Jones vs. Clinton: Who is paying? Bills: The uproar over where the money is coming from to cover the mounting legal costs has all but drowned out the original sexual harassment complaint.

WASHINGTON — WASHINGTON -- The original question was this: What, if anything, happened between Paula Corbin Jones and President Clinton in a Little Rock hotel on May 8, 1991?

But now that the lawyers have worked their way to the Supreme Court, there is a second question: Who is paying the legal bills?


It is not Paula Jones or Bill Clinton. And in a case in which both sides pay keen attention to their public relations victories and setbacks, the issue of legal fees is being debated as vigorously as the underlying facts of the suit itself.

Each side accuses the other of being mercenary -- while not being entirely forthcoming about its own billing practices and sources of money.


It's known that two insurance companies paid legal fees to Washington lawyer Robert S. Bennett, who is representing the president. In an interview last week, Bennett said he has collected about $1 million from the companies. But the companies concede that they made those payments more than two years ago.

In the meantime, Bennett has unsuccessfully argued before the Supreme Court that a sitting president cannot be sued. He would not say how he's been paid in that period of time.

Jones' lawyers likewise provide incomplete answers when asked who has been paying their bills. Joseph Cammarata, one of Jones' two attorneys, concedes that a defense fund has been set up for their client, but wouldn't say how much her attorneys had received from it.

"I think, frankly, that there is no money in the legal defense fund," Cammarata says.

He indicated that he and the other lawyer, Gilbert K. Davis, have dipped into their pockets to pay for the bulk of their work. This is a common practice among plaintiff's lawyers.

But when Jones said she would donate to charity some or all of the $700,000 she is seeking, it became less clear how Cammarata and Davis would recoup even their expenses.

"We're in a deep hole on this one," Cammarata said in an interview.

This is a touchy subject for Davis and Cammarata because of Bennett's occasional hints that her suit is being paid for by hidden right-wing supporters.


Jones' first attorney, a solo Arkansas practitioner named Daniel Traylor, had Jones sign a contract giving him one-third of any royalties from book or movie deals. Her second attorney was Little Rock activist Cliff Jackson, whose passion is bashing Clinton and who introduced Jones to the media at a national meeting of conservatives.

Traylor and Jackson eventually turned the case over to seasoned litigators Davis and Cammarata.

To this day, however, Bennett uses Traylor's dreams of a movie deal and Jackson's conservative links to attack Jones' credibility and her motives. And Davis' current candidacy as a Republican for attorney general in Virginia has become more fuel for the partisan suspicions of Clinton loyalists.

The president's personal lawyers were originally to be paid out of a legal defense fund that attracted considerable publicity, little of it flattering to the president. Critics noted that many of the donors had business before the federal government and might believe that contributions would secure favor from the White House.

There was more controversy when a Chinese citizen named Charlie Trieh submitted more than $450,000 in checks to the fund, money that was returned because its true source could not determined.

Bennett had already examined two insurance policies taken out by the Clintons in 1992 from Chubb Insurance and State Farm. The policies offer $1 million in coverage for a variety of mishaps, atop the coverage from the Clintons' auto and homeowners policies. Such supplemental coverage is called an "umbrella" policy; State Farm, the largest insurer in the country, says it now has about 1.5 million such policies.


Bennett concluded they provided the president with coverage for his legal bills. But the companies' payments incensed some policyholders. One of them, 50-year-old Thomas V. Flocco of Media, Pa., has sued State Farm, arguing that Clinton is getting preferential treatment.

"It's a sweetheart deal, which you or I could never get," says Flocco, a State Farm customer for 30 years. "It's just not right."

Larry Klayman, Flocco's lead attorney, maintains that the insurance companies' payments to Bennett amounted to an illegal campaign contribution. He says the alleged harassment of Jones happened a year before Clinton bought the policy, Clinton waited too long to file a claim, intentional acts are not covered in the policies, and Bennett's fees are excessive.

"Insurance companies normally would give you a $125-an-hour lawyer," he says. "And you'd be under intense pressure to settle."

"That's true," John Lobert Sr., an official with the National Association of Independent Insurers, says. "Normally, you'd be told, 'Here's your lawyer,' and if you want your own you're welcome to hire him -- and pay yourself."

But with this one exception -- whether Clinton should have been allowed to retain Bennett as his lawyer -- industry officials say they had little choice but to contribute to Clinton's defense.


"It's not unusual at all for insurance companies to pay defense costs in the kind of case [in which Clinton] finds himself involved," says Mavis Walters, executive vice president of the Insurance Service Office Inc., a corporation providing data and services to insurance companies.

"We have a 'duty to defend' regardless of the merits of the case," says Steven Goldstein, vice president of the Insurance Information Institute. "If we make a decision not to defend you and you sue -- and we lose -- the judgment can be enormous."

State Farm spokesman Steve Vogel says that Klayman's complaints about the nature of the policies are irrelevant because Jones also sued for defamation of character, a liability clearly covered by the umbrella policy. Vogel says State Farm has no objections to Bennett's fees or his legal strategy. And he hinted that Bennett is charging less than the $475-per-hour figure cited in the press.

"We're paying reasonable defense fees," Vogel says. "This is a complex case. It's not a fender-bender or a traffic accident."

Goldstein agrees, saying that insuring a sitting president presents an unusual challenge. Insurance companies typically allow for high legal bills in cases involving constitutional issues or when a policyholder's reputation is at stake.

"In those cases, we usually fight them out," Goldstein says. "Also, Bill Clinton is a party of one. There is only one person who fits his category."


But independent experts add that State Farm may wish it had handled Clinton like an ordinary client and pressed him to settle.

"They can't have it both ways. They can't say, 'We wrote identical policies for half a million people, but it just covers this one guy,' " says Robert Hunter, an insurance expert with the Consumer Federation of America.

"If I have a similar problem, I'm going to say, 'Pay up!' If they don't I'll kill 'em in court. If it's covered for Clinton, it's covered for everybody else."

Pub Date: 6/12/97