Friday, October 17, 2014

What NOM's $640,000 loss says about their management and lawyers

When National Organization for Marriage began its lawsuit against the Internal Revenue Service it was based on a fanciful Tea Partyesque conspiracy theory. According to their hypothesis, using the IRS the Obama administration was out to punish NOM for opposing same-sex marriage. Thus, the administration engineered the release, by the IRS, of a confidential 2008 donor schedule. The entire enterprise was based on conjecture which never made a whit of common sense to any reasonably rational person.

This ended up costing NOM over $640,000 of donated money.

Having run (a larger but far less prominent) not-for-profit, I can say, from firsthand experience, that a CEO can get carried away (to put it politely) every now and then. One day you're conquering Everest. Then one day you are planning a branch office on the summit to sell snow-cones. It happens. It is up to the people around him or her including subordinates, board members and outside counsel to restore perspective from time to time.

I am a very secure manager — cocky and arrogant. People were unafraid to say what they thought. So when my assistant said “schmuck, what are you doing?” I listened to her or anyone else whose opinions I considered trustworthy. Brown either didn't listen or wasn't being given the right advice by NOM's infrastructure. Surely there were people in NOM's employ or on its board who realized that there is a difference between hyperbole used to raise money and what is admissible in a court of law.

More importantly, good lawyers will tell a client when they are tilting at windmills. Good lawyers know when to decline representation. It's not just good lawyering but simple honesty that requires an attorney not to take money from a client when it is not in the client's best interests. According the original complaint filed with the court on October 10, 2013:
These disclosures are a deliberate attempt to chill the First Amendment activity of NOM, its donors and others who associate with NOM.
Did any of the lawyers involved in this case actually believe that this was deliberate on the part of the IRS? Some vast conspiracy? Based on what exactly? Surely someone knew that post-Nixon the IRS was staffed with stubbornly non-partisan professionals. Indeed the head of the IRS when the dastardly deed supposedly took place was a George W. Bush appointee. Surely someone was smart enough to realize the obvious; that NOM just wasn't important, or even relevant, to President Obama or his reelection campaign.

In press releases at the time, NOM was emphasizing the fact that the person who obtained the confidential donor schedule provided it to both HRC and the Huffington Post. Much was made of the fact that the president of the Human Rights Campaign left the organization to work on President Obama's reelection campaign. The schedule showed a relatively small donation from a Romney PAC. And this was supposed to impact the Romney presidential campaign? Didn't anyone come forward to say “are you fucking kidding me?”

If I give Brian Brown the benefit of the doubt (which is hard to do) the people around him should have dissuaded him from this course of action. At the very outset, Maggie Gallagher said exactly what turned out to be true; A low-level IRS employee inadvertently provided someone with a copy of a 2008 donor schedule which should have been redacted. Much of the information was already reported as campaign finance disclosures for Prop 8. The actual damage was minimal. Where was Robby George (who is also a lawyer) when all this was going on?

NOM's witness list, filed in March of this year, included a dozen people with the IRS or the tax division of the DOJ plus former IRS not-for-profit manager Lois Lerner. Including their own chairman, John Eastman, NOM had at least  nine lawyers working on what was a very simple matter. Little wonder how they could get carried away and run up nearly $700,000 in legal fees.

John Eastman should have held up a stop sign.

John Eastman
NOM's Chairman
In fact, Eastman never should have been representing NOM in the first place. It's a clear conflict of interest. There is some confusion about what was billed and what was actually disbursed by NOM to Eastman.

Nevertheless, according to court records, Eastman claimed that he billed out $188,782.50. He magnanimously discounted that sum to  $138,500.00. An outside consultant “eliminated or discounted billing entries he determined were duplicative, untimely or presumptively unreasonable.” The end result is that Eastman claimed that NOM was due $87,666.80 as reimbursement for his legal services. That's a mere 46% of what Eastman originally thought he was due. That says something about John Eastman's integrity. My theory is that he did not say “stop” because he was making too much money from a gullible client that he had some control over; A client that did not review (or know how to review) his time logs. In fact all of the lawyers involved in this misadventure were too greedy to properly advise NOM.

It's good news for us. Aside from depriving NOM of a considerable sum that they could have used towards marriage discrimination, this endeavor created an enormous loss of management time and focus. Anything that damages National Organization for Marriage is probably good for us. I question if NOM will publicize this issue. Would they want donors to know that they spent nearly $700 thousand in legal fees on nonsense?

Ironically, this lawsuit could create the real chilling effect on donors that NOM facetiously claimed in its complaint. Why give money to an organization that will waste it?

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