gospel reading)

In the introduction to this series, I sketched the background of the question it would be addressing, by reviewing the rules of legal ethics which govern an attorney who represents dual clients. The rules require that both clients give their "informed consent" to such dual representation, or else the attorney is disbarred from representing either. Such informed consent entails that the clients understand the kind of conflicts that could arise from having the same attorney represent their individual, but varying, interests which are at stake. When the interests or goals of the individual clients clash with one another, or each demand priority, then once again, the ethical rules command that the attorney withdraw from the dual representation. And because of the confidentiality gained from representing both clients together, the attorney is thereafter precluded from representing either client further. An attorney may serve two masters, but only for as long as those two masters are in complete agreement, and have an identity of interests.

The current Presiding Bishop's Chancellor, Mr. David Booth Beers, began by representing the Presiding Bishop (originally, Bishop Griswold, and now Bishop Jefferts Schori). That original representation had to do exclusively with clergy disciplinary matters under Title IV of the Church Canons, and with the role of the Presiding Bishop in the House of Bishops and at General Convention.

Beginning in 2001 (and perhaps earlier -- but certainly in 2001, and continuously thereafter), however, the representation began to expand into litigation involving the whole Church. The unincorporated association of dioceses which constitutes the Episcopal Church (USA) was at first named as a defendant in the All Saints Waccamaw litigation in South Carolina, but soon thereafter it began appearing as a plaintiff, the instigator of a lawsuit. However, none of the lawsuits so instituted by "the Episcopal Church" was ever approved by all, or even a majority, of the Church's member dioceses -- they were simply filed at the direction of the Presiding Bishop.

This might not have become an issue if it had remained a matter of just one or two lawsuits. But as we have seen in the preceding posts in this series, the lawsuits have multiplied in number until the Church is now a plaintiff in more than two dozen of them across the country. Their total cost to the Church is in the tens of millions of dollars.

Supposedly, the costs being incurred are balanced by the value of the property and assets which are at stake. Even this assumption, however, must be questioned as the total money committed to the fights climbs and climbs -- first twelve million, and then in just two short years, twenty million, and soon -- what? Thirty million, forty million? The Church's entire budget amounts to forty-seven million dollars in one year, and the mushrooming lawsuits threaten to swallow it entirely.

There has been no informed decision-making at any step along the way in this process. Instead, there has been only the private deliberations of just three persons: the Presiding Bishop and her two attorneys (both of whom used to belong to the law firm that is earning all the millions and millions of dollars from prosecuting the more than two dozen lawsuits). Episcopalians have to ask themselves if this is the kind of leadership of their Church which they expect, and whether the goal that leadership has fixed is worth the horrendous costs.

Even more, however, the clients should be asking whether they are getting proper representation, in accordance with the ethical requirements applicable to attorneys. Over the past four years, there has been increasing evidence of conflicts between the goals of the Presiding Bishop, and the goals of the Church as a whole (meaning its 106 dioceses). Consider just these instances:

1. Hypocrisy in Virginia

In Virginia, one of the issues in the litigation was whether each of the realigning parishes had conducted a proper vote of its members before filing their petitions requesting a determination from the court confirming their ownership of their properties. Specifically, one voting issue turned on whether a "majority of the whole number" of parish members entitled to vote meant (a) a majority of all of the persons enrolled as "members" of the parish, regardless of how many actually showed up for the vote; or (b) a majority of just those members present and voting at the meeting called to vote on the realignment. The Chancellor's law firm, Goodwin Procter, filed multiple briefs with the Fairfax County Circuit Court arguing that the statutory language had to be interpreted in the sense (a) above -- so that the actual "majority" required for the vote to be effective would be much higher.

At the very time Goodwin Procter was making this argument to the Virginia court on behalf of the Episcopal Church (USA) in the pending litigation, David Booth Beers (then still a member of Goodwin Procter; he is now "of counsel"), the Presiding Bishop's Chancellor was advising the House of Bishops that those very same words -- a "majority of the whole number" had to be interpreted according to sense (b) above when it came to voting to "depose" Bishop Robert Duncan of Pittsburgh, so that a much smaller number (59 instead of 151) could approve the deposition.

In other words, when it suited the Presiding Bishop to interpret the words in their second sense, her Chancellor did not balk at advising her exactly contrary to how his law firm was advising the Virginia courts, supposedly on behalf of the Church as a whole. A more direct example of a conflict between the litigation interests of the Church and the personal interests of its Presiding Bishop would be difficult to find. (And in the end, it was the interests of the Church which had to yield -- its opposition to the manner in which the votes were conducted by the realigning parishes was later quietly dropped -- without, of course, any consultation with the member dioceses as to the reasons for doing so).

2. Establishment of "the St. Ives Fund"

The second area of conflict has to do with the sheer amount of attorneys’ fees going to the law firm with whom Mr. Beers is associated (and with whom the Presiding Bishop’s special assistant for litigation, Mary Kostel, was formerly associated, as Mr. Beers’s junior). Out of the estimated total of $21,650,000 committed to legal costs to date, as I identified in this previous post, it is a fair guess that at least half of it has made, or will make, its way to the bottom line of that one law firm, Goodwin Procter of Washington, D.C. Had the Presiding Bishop herself been sued, or had she needed to sue someone in her capacity as such, there would have been nothing improper in Mr. Beers’s recommending his law firm’s services for that purpose, given the pre-existing personal relationship between them.

However, it is another thing entirely for the executive officer of a large corporation to hire her personal attorney’s law firm to represent the corporation at large in litigation whose costs will run into millions and millions of dollars. That decision is for neither the executive nor the attorney alone, nor for either of them in collusion. The ethical rules which I covered in the first post in this series mandate that the decision be made by a disinterested person or group in authority at the corporation. Nothing of the kind was ever done at the Episcopal Church (USA). The rules also require that the same disinterested authorities remain in control of the litigation until its conclusion, so that there is accountability for the costs in relation to the benefits. Nothing like that has been done at ECUSA, either.

The existence of this second conflict is objectively proven by the recommendation made to the Executive Council, at its meeting in Stockton in January 2009, to form a new trust fund under the aegis of the Church’s DFMS to receive donations to be used exclusively to defray legal costs -- the “St. Ives Fund.” The “explanation” given to the Council, which adopted the proposal unanimously and without any discussion, was as follows:
Trust Fund # 1033, The St. Ives Fund, is intended to provide financial support for legal costs associated with efforts to defend and preserve the Church’s rich heritage, which includes physical and intellectual property. The initial expressions of interest for the St. Ives Fund have come from members of the legal profession, including lawyers, judges and law professors. As of 12/31/08, $11,000 had been raised to fund the trust.
If the legal expenses were not a significant drain on the Church’s budget, there would have been no need, and no motivation, to establish the St. Ives Fund. But again, there is no discussion of the conflict. At any rate, now that the St. Ives Fund has been assigned an official number, interested persons may track its success (or lack thereof) in getting funded by following it in the annual editions of ECUSA's Trust Fund Book (it had grown to nearly $18,000 by the end of 2009).

3. Fees Far Exceeding Value of Properties "Recovered"

A third area of conflict is also created by the need to pay so much in legal costs and attorneys’ fees in order to accomplish what ECUSA's leaders see as their objective. Time and again, we have seen the Church go after parish properties for which it has no foreseeable use in the future, and which accordingly are placed on the market as soon as they are “recovered.” This gives the lie to the above “Explanation” offered as the raison d'être for the St. Ives Fund: the purpose of the lawsuits in such cases is precisely not “to defend and preserve the Church’s rich heritage,” but rather to enrich the Church’s coffers, if possible, by profiting from the sale of the property after the payment of the legal costs incurred to acquire it.

Thus far, however, the value of the properties actually recovered is many, many times less than the amounts expended to date, which total more than twelve million dollars as of the end of 2009, and which, as explained in the previous post, will top twenty million dollars by the end of 2012. The sale of the Church of the Good Shepherd in Binghamton, New York, brought in less than fifty thousand dollars to the Diocese of Central New York, and doubtless some readers of this blog could fill in some details of the handful of other sales of recovered church property which have occurred to date. The total can scarcely equal half a million dollars, and none of it is reported as having gone to the Episcopal Church (USA) itself, as opposed to going to the diocese involved. Thus if the purpose of all the lawsuits were truly as the Executive Council was told in January 2009, they are failing to achieve it -- and not only failing, but failing abjectly.

Instead, Goodwin Procter is profiting handsomely at ECUSA's expense, thanks to the lack of objectivity in its hiring and of continued oversight for its litigation objectives. This is a monumental conflict of interest, and involves a failure of fiduciary responsibilities in all branches of the national Church.

4. Aggrandizing the Presiding Bishop's Power at the Expense of the Dioceses

On a par with the foregoing conflicts of interest, but even more all-pervasive, is the widening gulf between the canonical powers of the Presiding Bishop under the Church's Constitution and Canons, and the extent of those powers as represented to the civil courts in the property litigation cases. Numerous others besides this blog (which has a whole page of links devoted to the topic) have called attention to the fact of how the arguments which the Presiding Bishop is making in the secular courts, in deposing clergy and in claiming the right to "derecognize" diocesan authority, are at odds with the position of many member dioceses about the actual structure and polity of the Episcopal Church (USA). (An excellent analysis is presented in this paper from fifteen present and former diocesan bishops.)

It should be obvious to all that there is a conflict of interest here. The Presiding Bishop's position is being pushed at all levels by the Chancellor and his former law firm -- who, as we have seen, has earned millions and millions of dollars for their efforts, all paid by the very Church whose structure they are undermining. These bills are approved only by the Presiding Bishop's staff, while the Treasurer has to keep finding new ways to come up with the money needed to pay them. Bishops like the Rt. Rev. Stacy Sauls (a former attorney himself), who are supposed to be auditing the amounts spent, instead profess not to know exactly how much is being spent.

Not only is there no oversight, but the very use of the Chancellor's law firm to represent the interests of the Church as a whole is forbidden by the Canons themselves -- which thereby recognize the inherent conflicts of interest that are involved. Canon IV.14.18 provides in part (I have added the bold emphasis):
The Presiding Bishop's Chancellor shall not serve as Church Attorney or Lay Assessor in any proceeding against a Bishop of this Church. The Church Attorney shall not be from the same law firm as the Chancellor or Vice Chancellor or as the Chancellor to the Presiding Bishop or as a Lay Assessor.
The Church Attorney is the official designated by the Canons to investigate and prosecute disciplinary proceedings against clergy in the name of the Church. Thus I ask: if the Chancellor's law firm is disqualified from representing the Church in canonical proceedings, what makes it suddenly qualified to represent the Church in civil court proceedings also involving the interpretation and application of Church canons, such as the Dennis Canon?

(This is not to forget that the Canons also forbid any members of the clergy from "resort[ing] to the secular courts for the purpose of interpreting the Constitution and Canons, or for the purpose of resolving any dispute arising thereunder" -- see Canon IV.14.2, discussed in the previous post. The Presiding Bishop flaunts this canon daily -- or rather, she delegates its flaunting to proxies, such as Bishops Lamb, Buchanan, Ohl and Price, in the service of her overarching agenda.)

I would submit that no organization can long continue in its mission once it has been so hijacked from its purpose, and bent toward satisfying the personal agenda of just one of its leaders. The failure to insist on accountability, unfortunately, is like a pernicious disease: the less accountability there is, the more the structure is weakened, and the less likely that any accountability will be exercised until it is far too late.

This concludes my series for now; I shall update it in the future, as circumstances dictate. It is my hope that somewhere in the laity and clergy of the Episcopal Church (USA) there are to be found those resolute individuals who can use the facts I have presented to call their leaders to account.


  1. If a tax exempt organization is funneling money inappropriately, would that affect its tax-exempt status?

  2. What might affect its status is if the organization pretended to be a church, but spent more than half its budget suing other churches. ECUSA is not quite there yet, but it's on its way.

  3. Same problem here as always. No one within TEc will utter a breath of descent. Deposition awaits any such activity. Most judges fall all over themselves to agree with what ever Her Most Reverendship and her henchmen propose. This is despite the noble efforts of defending attorneys often working for free. So far nothing bad has happened to Her Most Reverendship personally. She will continue to do her thing for the rest of her nine years with impunity. I hope that someday some judge will find against TEc and award attorney's fees and exhorbitant punitive damages. But, I am not holding my breath.

    NW Bob