Saturday, April 25, 1998
Have brief, will travel
Out of the west Texas town of El Paso comes Paul Yetter, a tough litigator
who has taken on corporate giants like Barrick Gold, Service Corp.
International and Texaco. Who else could have led the Bre-X class action
lawsuit?
By SANDRA RUBIN
The Financial Post
Houston - Paul Yetter has a theory about trial lawyers and securities cops,
and boardroom morals. He thinks stock frauds like Bre-X Minerals Ltd.
make strange bedfellows of the former, to the betterment of the latter.
It's no secret underfunded securities commissions lack the manpower to police public companies
the way they should. That being the case, Yetter says, class action lawsuits, like the Bre-X
blockbuster he's leading in Texas, should serve as a yellow flag to the morally ambiguous that they
had better play fair when they're playing with investors' money, or be prepared to face people like
him in court.
"A case like Bre-X, with all the publicity and notoriety, can be a perfect way to send a very clear
message to the marketplace about how people should act - how honest they should be," he says in
an interview. "People change their conduct when they know they'll have to pay for not living up to
the standards they should.
"This lawsuit is going to be a clear signpost to the future, if and when we're successful."
Yetter has had plenty of time to mull over the possible legacy of the tiny Calgary firm that claimed to
have stumbled on one of the greatest gold finds of all time. He was brought into the saga in
December 1996, three months before the fraud was exposed, by a group of investors concerned
their company was being forced into a shotgun marriage with giant Barrick Gold Corp. They hired
him to help keep Bre-X out of Barrick's grip in the face of aggressive brokering by the Indonesian
government - with a lawsuit if necessary. The shareholders wanted their company to strike its own
development deal.
Soon what they wanted was answers, about why independent testing of the supposedly massive
Indonesian site revealed "insignificant amounts of gold." By the time Bre-X was delisted - and it was
clear the only real gold that had ever been mined was in the form of options and stock sales by some
insiders - they wanted blood.
"What had been a really enriching project -shareholders thought they were making a lot of money
when I first got into it - became a really tragic story where people were losing their life savings, their
college savings, their retirement savings," says Yetter. "Some people were going bankrupt. It was an
unmitigated disaster. So it wasn't just a natural reaction to turn to litigation, it was immediate."
Several prominent U.S. law firms in New York, Boston, Washington, Philadelphia and San
Francisco also rushed to file civil suits. The behind-the-scenes wrangling to consolidate and lead a
U.S.-based class action has been described by sources as fierce. But Yetter hit a huge roadblock
while fighting to control the Bre-X case, one in which he felt deeply vested. His partners at the
respected Houston-based firm of Baker & Botts wanted him to pull back.
"My old law firm is a very solid corporate firm that represents some of the biggest companies in the
U.S. and, as the litigation progressed, some of my partners that do corporate transactional work
became increasingly concerned the facts were going to require me to sue very substantial players in
the securities industry. As I became convinced that to protect my clients we needed to sue J.P.
Morgan, some of my partners became equally convinced Baker & Botts couldn't put itself in that
position. So it became one of those situations where you have to choose."
Yetter walked out on his partnership and Yetter & Warden was born, with Bre-X as its first and
biggest case. Autry Ross joined Yetter from the U.S. attorney's office, where he was in the fraud
division prosecuting financial institutions. He decided to throw his lot in with the young firm for a
variety of reasons.
"There has never been any doubt in my mind that Paul would be extremely successful," Ross says.
"He's a tireless worker who's completely devoted to the causes of his clients. And I have a lot of
trust in Paul in a business where, frankly, people are always looking after their own best interests to
the exclusion of others. Paul can be always taken at his word.
"So there's my sense that he has a very, very bright future ahead of him. But Paul's also fun to work
with because he cares so deeply about putting out a good work product."
It may not always be that much fun for the other side. Yetter is probably not the person you want to
see at the opposing table in a courtroom. Talented, tough-minded and tenacious, with the work ethic
of a sled dog, at 39 he has sat on a long list of judicial committees and won a Texas Bar Association
citation for his work. He's chairman of the state's Alliance for Judicial Funding, which represents
state judges on legislative issues.
He was part of the 1985 legal team under legendary litigator Joe Jamail that won a then-unheard-of
US$10.5 billion in a judgment for Pennzoil Co., putting Texaco Inc. into bankruptcy. A photograph
of the jubilant Pennzoil lawyers surrounded by a crush of reporters - inscribed: "Paul, this was a
great moment, Joe Jamail" - sits on the shelf behind his desk. Yetter was also trial counsel for
American Airlines when it grounded a US$3-billion predatory pricing suit; he helped Diamond Field
Resources Inc. defeat a $4-billion challenge to the ownership of Voisey's Bay, and Vancouver's
Loewen Group Inc. bury a US$4-billion hostile takeover bid by Houston's Service Corp.
International with court cases in Texas and New York.
"I handled the lawsuit in Houston and the strategy was that we had to defeat that case to let the case
go forward in New York, which was a very broadly attacking antitrust case," he says. "The long and
the short of it is we won in Texas, which allowed the New York case to go forward, and within
about a week SCI dropped its takeover bid, rather than have to produce all the information they
were going to have to produce for the litigation in New York."
Finis Cowan Jr., a former senior partner at Baker & Botts, says Yetter developed "an enormous
reputation early on because he tried a whole string of about 25 cases and won every single one of
them."
"After working with him on the American Airlines suit, I concluded he was really one of the finest
young trial lawyers I had ever been associated with," says Cowan, who himself was named one of
the top 10 trial lawyers in the U.S. by the National Law Journal in 1994. "He's very, very talented.
He's got the ability to see to the heart of the case; he's very, very skilled at direct and
cross-examination of witnesses; he has a very pleasing personality that inspires trust and he's
enormously hard working."
For all the career splash, Yetter is surprisingly low key. He's about as far from an F. Lee
Bailey-style U.S. trial lawyer as Ken Dryden is from a Don Cherry.
He drives a Chevy pickup. He favors disposable pens, wouldn't be caught dead with a $500 Mont
Blanc. His office on the 38th floor of Houston's highest tower is understated, decorated mainly with
pictures of his family and watercolors painted by his sister. He's at his desk in the morning while
most people are still enjoying their final hour or two of sleep. His work day is 12 hours, his work
week Monday to Saturday and most days he brown bags it at his desk, door closed, while poring
over legal texts. If he steals any time away, it's likely for a mid-day workout.
"I think the folks who hired me [for Bre-X] were looking to get the most aggressive, relentless,
tireless advocate for their rights," he says. "And I think that's a reputation American trial lawyers,
Texas trial lawyers in particular, have and deserve."
It was Bre-X shareholder Greg Chorny who first contacted Yetter back in 1996, on the advice of a
Bay Street law firm. He makes no bones about the fact he researched Yetter's reputation.
"You can start judging Paul by his academic records," says Chorny, who was a trial lawyer in
Timmins, Ont., for two decades. "He graduated from Columbia law school and clerked for the U.S.
Court of Appeals. Only the cr‚me de la cr‚me get to clerk for judges like that in the U.S. Those are
plum positions because they carry a lot of prestige; they're useful to you in your CV down the road.
"I chose him by reputation, but I liked him from the first day I met him. He's a polished, well-spoken
and tactful lawyer, who also gives you the feeling if push comes to shove, he could be one of the
toughest people you'd ever meet, without being bombastic about it."
Bombastic is definitely not Yetter's style. It's more likely to be soft-spoken, reassuring and folksy,
camouflaging a razor sharp intellect and an astute sense about what makes people tick.
Vancouver lawyer David Klein, who has thrown his support behind the Texas-based suit rather
than teaming up with a Bre-X class action in Ontario, says he is struck by Yetter's lightening quick
analytical skills, but even more by his deftness in managing a big legal team - one that undoubtedly
contains some big egos.
"With this type of litigation one has to work with a large group of lawyers," says Klein. "He's been
able to keep that team together and ensure everyone feels not only that they're included, but that
they're an important part of the team. That's a very special quality because it's not always easy to
work with a group of high-profile lawyers - and there are many high-profile lawyers working on the
Bre-X case. He has superb people skills."
Yetter says what makes him, or anyone, effective at litigating complex commercial cases like Bre-X
or Pennzoil is remembering that, at heart, they are still about people.
"These huge commercial fights all boil down to people and basic right and wrong. Some commercial
litigators don't look at litigation like this in the context of a normal person. It's important to keep a
perspective on the big picture and remember to focus, not on the complexities, but on the basic right
and wrong of who did what and why."
Growing up in the Texas border town of El Paso, he always knew he wanted to be a lawyer like his
father.
"My dad is a solo practitioner and I grew up watching him handle cases for every sort of client you
can imagine. Being in a small town in west Texas, you don't have the luxury of working just for big
corporations, or doing big corporate transactions, you work for ordinary people. I saw all the good
things he did every day in the community, case by case and client by client. So I always wanted to
be a lawyer, and I enjoy what I do.
"You can do good things for individuals and you can do important things for society as a trial
lawyer."
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