THE MAN ASKING IRANSCAM'S TOUGH QUESTIONS Arthur Liman has been known to show up for a trial in a mismatched suit, but he is also the fellow whose testimony helped send Texaco into bankruptcy.
By Christopher Knowlton

(FORTUNE Magazine) – WHAT DO the Iran-Contra scandal, the Texaco-Pennzoil case, and Dennis Levine have in common? The answer: Arthur L. Liman, a gruff-voiced white-collar-crime lawyer whom many colleagues regard as the greatest litigator of his generation. Liman, 54, is a courtroom giant, a master legal strategist, and a trusted corporate adviser. He is also endearingly absent-minded, the sort of fellow who steps into the shower with his shoes on and who once became so lost in conversation at a dinner party that he helped himself to the scraps on his neighbor's plate. His courtroom conduct is a study in casualness: no flash, no pizazz, just Arthur Liman chatting with you, his jury -- his jury because he adopts you as his own. Tall and ungainly, he lumbers back and forth, his body baggy and his ears too big. An unruly strand of wiry dark hair hangs down his forehead. Using language a child could understand, he conveys the facts of a case, weaving in understated analogies in which common sense predominates. He is direct, friendly; he even seems to like you. Before long you may come to wonder: How can I refuse him? Take comfort from the fact that few juries do. Liman's blue-chip clients include Warner Communications, Weyerhaeuser, Continental Grain, Time Inc. (parent of FORTUNE), and Lazard Freres. He has also defended a long list of notorious characters, including Robert Vesco, the embezzler and fugitive, and John Zaccaro, the real estate tycoon and husband of Geraldine Ferraro. For sheer variety, however, nothing compares with Liman's clients of the last 21 months. In September 1985, he helped represent Pennzoil in its case against Texaco and, in a risky legal move, took the witness stand. His testimony helped send Texaco into Chapter 11. Next he agreed to take the cases of Dennis Levine, the inside trader, and Michael Milken, Drexel Burnham Lambert's junk bond baron. Late last year he cemented the relationship between clients Laurence Tisch and William Paley, an alliance that led to the ouster of CBS Chief Executive Thomas Wyman. Then it was back to court to defend Christie's from the charge that it had rigged the sale of impressionist masterpieces. Liman settled that suit out of court and moved on to Washington, where he organized the Senate select committee hearings on the secret arms shipments to Iran and the Contras. The investigation, a joint House-Senate enterprise, will last well into the summer. OUTWARDLY LIMAN is a man of simple tastes who forswears limousines for taxis, whose chief pleasures in life are reading, saltwater fishing, and the company of his family. ''I'm just a plain old practicing lawyer who will try anything,'' he says. His willingness to defend bad guys goes beyond the legal principle that they are entitled to representation and beyond an awareness of the publicity that accrues to him and his firm whenever he tries a highly visible case. He relishes the vicarious thrill and added challenge of representing the damned. ''I'm having fun,'' he says with a wide smile. Liman is untroubled by the ethical dilemmas. He accepts the fallibility of his clients, and yet his confidence in himself and in the law remains unshakable. Charles Lamb wrote, ''Lawyers, I suppose, were children once.'' Liman came close to being the exception. ''Early on, his parents treated him with a deference you rarely see,'' says first cousin Joan Hamburg, a New York radio and TV talk show host who grew up with Liman in Lawrence, Long Island. The family patriarch, Liman's doting grandfather, was a flamboyant Russian-born peddler who launched a successful dress-making business and claimed to be a descendant of the doctor to the Czar. Liman's mother, a strict high school Latin teacher, and his father, a history teacher who later joined the family business, took it for granted that Arthur would do well academically. The shy, skinny boy did not disappoint. He arrived at Harvard when Senator Joseph McCarthy was attacking the university as ''pink tinged.'' Appalled by the hearings, Liman wrote a thesis on the constitutional limits of congressional investigations. After graduating Phi Beta Kappa, he went to law school -- Yale -- todefend the ramparts. Stephen Weiner, Liman's roommate at Yale and now a partner in the New York law firm Winthrop Stimpson Putnam & Roberts, was playing poker with Liman the day first-term grades arrived. ''Nobody could mutilate a deck of cards as fast as Arthur,'' he recalls. The foursome opened their report cards, and Weiner, who had done well, asked Liman what he got. Liman said simply, ''All excellents.'' His stunned poker partners passed around the royal flush. Says Weiner: ''That was amazing, unheard of. He was awe inspiring.'' Liman went on to graduate first in his class. Yale offered him a teaching job, but Liman chose instead to practice law. In 1957 he accepted a position at the New York firm Paul Weiss Rifkind Wharton & Garrison. The head of the corporate practice at Paul Weiss, Ernest Rubenstein, takes credit for recruiting Liman: ''It is one of my greatest contributions to the firm.'' Rubenstein heard Liman's name mentioned at a friend's bachelor party and tracked him down at his home in Lawrence. Standing in the driveway, he succeeded in selling the gawky scholar on the virtues of Paul Weiss. Rubenstein recited the list of Paul Weiss firsts: the first firm to name a woman partner, the first to hire a black associate. It was democratic, active in public service, and managed by an innovative committee system that divvied up administrative chores. The most eminent of its partners was Judge Simon Rifkind, a small, bespectacled litigator famed for his operatic courtroom performances and for legal writings of Jeffersonian eloquence -- among them key sections of the New Deal legislation. Liman joined the tax department but immediately switched into litigation. ''After he had been here two weeks,'' says Rubenstein, ''no one doubted he would one day be a partner.'' Liman spent what free time he had with a clique of cousins and law school chums. At a cocktail party in 1959 he met a recent Barnard graduate, Ellen Fogelson; four months later they married. ''He was persuasive, decisive,'' says Ellen, a writer, painter, and advocate for the arts. ''I guess you could say he brought his courtroom skills to the courtship.'' According to Joan Hamburg, who introduced the couple, Ellen was hardly a hung jury. She whispered to Hamburg after meeting Liman for the first time: ''I think I'm going to marry your cousin Arthur.'' The Limans have three children: Lewis graduates this spring from Yale Law School and plans to become a litigator; Emily, a Princeton graduate, is entering a Harvard Ph.D. program in neuroscience; Douglas, a filmmaker, has a year to go at Brown. IN 1961 President Kennedy named Robert Morgenthau U.S. Attorney for the Southern District of New York and gave him a mandate to crack down on white- collar crime. Morgenthau, a fellow Yalie, offered Liman a job as an assistant U.S. Attorney. For Liman, who felt nervous in the courtroom and uncertain that he would ever be a good trial lawyer, it was a chance to try his own cases and get the experience he needed. Lloyd Garrison, a senior partner at Paul Weiss, moaned that the firm was losing the best associate he had seen in 15 years. Liman says he became ''the garbage pail for the U.S. Attorney's office. I took cases other people didn't have time for.'' When he returned to Paul Weiss 2 1/2 years later, he had developed his distinctive, unadorned courtroom style and acquired a wealth of litigation experience. He had also begun to develop a reputation and attract cases of his own. ONE OF THESE, his successful defense of Joseph Kosow, an alleged co- conspirator of stock swindler Louis Wolfson, proved especially important in retrospect. It was here that Herbert Siegel of Chris-Craft Industries, drawn by reports of Liman's tough cross examination, first saw Liman litigate. He hired Liman to advise him in Chris-Craft's dogfight for Piper Aircraft. The case took over six years to try and appeal, making two trips to the Supreme Court, where Liman ultimately lost. In the meantime Siegel referred Liman to David Mahoney, formerly head of Norton Simon, who in turn referred him to Anthony O'Reilly, chairman of H. J. Heinz. So out of the Kosow case, one which most Wall Street firms deemed too tacky to touch, came three of Liman's most valued clients. Liman took a second leave from Paul Weiss in 1972 to advise the commission investigating New York's Attica prison riot. To win the trust of the inmates, he insisted on eating in the prison cafeteria on Christmas eve. The commission's published report was highly critical of then governor Nelson Rockefeller and the state. Largely the work of Liman, the report received a nomination for the National Book Award. This pattern of alternating private practice with public service repeats itself throughout Liman's career. Some of his pro bono suits became showcases for his talents. In one fine performance he represented New York City in a claim brought against Rockwell International, maker of the problem-plagued R- 46 subway cars. When Rockwell put Robert Anderson, the company chairman on the witness stand, Liman saw immediately that he was a decent man and a sympathetic witness. Rather than discredit Anderson, Liman depicted him as a man too good for his own company. He established that Anderson knew little about the specifics of the case, then he paraded out the evidence against the company, remarking at each disclosure, ''The Rockwell of Mr. Anderson would never do this!'' Finally, with Anderson noticeably paler, Liman fractured the defense by asking why Rockwell, renowned for the Apollo project, could put a man on the moon but couldn't get New Yorkers from 34th Street to 42nd Street. The jury, which included an employee of Rockwell's accounting firm, awarded the city $72 million in damages.''Liman is brilliant and methodical,'' says Morgenthau, now the Manhattan district attorney. ''He can take a witness's socks off leaving his shoes still on and securely tied.'' ''Nothing sells legal services like reputation,'' says Rifkind. Liman's continued to grow. Although Rifkind and others are too tactful to say so, Liman is the top star of Paul Weiss, where he occupies the largest office. ''Only a fool would pass up the opportunity to seek his counsel,'' says Rubenstein. Or a poor man. Liman's services bill out for around $330 an hour, and he earns a salary in the high six figures. One person willing to pay the fees was Bill Paley, who, in the words of a CBS executive, ''burns through lawyers.'' Liman represented Paley last September during the CBS boardroom coup. But at the time, Liman considered Tisch, a Westchester County neighbor and tennis partner, a better friend. ''Liman was the bridge,'' says a board member. Once Tisch and Paley became allies they had little trouble ousting Wyman. The incident illustrates how a well-connected lawyer can influence a client's fate. Liman, himself, believes his first responsibility to clients is to keep them out of court. One device he uses is the ''smell test,'' which fellow partners credit him with developing. When a client's business strategy falls within the bounds of the law but nevertheless will look bad, the strategy is said to fail the smell test and the risk of potential litigation must be carefully weighed. Ironically, the inventor of the smell test has a predilection for clients who positively stink. Take Dennis Levine. Liman agreed to defend Levine against insider trading charges because Paul Weiss had worked with him on several takeover deals. ''It seemed to us,'' says Liman, ''that if Dennis was good enough to represent as an investment banker, and he then got into trouble, if we really were professionals, we should be prepared to represent him.'' This take-your- medicine rationale sounds less than persuasive. But then Liman reveals that a key aspect of his strategy involved persuading Levine that he couldn't deny his guilt. Levine's subsequent cooperation netted Ivan Boesky and dramatically widened the scandal. ALTHOUGH Liman's high profile has provoked rumors by some rivals that he employs a press agent, most of his peers accord him an unusual amount of respect and affection. ''Arthur could not knowingly misrepresent a fact if his life depended on it,'' says Rifkind. Others admire his capacity for work. At Paul Weiss he carries 40 cases to an ordinary partner's 20 or 30. Part of his appeal stems from being odd as well as able. Friends describe him as serious to the point of ponderous, physically clumsy and, more often than not, disheveled. He has been know to show up at a trial in a mismatched suit. ''He's got no conception at all of what he is wearing,'' says a family member. These days a national television audience is getting a glimpse of the Liman style as he conducts the Senate's Iran-Contra investigation in the same room where McCarthy held forth more than 30 years ago. Working with fellow investigators for the past three months, Liman has labored to establish who the key witnesses are and what roles they played in the arms sales. He views the job as a public service he could not refuse, although it has meant temporarily putting aside private practice. Whatever happens in the hearings, it is unlikely that Liman will make the impact he did in the Texaco-Pennzoil case. Liman, representing Pennzoil's investment banking firm, Lazard Freres, negotiated the marriage between Getty and Pennzoil, only to see Texaco make off with the bride. If it was revenge Liman sought, he got it. When the case went to trial, Joseph Jamail Jr., the lead counsel for Pennzoil, put Liman on the witness stand. Jamail's key argument was that a deal is a deal, and he used the image of a handshake to symbolize it. He asked Liman to explain the long night of negotiation between Pennzoil and Getty. Liman turned toward the Texas jury and, after a few self- deprecating remarks about New York lawyers, described how, posted outside the Getty boardroom, he conveyed offers between the board and Pennzoil Chairman J. Hugh Liedtke, and how, after Getty agreed to a sweetened offer, Martin Lipton, one of Getty's lawyers, emerged from the room to say, ''Congratulations, Arthur, you got a deal.'' Liman asked if he could shake hands with the board members, which he proceeded to do. Here then was the metaphorical done deal. At least partially on the basis of Liman's testimony, the jury ruled in Pennzoil's favor. LIMAN FOOTNOTES the incident: He had a good reason for being so polite that night. Hungry after hours of deliberations, he spied a tray of sandwiches just as it disappeared into the boardroom. Liman wheezes an infectious laugh as he confides, ''I asked permission to shake hands with everyone, but I have to say that my stomach played a part. If I hadn't seen that food I'm not sure I would have felt the need to go in and do it.'' This may mark the first time a man's appetite has put a $32-billion company into bankruptcy. Although he favors cheeseburgers and Chinese food to fancier fare, Liman has learned to enjoy the good life. He and Ellen live in a Fifth Avenue apartment overlooking Central Park that doubles as a museum for their collection of 19th-century board games. They also own a home on the water in suburban Westchester County and a sport-fishing boat, Celerity, that Liman takes out in pursuit of bluefish and tuna, his favorite recreation. In April, 30 relatives gathered on Long Island for the Passover Seder, and Liman, as usual, made a sentimental toast. The family doesn't think success has spoiled him. Says Hamburg: ''He has always been a person with great confidence and a strong sense of who he is and where he came from. People like that handle the publicity very well. It's not like he's some poor boy who walked barefoot across the desert.'' Liman's father, 89, still bores his golf foursome with boasts of ''Arthur did this and Arthur did that.'' The family finds nothing puzzling about Liman's blend of brilliance and absent-mindedness. To them he is like the boxer who focuses solely on his bouts and, out of the ring, drops his guard and gets decked by everyday life. They like to tell of the time Liman asked his secretary to phone a client. She called and learned that he had just died of a heart attack. When she broke the news -- ''I'm sorry, Mr. Liman, but Mr. Kurtz has passed away'' -- he replied, ''That's fine. Just have him call me when he gets in.''