- The Washington Times - Wednesday, July 19, 2000

Steel trade might be a microscopic portion of a U.S. economy that is rapidly going digital, but don't tell that to the small army of steel lawyers in Washington.

The entire U.S. steel industry is a fraction of the size of the high-flying technology industry, but Washington steel lawyers, who log endless hours pursuing trade litigation and lobbying Congress, are a cottage industry of their own.

And the links between the industry and the legal establishment are tight. This spring, the chief executive of a major U.S. steel company joined the law firm to which he had funneled much business over the years, an unseemly move in the eyes of some fellow barristers.

"There is a very high ratio of legal talent relative to the importance of this industry," admits Lewis Liebowitz, a lawyer who works on steel issues at the firm Hogan & Hartson.

Wall Street appears to concur in its assessment of the industry.

Eight major U.S. companies that make steel from raw materials AK, Bethlehem Steel, Geneva, USX Corp, Wheeling-Pittsburgh, Inspat, LTV and Weirton have a combined market capitalization of a little less than $3 billion. By contrast, Internet infrastructure giant Cisco Systems, a newcomer to corporate America, is worth a stunning $489 billion.

"You could buy [Bethlehem Steel] for pocket change," conceded Robert Lighthizer, a lawyer with Skadden, Arps, Slate, Meagher & Flom who represents the Pennsylvania-based company. But he added that the 15,000 "middle-class jobs" at Bethlehem are worth fighting for.

Legal work in Washington for all facets of steel American companies, foreign producers, importers and consumers has been big business since the Asian economic crisis began in 1997. And as the Commerce Department plans to release a report later this month on what it calls the 1998-99 "steel crisis," the lawyers, many of whom provided input, are waiting to cheer its conclusions or castigate its reasoning.

The world economic crisis triggered charges by the domestic industry that foreign producers were engaging in unfair trade and dumping steel in the U.S. market, as they had for decades. The steel industry and its lawyers pushed for punitive tariffs and legislation to slap quotas on foreign steel imports.

Dumping, not lawyers' penchant for litigation, is the reason why so many billable hours have been charged in the name of defending the steel industry, its lawyers say.

"The distortions of trade have been worse here than anywhere else," said Thomas Howell, a lawyer with Dewey Ballantine, which has represented U.S. firms for years.

Lawyers for foreign producers have fought the accusations against their clients and charge that the domestic industry's own mismanagement is to blame. But they largely agree with their adversaries on one point: the combination of heavy litigation and lobbying work keeps lots of steel lawyers busy.

"In trade law, steel is a mainstay," said Bill Barringer, a lawyer with Wilkie, Farr and Gallagher who represents the Japan Iron and Steel Export Association.

Trade litigation, which steel issues dominate, involves petitioning the Commerce Department to slap tariffs on imports that domestic industries believe have been dumped in the United States. That agency calculates the size of the duty, and the International Trade Commission makes the decision on whether to impose it.

Proving whether imports are sold at below-market prices and defending a company against those charges is expensive. Lawyers on both sides estimated that a simple case can cost up to $3 million. And since U.S. steel companies typically hurl these charges at multiple businesses in several countries involving numerous products, the involvement of a dozen law firms is not unusual.

Beyond the litigation, lawyers including Mr. Howell also do business on behalf of the steel industry by trying to influence U.S. government policy.

Attorneys for both U.S. and foreign steel companies charge privately that the lawyers have become their own interest group, who line their pockets by doing unnecessary work. But not surprisingly, it's always the other guy who is unscrupulous.

Mr. Barringer recently prepared a lengthy, scathing report on American "Big Steel" that prompted whispers by lawyers for the U.S. industry that lawyers for the Japanese industry were simply creating unnecessary work. Whatever its content, the report was simply a mother lode of billable hours, they said.

Mr. Barringer concedes that he approached his client with the idea, but says such ideas are part of the job.

"They pay me for proposing things to them, not the other way around," he said.

More common is the accusation, brought against lawyers for U.S. companies, that they start litigation for the sole purpose of injecting uncertainty into the market for imports, not because they expect to win. The charge is hard to prove and quickly denied by lawyers like Mr. Howell.

"It's unethical to do that," he said. "You bring cases that are ethical, not simply cases that disrupt the market."

Highlighting the close links between law and industry was the move by Hank Barnette to Mr. Lighthizer's firm, which received as much attention as any personnel decision in the industry recently. Mr. Barnette, as the CEO of Bethlehem Steel, had retained Skadden, Arps to fight many of his company's battles in Washington over the last 20 years.

"I think that job is a payoff for all the legal fees he has steered to that firm," said Charles Bradford, who heads the New York-based analysis firm Charles Bradford Associates.

Mr. Lighthizer points out that Mr. Barnette, before becoming CEO, was the company's general counsel and is a graduate of Yale Law School, and that his son works at the law firm as well. Mr. Barnette declined to comment.

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