LITTLE ROCK, ARK., MARCH 14 -- It is an axiom of life in Arkansas that most people who want something out of the state will at some point solicit support from the governor's office, where Bill Clinton runs the show, or from the Rose law firm, where Hillary Clinton is a partner. Or quite often both. The power line here runs 14 blocks from the red brick Rose building up to the pillared state capitol.
Rarely in American politics have married partners played such interconnected public roles, and the convergence of legal and political power in the Clinton family poses several problems for them as they seek to move on from this small-town, politically inbred capital to the White House.
The Clintons have faced questions about potential favoritism for business clients of the prestigious Rose law firm, and conflicts of interest for a governor whose appointees regulate many of the business and financial institutions Rose represents, since they rose to state power more than a decade ago.
They had to answer them again before a national audience last week -- just as Clinton emerged as the front-runner for the Democratic presidential nomination -- when newspapers reported Rose's pleadings before the state for the owner of a failing savings and loan with whom the Clintons were participating in an unrelated real estate venture.
For their old friends and supporters, the recent accounts gave short shrift to difficulties faced by a professional woman who happens to be married to the state's dominant political figure, and to Hillary Clinton's efforts to separate the interests of her clients from those of the government her husband leads.
"If you are going to be a high-powered lawyer, it would be pretty hard to separate yourself from the economic power of the state," said Clinton adviser Diane Blair, a political science professor at the University of Arkansas.
But Clinton rivals say that the very listing of the governor's wife as a partner gives Rose's clients undue leverage in their dealings with state government. "If you want something special in this state, you go to the Rose firm," said Sheffield Nelson, a Little Rock lawyer who lost to Clinton in the 1990 governor's race.
Until recently, Hillary Clinton has sought to disarm critics by saying she did not represent clients before the state government, and that she declined her share of Rose's fees from such cases. Her alleged role in the Madison Guaranty Savings and Loan case appears to crack the image of arms-length distance.
The case dates back to 1985, when Madison Guaranty was under pressure from federal regulators to increase its ratio of capital to assets. The Rose firm asked the state security commissioner to approve in principle a plan by the thrift to issue preferred stock. Hillary Clinton was listed in the initial pleading as one of two lawyers to contact. She received the letter of approval from the commissioner, who had just been appointed to the post by the governor.
Campaign officials denied that Hillary Clinton played an active role in handling or landing the case. Madison Guaranty's principal shareholder, John McDougal, was an old friend of Bill Clinton's, who had brought the Clintons into the real estate deal in the Ozarks several years earlier.
Last week, McDougal's wife Susan, who was a major shareholder in the thrift, disputed the campaign's version, saying that Hillary Clinton actively solicited the case.
Webster L. Hubbell, a senior partner at Rose, said Hillary Clinton did "some work" for Madison Guaranty, but not a major share. He declined to give further details, citing the confidentiality of attorney-client relations.
Hillary Clinton has not commented on the matter. Among the unanswered questions is when she stopped profiting from the Rose firm's representation before the state on other matters such as bond sales. As late as 1986, she was quoted as saying she would disclose those benefits if one of her husband's political rivals disclosed how much he earned in fees from an underwriter who did bond work for the state.
A list of the Rose firm's clients is an introduction to the financial power of Arkansas. Although one of the nation's poorest states, it is home to some of the wealthiest corporations, from Wal-Mart Stores, America's leading discount merchandiser, to Tyson Foods, the top chicken processor.
The Rose firm offers the full range of representation before the government, from getting environmental approvals from the state Pollution Control and Ecology Commission, to lobbying to protect the poultry industry from strict regulations on animal waste, to writing the rules by which corporations treat their shareholders.
When the elders of Arkansas' corporate world formed a group in 1986, known as "The Good Suits Club," they set out to make the state's laws of incorporation more amenable to business interests. For political support, they turned to Bill Clinton, who made their purpose part of his administration's legislative package and promoted it in his State of the State address. For legal acumen they hired Rose, which drafted the 397-page treatise and lobbied to help get it enacted a few months later.
One of Rose's most lucrative clients is the state government, which has issued a number of nonbid contracts to Rose, as well as to other leading firms here, during Clinton's years as governor. The Public Service Commission, appointed by Clinton, paid $115,000 to Rose to represent it in a nuclear power plant dispute with Mississippi.
Rose has earned up to $175,000 for bond counsel work for the Arkansas Development Finance Authority since 1985. Although the firm is not the leading earner of bond counsel fees, it did not have any of the state business in most early years of the decade, according to state records.
Hillary Clinton's work at Rose is just one part of her professional life. She has led several task forces for her husband, including a 1983 panel that reformed the public education system. She is a frequent witness at legislative hearings on issues dealing with schools and children. She also serves on the board of directors of two major corporations: Wal-Mart and TCBY Enterprises, a yogurt company.
Asked about her role with those companies, Hillary Clinton once said she did not see a conflict because they were not chartered or directly regulated by the state, even though they were based here. Bill Clinton's financial disclosure forms indicate that Hillary made more than $12,500 per year serving on each of the Wal-Mart and TCBY boards.
For several years, Bill Clinton has had a special fund he has used to promote his legislative agenda to the public through paid advertising. Records show that Frank D. Hickingbotham, chairman and executive director of TCBY Enterprises, contributed $25,000 to the fund in 1989.
Hillary Clinton joined the Rose firm in January 1977 when the Clintons moved from Fayetteville, where they both taught at the University of Arkansas law school, to Little Rock, where Bill Clinton began a two-year term as attorney general. In 1979, about the time her husband became governor, Hillary Clinton was promoted at Rose, becoming the firm's first female partner. She also became the Clinton family's chief wage earner -- Bill Clinton's salary as governor was $35,000 a year.
Hillary Clinton was named one of the 100 most influential lawyers in America by the National Law Journal in 1988 and 1991. Records indicate that most of her work for Rose has involved copyright infringement cases: protecting royalties for songwriters and trademark names for bread companies. Paradoxically, although she frequently is referred to in Little Rock and in profiles as a premier litigator, there is little indication here that she has appeared frequently in court.
George Bentley, a courthouse reporter for the Arkansas Gazette for 30 years, said he saw Hillary Clinton in court once: She represented the Little Rock Airport Commission in an eminent domain case. George Wells, who covers the federal courts for the Daily Record, a legal journal, said he has seen Hillary Clinton in trial litigation "maybe once or twice over the years." Pam Strickland, the Daily Record's state judicial reporter, said she has not seen Hillary Clinton in the state courts.
Rose is one of the Big 3 firms in Little Rock. The others are the Wright firm, where Bill Clinton worked when he was out of office between 1981 and 1983, and the Friday firm, known for its connections to former longtime Arkansas governor Orval Faubus.
Rose has 55 lawyers in four sections. Hillary Clinton is among 19 members of the litigation and labor section. She works in a corner office on the third floor of the Rose building, a converted YMCA that has a swimming pool and old hardwood floors. Although she has been away from Little Rock much of the time since Bill Clinton began his presidential campaign last October, her colleagues said she calls in at least once each day.
While Hillary Clinton gave her firm a special status among the big law firms in Arkansas, Rose had ample clout long before the governor's wife was made a partner. Founded in 1820, it is one of the oldest firms west of the Mississippi River. U.M. Rose was among the founders of the American Bar Association and its president in 1900. He is one of two Arkansans whose statues loom in Statuary Hall in the U.S. Capitol. The Rose firm has supplied six Arkansas Supreme Court justices as well as several members of the legislature.
At critical junctures in Arkansas history, Rose lawyers have been at the center of legal action. Rose lawyer A.F. House served as lead counsel for the Little Rock School Board during the historic Little Rock Central High School desegregation case in 1956 and 1957.
The Rose firm is so ingrained in the Arkansas establishment that conflict-of-interest questions frequently arise. Hubbell served as mayor of Little Rock from 1979 to 1981, briefly relinquishing his partnership at Rose, and returning at the end of his term. In 1980, records show, the Rose firm served as bond counsel for $150 million worth of municipal bonds. The city Facilities Board gave the work to Rose on the recommendation of Watt Gregory, who also worked at Rose and who had served as bond attorney for the city the previous year.
"Obviously, the situation creates problems of appearance," John DiPippa, associate dean at the University of Arkansas-Little Rock law school, said of Hillary Clinton. "Even when technically there is no problem, the question is whether it looks good." But, he said, "I think Rose has dealt with it properly."