Jack TenneyExtra Point

by Jack Tenney, Publisher

September 2003

Things change. Some things don't: Here's a column from October 1989.

Things done "on advice of counsel" are generally accepted as being both OK and without moral consequence to the doer.

Clearly, it is far more advantageous for those wishing not to comment to say something like, "As much as I'd like to speak to that point, on advice of counsel I have no comment at this time."

Somehow, by citing advice of counsel as the compelling reason for an act, one is excused for that act.

Jimmy Hoffa was someone who understood, really understood, advice of counsel.

It seems the Teamsters were looking for a new trustee bank to administer one of its larger pension funds. And, in Hoffa's days, one of the larger Teamster pension funds was one of the world's larger pools of capital.

A former colleague of mine was working at an Illinois bank that was in the running for the account. The bank evaluated the asset portfolio and was unhappy with the number of large mortgages that appeared to be thinly collateralized. Further, many of the loans were not paid current.

As the negotiations progressed, it became clear to the bank that the account might be far more trouble than it would be worth. For that reason they decided to pass. The problem was that someone had to tell Jimmy, a guy with a rep for, well, call it sensitive feelings.

The lead slick for the bank calls Hoffa, saying, "Jim, we're passing. Sorry."

Hoffa replies testily, "Why pass?"

Sincerely but firmly Hoffa is told, "Too many loan payments in the past-due column, Jim. Three percentage points plus-or-minus a tick over our limits, I'm afraid. We're really sorry."

Hoffa asks, "Whadaya calling past due?"

The bank guy says, "Anything out of term, Jim. A payment due on the 26th is past due on the 27th."

Hoffa asserts, "You don't want our business, do you?"

"Whoa, Jim, listen to me. It's not that we don't want your business; we just can't take on a loan portfolio with so many loans past due," answers the banker on the verge of deodorant failure.

Hoffa counters, "If that's the problem, just refigure the loans counting only payments overdue 30 days as past due."

Gulping, the bank guy struggled, "Jim, you're suggesting we redefine past due."

"Yeah, yeah. Bingo! Do that and call me back, I gotta go."

By rearranging the columns on the aged loan payment schedule, it was evident that Hoffa's suggestion would moot the bank's rationale for passing the business.

A call goes out asking for guidance from the bank's attorney. "Just say no," the counselor coins.

The next call went something like this:

"Jim, there's still a problem."

"What now?"

"On advice of counsel, Jim, we've got to pass."

"What crap! You just don't want our business."

"No kidding. Really. We ran the new view of the portfolio through legal and they nixed it. No can do. Want to, but can't do. Advice of counsel, honest."

"You really want our business? Is that what you're saying?"

"Absolutely."

"But you're forced to turn it down on advice of counsel?"

"Precisely."

"It's easy then."

"Easy?"

"Sure. Get new counsel and call me back."