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Starr Will Argue Case For Client Next Month

By Ruth Marcus and Susan Schmidt
Washington Post Staff Writers
Wednesday, April 29, 1998; Page A03

Independent counsel Kenneth W. Starr has decided to proceed with plans to argue a major appeals court case next month, rejecting criticism even from some allies that he should be devoting himself entirely to the investigation of President Clinton.

Starr has maintained his private law practice at Kirkland & Ellis, where he has earned more than $1 million annually, throughout his four-year tenure as a special prosecutor. His supporters argue that Starr, whose private work is allowed under the independent counsel statute, works more than full time at the counsel job and can juggle the dual roles of independent counsel and appellate litigator.

Starr agreed months ago to take on the appeals court case set to be argued May 5. It is a mammoth dispute between the Meineke discount muffler chain and franchisees who claim the muffler company defrauded them of millions of dollars that were supposed to go for advertising. Starr is representing Meineke and asking the appeals court to overturn a nearly $400 million judgment against the company.

The White House has seized on Starr's plan to argue the case at a time when he is working to complete a report to Congress about his investigation of Clinton. The opposing lawyer in the case, Charles Cooper, has said he will devote about 100 hours to preparing for the argument.

White House spokesman James Kennedy said yesterday, "It appears Mr. Starr is exercising a new privilege -- the privilege to earn $1 million a year for himself while spending $40 million of taxpayer money on an endless investigation."

Starr spokesman Charles Bakaly said that "this matter is a longstanding commitment, and he honors his commitments to both his public and private clients." Starr is also committed, he said, "to fairly, fully and expeditiously complete his duties as independent counsel."

Starr has completed a majority of the preparation for the argument, said Bakaly, and after the oral presentation to the court he will be back in the office the same day. Bakaly said that notwithstanding his work for private clients, Starr keeps a full-time schedule as independent counsel.

Although Starr had long planned to argue the case, his firm said earlier this month that it was not clear who would fill that role. "No final decision has yet been reached about whether Ken will argue the matter," his partner Jay Lefkowitz said at the time. "It's something I know he is discussing with his client."

Meanwhile, Starr is winding up his Little Rock grand jury, which has heard testimony about the Whitewater part of his investigation and is scheduled to expire May 7. His prosecutors as soon as today may play the videotape of the nearly five-hour deposition they took Saturday from first lady Hillary Rodham Clinton.

The interview, conducted in lieu of a grand jury appearance, focused on her previous sworn statements about her legal work for the savings and loan owned by her Whitewater business partners, Susan McDougal and her late ex-husband James B. McDougal.

Susan McDougal, who is serving a prison term for bank fraud, was summoned to the grand jury in Little Rock last week but refused to testify, as she has before. Starr may call her again this week. If she continues to refuse, she could face criminal contempt charges. She has already served 18 months for civil contempt.

In Washington, Starr's grand jury for the Monica S. Lewinsky matter has heard from virtually no witnesses in weeks, as Starr and the White House await several key rulings from Chief U.S. District Judge Norma Holloway Johnson that will determine how the investigation can proceed -- including whether Starr can question senior Clinton aides, Secret Service agents and Lewinsky herself.

Nancy Hernreich, director of Oval Office operations, showed up at the federal courthouse yesterday for a repeat appearance before the grand jury but did not testify because the prosecutor who was to question her was ill, according to a source familiar with the appearance. Hernreich has testified four times already.

Staff writer Peter Baker and staff researcher Ben White contributed to this report.

© Copyright 1998 The Washington Post Company

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