Representing Lewis were Clarkson and Tom Lamia, Lewis’s California counsel, of the firm Paul, Hastings, Janofsky and Walker. Also present in the room were representatives of Chemical Bank and the six MESBICs. On the other side of the table were Cammer and his lawyers.
Ah, but the story does not have a happy ending. In fact, it was a disaster—no deal.
We got to a definitive agreement after 1½ years of meetings. I put together a $7 million package consisting of $5 million in bank financing and $2 million of subordinated debt with warrants to own about 40 percent of the company. I was putting up about $200,000 together with my brother Jean Fugett, who was then a tight end with the Washington Redskins. To make a long story short, after two years of work—on the day of the closing—Bill decided to back out of the deal.
It was unbelievable. He simply wanted out and figured he would break the deal, contract or no contract. The fact is that I had to let it happen because if he did not want to continue after the sale to help run the business, then it was a very different deal.
The deal never closed because at the last minute, Cammer announced that he would not sign his employment agreement, which was one of the conditions of the acquisition. Worried, Clarkson and Lamia decided to call Lewis. Lamia briefed Lewis and then put him on speaker phone in the room.
That conversation remains etched in Clarkson’s memory. Huddled around the phone on the West Coast were Clarkson, Lamia, the various representatives of the lenders, and Cammer and his lawyers. Lewis and his associates hovered around a speaker phone in Manhattan. Also listening in at another speaker phone were Chemical Bank executives at their office in New York.
Cammer puffed on one cigarette after another. Appearing quite nervous, he seemed to be shaking slightly during the conversation. He began by saying that the conditions for closing had not been met and therefore the deal couldn’t close. He repeated to everyone that he would not work for Lewis and would not sign the employment agreement.
“And since he was really the pivotal operating person, the whole deal fell apart,” Clarkson says.
Cammer did not stop there however. Clarkson was incredulous when he heard what Cammer said next. “I do not want to work for Reginald Lewis. I will not work for someone who has offered me money under the table,” Cammer said.
Everyone involved in the acquisition attempt blinked disbelievingly. “Here we are taking notes at a conference call and this guy is, you know, saying things that any intelligent person in the world would know would be libelous—slander! He virtually called Reg a liar and a cheat,” Clarkson says.
Lewis went ballistic. “How dare you impugn my integrity. You are a liar! I never ever offered you any money under the table. I will sue you for every dollar you have. You cannot attack my integrity and walk away unharmed,” Lewis fumed.
“He expressed total outrage—that this was obviously a lie,” Clarkson says. “When he got going, he could talk as well as anybody. The outrage poured through. I knew right then and there the entire deal was falling apart.”
One and a half years of work by Lewis, as well as his dreams of owning a majority stake in Almet, were going up in smoke.
The night this happened, I came close to a breakdown. The walls began to close in around me, I began to hallucinate and lose my balance. Somehow I went to sleep. The next morning, around 6 A.M., I had slept for maybe two hours. I went down to see my bankers to try to hold the deal. A particular banker who had actually tried to break the bank’s commitment met me and said, “Reg, this guy is going to give you problems.” It was true and the first time this guy had come straight in the whole process, because at that point of course it was in his interest to do so. I went to my office and Diana Lee said, “Reg, we can’t let this guy get away with this.” I had kept Diana out of most of the action until the very end, so that we could keep the money coming into the firm. I said, “Diana, see what you can do; stir up the pot.”
Diana got on the phone and got Tom Lamia, who was my counsel in California, to turn up the heat. Tom said he had already started preparing the legal papers against Cammer. For the next few days, we kicked and screamed and worked out a settlement which was reasonably attractive—some of my investors in kindness said they thought I had planned it that way. Nothing could be further from the truth.
Lewis threatened to sue Cammer for breach of contract and libel over his remarks over the speaker phone. Cammer’s own legal counsel resigned the next day and Cammer later agreed to compensate Lewis for all of his expenses in the transaction and to pay him a break-up fee. In addition, Cammer paid Lewis a $250,000 settlement in exchange for dropping the libel suit.
Seventeen years later, Cammer claims that Lewis failed to come up with the cash needed to buy Almet by closing day and says he refused to grant Lewis an extension.
“Plus, there’s the fact that he was going to have his half-brother, who was at that time playing for the Washington Redskins, be the head of the company. He was going to let me run it, but his half-brother was going to be in charge, so to speak,” Cammer says.
A short time after rebuffing Lewis, Cammer sold Almet to a Baltimore company for about $11 million, instead of the $7 million Lewis offered him. He was subsequently sued by a former partner whom he had bought out prior to the sale. Loida Lewis recalls her husband saying when he read of the sale, “You see, I educated that son of a bitch!” Loida herself harbored thoughts about the Almet transaction. “It was personal. I did not tell him, but my own opinion was that Cammer would not want to work for an African-American. I never verbalized it to my husband,” she says. Cammer denies that race was a factor.
As far as Lewis was concerned, the settlement he received was a small consolation.
I flat out got my butt kicked and the settlement just eased the pain a little. I took $10,000 and went to Puerto Rico on vacation. My family was in the Philippines, since I had sent them away a few weeks before the deal was due to close to avoid any distractions. During my vacation, I replayed the deal, but my mind was not working—I could not understand. The only conclusion I could reach was that even after finding the needle in the haystack, putting together great financing, courting a 61-year-old businessman, getting a definitive contract signed without a penny up front and more, much more, I STILL WAS NOT READY. My mind could go no further.
I took the vacation, returned to New York, and threw myself completely into my law practice. Six months later, I had my first $100,000 month from the practice of law, net to me. But in human terms, I wasn’t there.
Lewis took part of the settlement and bought a vacation home in the exclusive Long Island community of East Hampton in a section known as Hampton Waters. Located on Springy Banks Road, the house had a relaxed, cozy feeling about it with huge floor-to-ceiling picture windows, a large outdoor deck surrounding the house, and a small, man-made bubbling spring. Groves of large trees shielded it from neighbors. This was where Lewis retired to lick his wounds.
Those close to Lewis—including his wife—had no inkling of the torment Almet was causing him. An intensely private man, Lewis allowed no one to witness the pain and despair raging just behind his elaborately constructed mask. He prided himself on being a man of his word and on being able to deliver. He felt he’d lost face before his financial backers—whom he thought would be reluctant to ever support him again—his business associates, friends, and even his wife.
On the surface, Lewis was upbeat and blasé. He even boasted to a friend, “Even when Reg loses he wins,” a reference to the money he was paid by Cammer.
After the deal fell apart, Lewis began putting in 70-hour work weeks at 30 Broad Street.
With Lewis practically living at his law office in the wake of the Almet debacle, law partner Clarkson saw more of him than anyone. “I thought he took it pretty much in stride,” Clarkson says. “And I knew him pretty well, but I never got the sense it was such a blow to him. He certainly hid it very well when he got back to the office. I was there with him every day—I never got
the sense that it got to the point that it would cause a breakdown with him.”
Lewis had resolved to deal with his Almet demons in private and he was his own toughest critic.
The only constant in my mind was “I WAS NOT READY.” During that summer, I bought a vacation home in East Hampton which the family loved. It’s a very nice house and in 1978 I spent a good part of the summer there. I began to take my daughter Leslie for long walks, or would watch her ride her bicycle on deserted roads near the house. One day, Leslie and I were out and she was on her bike and the thought came pounding in my head again, YOU ARE NOT READY.
But this time, on a somewhat cloudy day in East Hampton, an answer started to emerge. Leslie was getting too far ahead, and as I ran a little to catch up, the answer came roaring through, “WELL, IF YOU ARE NOT READY, ALL RIGHT. THEN GET READY-GET READY.” As I approached my daughter, then five years old, I knew that what I was going through was a mental process of burying the hurt ego of the last few months. I decided to wipe it out of my mind for the moment: My five-year-old needed help turning her bicycle around.
I said, “Here Leslie, this is how you do it.” When I told her that, I hadn’t another thought in my head, and without thinking, I knew the healing process had begun.
I decided first to restore my own self-confidence. This had begun instinctively right after the blown deal by turning my attention back to the law. Next, why not take inventory? I decided to grade everyone involved in the deal, including myself. Part of this effort was to review the work of others who appeared to be successful. I then became a prospectus junkie and read all the deals which were publicly reported. It is amazing how much you can learn from public records about how people go about things.
After sifting through the ashes of the Almet deal, Lewis began studying successful corporate takeovers and subjecting himself to rigorous self-analysis. Like a dissipating fog, his languor and self-doubt lifted and a plan began to come into focus.
Slowly, oh so slowly, I felt a certain picture emerge. I had to guard against being too easy or too hard on myself and found that I did have the ability to get outside myself and remain neutral in my thinking. The hardest fact to come to grips with was that many of your strengths can indeed be weaknesses at different stages in the deal process. For example, in Almet, I was the finder of the deal, chief financial analyst, fundraiser, quasi-legal officer, and chief strategist. In short, I was going about it assbackwards.
For five years, I had gone about it all wrong, using an approach that could get me close, but not get the job done. A hard pill to swallow.
Another issue which emerged quite quickly was to take the emotion out of the equation to the fullest extent possible. These were business transactions, nothing more. Not jousts, tests of moral fiber, etc. Of course, passion is often important to get a project started, but once it gets going, the pendulum shifts very quickly to cold calculation from passion.
Another hard fact was that most of the people who were good at this were involved full time. Part-time deal-making is almost a contradiction in terms. Also, forget about the old boy network. What was driving transactions in today’s market was fees. Fees to the banks, the investment bankers, the lawyers, the accountants, the deal-finders. Strong economic incentives were very much the order of the day.
I began to feel there was hope for me yet.
Armed with a new outlook and with his shattered psyche on the mend, Lewis was finished brooding. He soldiered on in his law practice but he would eventually return to the corporate acquisition fray with a vengeance.
99 WALL STREET
Some addresses, like 1600 Pennsylvania Avenue, say all that needs to be said. The address of Reginald Lewis’s next law offices, 99 Wall Street, falls into that category. Lewis could have found cheaper offices, as his partner Charles Clarkson had suggested. But how could someone like Reginald Lewis resist a chance to work literally on Wall Street? The address fairly screams, “I’ve arrived, I am to be taken seriously and treated with respect!”
Lewis moved to 99 Wall Street in 1979, renting out the 16th floor. Visitors stepping from one of two elevators found themselves facing an attractive, polite receptionist seated behind a desk. Immediately behind her, on the wall, was the name Lewis & Clarkson in elegant, stylized silver letters.
Although Clarkson’s name was in the firm’s title, a lawyer who worked there joked that Lewis’s name should have been capitalized and Clarkson’s should have been in small letters. Even Clarkson acknowledges that he was a partner in name only, and to this day has no idea what kind of revenue Lewis & Clarkson generated.
“Reg was very, very non-informative in those areas,” Clarkson allows. There was never any doubt about who controlled the law firm.
A glass entry way partitioned off the firm’s lawyers and support staff, who always appeared to be working quietly, but at a frenetic pace. Inside the small reception area, the cheesy look of 30 Broad Street had been replaced by contemporary, understated furnishings and tasteful artwork. The ambiance was restrained and a little more corporate, but by no means lavish.
Lewis had purchased a gray tweed modular sofa in the shape of an “L” for his spacious corner office. A law library and conference room were opposite his office.
By this time, Lewis’s clientele was mostly corporations, with a sprinkling of entrepreneurs also providing revenue. The days of existing hand-to-mouth and having to do an occasional new home closing in a pinch were becoming things of the past.
However, Lewis could still be tight-fisted with money. One December, Lewis and two other lawyers with firms at 99 Wall Street held a joint Christmas party. The expenses came to about $400. Lewis received a bill for a three-way split of the party expenses, about $133 per man. He hit the roof and called Peter Eikenberry, one of the other hosts of the party.
“He called me up and raised hell,” Eikenberry remembers. Lewis forcefully argued that since only a few of his Lewis & Clarkson staffers had attended the party and Eikenberry had invited plenty of people, a three-way split was simply not equitable. Period. Lewis may have been a hot-shot corporate attorney on Wall Street, but $133 was still worth going to war over.
“I think he wanted his people to go out and negotiate for that last nickel every time,” says Eikenberry, who also recalls that Lewis could be quite charming and amusing at times.
Even at this stage of his career, Lewis liked to cultivate an aura of inaccessibility. Ray LeFlore was a veteran black attorney who leased part of the 16th floor from Lewis. He would frequently invite Lewis to lunch on the spur of the moment, but Lewis would generally turn him down.
“Invariably, he’d always say when I did that, ‘Gee, Ray, you know we haven’t had lunch together for a good while. We really ought to go out together. How are you next week?’” LeFlore recalls.
At one point, Lewis and LeFlore talked about LeFlore’s joining the law firm permanently. Even though LeFlore was comfortable with Lewis, whom he found to be a gentleman and a straight-shooter, the Strong-willed men decided their friendship would be best preserved by not joining forces, so LeFlore left after one year to open his own office.
In 1981, two new faces appeared at Lewis & Clarkson: Kevin Wright, a black Harvard Law School graduate with five years of experience, and Laurie Nelson, a Jewish New York City native straight out of Brooklyn Law School. There was a definite Harvard-Brooklyn clique practicing law at Lewis & Clarkson, in keeping with the two name partners’ respective alma maters.
Wright’s father was one of Lewis’s first major clients. Wright himself would in time become Lewis’s trusted right-hand man, the so-called “Reg, Jr.”, who stayed with Lewis until Lewis’s death. Nelson, who had a habit of occasionally lording over support staffers, left after five years and remained a Lewis protege because her brashness reminded Lewis of himself.
The task of going to law schools and recruiting prospective lawyers fell to Wright and Nelson. Lewis would send his young recruiters out with explicit marching orders, “Look,
when you go into those interviews, you are going to see a lot of drek. Get rid of it! I do not want to talk to anybody that you don’t think can cut it. If you don’t think they can cut it, I definitely won’t think they can cut it. And I don’t want any distinctions made between minority students and nonminority students, except that if you see a minority student who’s really excellent, I want to talk to her or him.”
Full-time lawyers and even summer interns had to be able to hit the ground running at Lewis & Clarkson, because Lewis made a habit of giving them tremendous responsibility right off the bat.
Clarkson was thrown into a multimillion dollar MESBIC closing his first day, while Nelson worked on a $30-million hotel loan transaction on her second day. Lewis didn’t have the luxury of bringing a new lawyer along slowly like large firms did. So it wasn’t just a matter of Lewis setting unrealistically high standards. He needed people who could, as he was fond of saying, “do the work.”
“This guy basically made me what I am,” says Nelson, who now practices real estate law with a large New York City law firm. “You’re talking about a man that I idolized for years. Pretty much all of the practical skills that I have today, 12 years after I graduated from law school, I got directly from Reg Lewis.”
When he was chairman of Beatrice International, Lewis insisted on implementing a summer intern program for young business and law students. For all his gruffness, he liked to spend time with his interns. He often sat around for hours, discussing the state of the world.
Orlan Johnson, a Howard University law student who interned at Lewis & Clarkson one summer, remembers one evening when Lewis lectured Johnson and two other black students who were going to business school about his concern that too many African-American entrepreneurs were looking to start businesses from scratch, rather than acquiring companies already up and running.
Why Should White Guys Have All the Fun? Page 15
