The Wizard of Wyoming: Part II
"Why bother?" a friend asked the other day after reading my post about the financial arrangments supporting Gerry Spence's Trial Lawyers College in Wyoming. Alumni of the college have called for my expulsion from the tribe; some are reduced to mere fighting words, taunting me as an attention seeker and destructive soul bent by jealousy or worse. And Spence passes me off as one who would rather destroy than build, a twisted soul looking for the limelight in all the wrong places.
Guilty as charged on all counts. I write a blog and newspaper column to express my opinions. I've been writing opinion pieces since 1983, when I first was employed as an editorial writer for a daily paper in the Northeast. I've never claimed perfection. I like raising Hell, afflicting the comfortable and bucking tides of complacency. And everyone knows I have issues. I am in trial in a murder case now. When I asked the judge for early adjournments a couple days a week to attend psychoanalysis, the judge simply giggled and said "about time."
But there are certain things I have not done. I have not placed property of mine in a public trust. I have created interlocking boards to accomplish what one board could do. I haven't named an institution after myself and then strong-armed folks for contributions. And I haven't run off critics. I wonder whether Spence can say the same without his fingers crossed.
Both the Spence Foundation and the Trial Lawyers College are tax-exempt entities. In exchange for relief from the obligation to support the public fisc, both entities must serve some charitable purpose. Having sought shelter from taxation, they have opened their affairs to public scrutiny. No one forced them to take this step. It was a quid pro quo for the free ride received from Uncle Sam. Asking questions is no crime.
The Spence Foundation owns the building and grounds on which the Trial Lawyers College sits in DuBois, Wyoming. The Trial Lawyers College leases the facility from the foundation and pays for all of the operating costs associated with the ranch. Although I have not seen the written lease between the foundation and the college, I am told the lease drafted in 2005 permitted the foundation to revoke the lease if, in its judgment, the college departed from its mission. If that is true, the lease appears to be a sham.
Board members at the time raised questions about this. It is a lop-sided arrangement that permits the foundation to cash in any time it likes. Questions were also raised about unauthorized payments from the college to closely related entities and persons. These were troubling and legitimate questions.
Two board members, Charlie Abourezk and John Nolte refused to sign the lease, for fear that they might thereby assume liability for breach of their fiduciary duty to the college. Entering into an open-ended lease of this sort made the college vulnerable to whim. What happens if the foundation wakes up one day and decides enough is enough?
Tensions on the board were high. Spence offered to resign rather than serve on the board with Abourezk, so Abourezk resigned; Spence then asked for, and received, Nolte's resignation. The lease was signed. I simply do not know whether there is a new lease. There ought to be, and Spence suggests that there is such a lease, giving the college the right to a fixed lease of 25 years when the current lease expires. Where's the lease?
The gloss placed on the relationship between the two boards is as follows: The foundation owns and manages the ranch. As such, the foundation employs the folks who manage the ranch, and oversees the day-to-day operation. Because family is nearby, family does the work, receiving not a dime in compensation. The college has a lease and can renew if it likes. This is, as Candide said, the best of all possible worlds.
But application of Occam's Razor to this arrangment shows there is plenty of excess to trim. If the college has something approaching the right to use the ranch in perpetuity why have a foundation, too? After all, the college pays for the upkeep and use of the place. What's more, the tax exempt status of the property would not be implicated if it were simply given to the college. Why have two boards doing the work of one?
The answer is simple: The foundation controls the property. The foundation is not the college. And the foundation's trustees, IRS forms reflect, are primarily members of Spence's family.
It is suggested the the transfer of title to the land from private hands to the foundation is irrevocable, or, at the least, that it will benefit no living member of the Spence clan. Perhaps. But while living the family can control the property and avoid taxation on it, all the while having contributors make the payments necessary for its upkeep. Not a bad arrangement.
Perhaps there is nothing wrong with this. But to say that the ranch has been given to the college sounds an awful like like Bill Clinton's denying sex with Monica Lewinsky.
Where things get hinky in my view is with regard to the sort of heart-of-darkness quality to college. It wants to educate lawyers in a new way. It wants to serve the people. It wants to assist lawyers in becoming better lawyers. These are all good goals, and worthy of support.
I support that mission. Clarence Darrow did a pretty good job a century ago of fighting for the downtrodden without ever naming an institution after himself, selling mugs with his name on it, passing out name tags at events with his picture on it or otherwise engaging in a futile attempt for immortality. And he did so without demanding unquestioning loyalty from those around him. In Darrow's downtime, he invited friends over to measure themselves against great works of literature. I would love Spence more if were more like Darrow.
I confess to having fallen under Spence's spell. My father disappeared when I was a child. Spence saw my need. Did he treat me like a son, or did he see my need and use it for ends all his own? I wish I knew. Some part of me finds unhealthy the man's need for approval and the extent to which others will go to seek his. And I am stunned when I look at the corporate structure supporting the college: it looks so much like the classic alter ego fact pattern.
Jude Basile is the new president. Spence is now mere CEO and not a board member. So here is a test for Basile. How about an annual report? The first edition might well simply provide a history with documents. And how about referring to the place simply as Trial Lawyers College? That's what the place is, right? A place where lawyers can go to grow and share the best the law can offer? Give Spence his due, but distinguish between the man and the college's mission ... if Spence will let you.