After the movie "A Civil Action" portrayed W.R. Grace & Co. as a callous corporate polluter, it seemed that the company's image and fortune could plunge no lower.

Grace was featured in that 1998 drama, which depicted the events of a decade earlier, when eight Boston area families negotiated an $8 million settlement with the company over claims that corporate chemical dumping had poisoned some of their children.

The Columbia-based chemical maker is still in a legal and ethical tangle. It is fighting criminal charges tied to a mining operation that exposed a small Montana town to asbestos decades ago. It faces civil charges linked to its cleanup efforts at a now-defunct New Jersey plant that processed asbestos ore from that mine. And it is operating under bankruptcy protection for the fifth consecutive year as it tries to resolve about 129,000 personal-injury claims related to asbestos.

Alfred E. Festa, the new chief executive who is trying to lead Grace out of bankruptcy, said problems run so deep that he considered changing the company's name when he took over in June in hopes of distancing Grace from its past.

"This could be the most troubled period in the company's 150-year history," Festa said. "Everyone in this company feels terrible about the asbestos problems from all those years ago . . . But we can only focus on what we can control, like our relationships with our customers. We have to be mentally strong to do that."

So now what?

There is no shortage of advice on how to recover from inherited problems that haunt companies for years, such as the gas leak that killed thousands at Union Carbide Corp.'s plant in Bhopal, India, in 1984, or the multibillion-dollar lawsuits stemming from the tobacco industry's alleged cover-up of the dangers of cigarette smoke.

Experts who study companies in crisis agree that Festa has a brief window to establish his leadership and prove to employees, customers and creditors that he can steer the global enterprise, which employs 1,200 people in Maryland and 6,500 worldwide, through its troubles.

"People are willing to give a new guy the chance to prove he can overcome legacy issues," said Michael Useem, a management professor at the Wharton School of the University of Pennsylvania. "But about 18 months later, the new guy owns the issues. If the company is not moving in the right direction by then, the honeymoon is over."

The new guy is not new to corporate America. Festa, 45, spent a decade at General Electric Co. and another at Allied Signal Inc., reaching the executive ranks of both firms. The Rome, N.Y., native then ran a start-up software company in Philadelphia for a short time before joining Morgenthaler Private Equity, a venture capital firm, in 2003.

Festa was itching to return to his corporate roots that year when he got a call from Paul J. Norris, Grace's chief executive at the time, urging him to consider joining the company. So Festa started looking at Grace's fundamentals, legal issues aside.

When he accepted the chief's executive position in June, after a year as chief operating officer, the appeal was not the $1.75 million signing bonus that came with it or the $760,000 salary, Festa said. He might have done better at another firm, he said.

"I just decided Grace had a tremendous business that I could help shape," Festa said. "The challenge was to get the company back to the prominence it deserves."

Working in his favor, Festa said, is Grace's revenue. Sales increased each of the past four years, reaching $2.3 billion in 2004, up from $1.7 billion in 2001, when the company filed for Chapter 11 bankruptcy protection.

Even after that filing, the annual employee turnover rate remained at 5 percent and the company continued to attract talent from top-tier schools and firms, he said. Former General Electric executive Richard C. Brown, for example, joined Grace this year to head one of its major units.

Festa said that one reason the company has remained competitive in recruiting despite its legal troubles is that its underlying business and line of specialty chemicals is strong. For example, Grace makes the sealant that keeps bottles of beer and cans of food airtight, the silica that helps toothpaste clean teeth, and the compounds that remove sulfur from oil in refining -- products unfamiliar to consumers but critical to makers of consumer products.

It also kept expanding under the eye of the bankruptcy court. Since filing for Chapter 11 protection, Grace has spent about $180 million to acquire 22 small firms that helped it put out new products, Festa said. About 20 percent of Grace's revenue last year came from products introduced since the start of 2001.

"We were able to do all this because our customers believe in us and in our products," Festa said. "While we were getting trashed in the newspapers, our customers who worked with our employees for so long stuck by us."

Festa works out of an office that once occupied much of the company's main floor. He carved a conference room out of most of it, leaving himself a more modest workspace. Since taking over, he has tried to keep company staff focused on inventing, making and selling chemicals.

The fact that Grace largely sells to other companies works in Grace's favor, said Stephen A. Greyser, a Harvard Business School marketing professor who specializes in corporate reputation.

"Grace is no Martha Stewart," Greyser said. "Martha Stewart's name and face were all over magazines and television programs and products that touched consumers. The general public is less important to a W.R. Grace. " As Festa put it: "The Average Joe does not pay our bills . . . The Average Joe does not buy our products."

It didn't used to be that way.

Company founder William R. Grace moved to Peru to escape Ireland's potato famine and began chartering ships that traded fertilizer in 1854. He moved his headquarters to New York about a decade later and laid the foundation for what became a highly diversified firm that once owned such businesses as banks (Grace National Bank), airlines (Pan-American Grace Airways) sporting-goods stores (Herman's) and restaurants (El-Torito-La Fiesta.) Grace entered the specialty-chemical business in 1954, a year after going public, with the purchase of Davison Chemical Co. and Dewey & Almy Chemical Co.

Eventually, Grace scaled back, shedding everything but the two chemical units, each of which accounts for roughly half its annual sales.

Despite success in its core field, the past still looms large. Losses widened in 2004 to $402 million, compared with $55 million the previous year. Eating into its bottom line is the $1.6 billion trust fund that the company has proposed under its bankruptcy reorganization plan to compensate asbestos victims. The fund has not been approved by the bankruptcy court, but Grace set aside $476 million in 2004 to help pay for it.

"It's not even the bankruptcy per se," said Greyser, the Harvard professor. "It's about what caused the bankruptcy. Can they really leave it behind?"

That's not at all clear.

Grace filed for Chapter 11 protection in April 2001 because of a surge in personal injury claims filed the previous year, mostly by construction workers who applied an asbestos-laden fireproofing spray designed by Grace to keep the steel beams of buildings from melting under extreme heat. Those claims date back to 1963.

Exacerbating Festa's problems is his predecessors' decision in 1963 to buy a mine in Libby, Mont., that contained abundant deposits of vermiculite, a mineral used in fireproofing spray, potting soil and attic insulation. The vermiculite contained naturally occurring asbestos that infused the air of the Libby mine, blew into the town, and was carried home by workers on their clothes, the company said.

In February, federal prosecutors charged the company with burying a paper trail dating to 1976 to cover up the dangers of asbestos. They said the death rate from asbestos is now 40 to 80 times as high in Libby and surrounding areas than elsewhere in the country. Grace denies criminal wrongdoing and says it took steps to reduce asbestos exposure knowledge about the danger emerged.

Every time the Montana issue percolates, Festa said, his biggest challenge is to keep employees focused on the task ahead.

"I want the legal issues confined to the leadership and not have every employee in this company consumed by it," Festa said. "When articles come out, they get concerned. They want us to come out with a strong stance. But hey, we're not going to try our case in the press."

It is tough to say how Grace will fare in the courts.

Since Johns Manville Corp. filed the first asbestos-related bankruptcy case in 1982, about 70 companies have sought Chapter 11 bankruptcy protection because of asbestos claims, according to a study by the Rand Institute for Civil Justice, a California think tank. About 20 firms have since emerged from court protection, but not all of them prospered, according to Lester Brickman, a law professor at the Benjamin N. Cardozo Law School of Yeshiva University.

Johns Manville, once the world's largest asbestos producer, emerged from Chapter 11 in 1988 and was purchased for $2 billion by Berkshire Hathaway Inc. in 2000. But by that time, the company "was a shrunken version of its Fortune 500 status and it never did recover as a market leader," Brickman said.

Others overcame bankruptcy, but at a huge cost. For example, Houston-based Halliburton Co. agreed this year to pay $5.1 billion to settle hundreds of thousands of asbestos claims filed against one of its subsidiaries. Through that agreement, some of the company's units emerged from bankruptcy.

Grace says that unlike other companies that were on the brink of liquidating by the time they filed for protection, Grace went into bankruptcy in a relatively sound state. It could still pay its bills, it had strong cash flow and its sales were up. The company could also benefit if Congress approves legislation establishing a national trust fund for asbestos claims. Though Grace and other companies would have to pay into the fund, it is intended to make their costs predictable and settle once and for all the tens of thousands of cases that have in the courts for decades.

"The courts will decide how the money gets sorted out," Festa said. "If we make ourselves financially stronger in the meantime so we can pay fair wages, provide innovative products and fund our pension, at the end of the day, we'll be okay."

Festa gives his leadership team high marks so far on all those fronts.

That is why, he decided, there is no need to change the company name.

Staff researcher Richard Drezen contributed to this report.

Alfred E. Festa took over in June as chief executive of W.R. Grace & Co. and hopes to guide the company through Chapter 11 bankruptcy.

"We can only focus on what we can control, like our relationships with our customers," Alfred E. Festa says.

Festa confers with Brian McGowan in the company's headquarters in Columbia. Festa thinks Grace has a bright future despite legal problems.