Top WaMu lawyer out as its legal issues grow

Lost in the latest wave of bad news breaking over WaMu was this tidbit: The company's longtime top lawyer, part of its inner management circle for more than a decade, has stepped down abruptly while it faces unprecedented legal troubles.

Fay Chapman will retire in June but is being replaced immediately as chief legal officer, said Seattle-based WaMu, which is reeling from rapidly climbing losses in the mortgage market and a rapidly dropping stock price. As a senior executive vice president, Chapman was one of two women on WaMu's executive committee.

Stepping in as interim chief legal officer is Stewart Landefeld, previously head of the national business practice group at the biggest Seattle-based law firm, Perkins Coie.

Executive search firm Heidrick & Struggles will help WaMu find a permanent top lawyer. In a regulatory filing disclosing the changes, the bank said Landefeld doesn't wish to be considered for the post.

And who could blame him? WaMu faces a deepening array of legal challenges:

• The New York attorney general is suing an appraisal firm used by WaMu, accusing it of acquiescing to pressure from the lender to inflate appraisal values so bigger loans could be made.

• A 65 percent plunge in WaMu's stock has provoked a rash of shareholder lawsuits.

• And yet another batch of suits claims the company, its directors and officers breached their fiduciary duty to their employees' retirement plan by having 15 percent of its funds in WaMu stock when they should have known it was "an imprudent investment."

The company is defending itself against the allegations in all those cases.

WaMu spokeswoman Libby Hutchinson said the 61-year-old Chapman will advise the company as a consultant for another two years after retiring.

Chapman was appointed executive vice president and general counsel in 1997. By then she'd already served as the company's outside counsel for 15 years and had been "a key strategist in the company's acquisitions," WaMu said at the time.

Landefeld's background is in corporate finance, not banking or litigation. But he is accustomed to managing a lot of busy attorneys: His group at Perkins Coie had nearly 200 attorneys, working for clients from Microsoft to Boeing to WaMu.

An earmark runs through it

There's nothing quite like the Montana trout-fishing land owned by Seattle-based Plum Creek Timber and celebrated in "A River Runs Through It."

That, at least, is the figuring in Congress. Deep in the thousand-plus pages of the energy bill now pending in D.C. there's a special provision that could only affect more than 40,000 acres owned by Plum Creek in that area, Bloomberg News reported.

The U.S. Fish and Wildlife Service has been working with Plum Creek since 2000 to try to protect the threatened bull trout in the Bull River area in the state near the setting of Norman Maclean's novella, "A River Runs Through It," later a movie directed by Robert Redford.

Bloomberg News reports the energy bill contains language to make U.S. taxpayers pay the interest on as much as $500 million of state-issued "forestry conservation bonds" to be used for the potential purchase of prime bull trout habitat that otherwise is in danger of development.

U.S. taxpayers would pay as much as $161 million to help the state of Montana finance the deal.

The property is unnamed, but the specifications make clear it belongs to Plum Creek, the biggest private landowner in Montana.

The provision "aims to protect pristine lands from ever being flipped by developers into condos and strip malls," Carol Guthrie, a spokeswoman for the Senate Finance Committee, told Bloomberg News. That panel's chairman, Democrat Max Baucus, is from Montana and helped write the energy bill.

House Republicans called the provision a special-interest clause, or earmark, which Democrats said they would limit when they took control of Congress in January.

The legislation "can only possibly benefit one landowner in the U.S.," Republican Rep. Jim McCrery of Louisiana told reporters. "These are the kinds of things that are hatched in secrecy."

Kathy Budinick, a spokeswoman for Plum Creek, and Guthrie told Bloomberg News the company didn't lobby to have the provision added to the energy bill.

"This is not something Plum Creek is doing, it is something Senator Baucus is doing," Budinick said.

Plum Creek's political action committee contributed $9,000 to Baucus in 2005 and 2006, more than it gave to any other federal candidate, according to the Washington-based Center for Responsive Politics.

Rami Grunbaum: rgrunbaum@seattletimes.com or 206-464-8541