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Daily News (AK)
September 13, 1992
IN HIM THEY TRUST LAWYER FIGHTS TO REMAKE MENTAL
Daily News business reporter
After the four or so days without sleep, the lawyer lost
it. In the middle of the night, his mind raging and racing, Jim
Gottstein said he jumped out of a second-story window of his
father's house and wandered around the schoolyard across the street
in his underwear. Paramedics hauled him away to Alaska Psychiatric
Institute in a straitjacket. "I was really
wild when they dragged me in," he said.
The pressure of opening a new law practice and a run for the
legislature combined with jet lag and a lack of sleep were more than
he could stand, Gottstein said.
Released from the institution a month later, he spent the
next nine months battling the depression that set in after his
breakdown. Depression so deep that some days he couldn't even get
out of bed.
Nearly a decade after recovering from that breakdown,
Gottstein is still involved in the mental health field, but
this time as a litigator rather than a consumer. He was pulled into
one of Alaska's biggest lawsuits over land by a longstanding family
commitment to advocacy for the mentally ill and pushed along by his
own experience as a patient. That battle has made him one the most
powerful people in Alaska right now.
Gottstein is the main land expert in the troika of
lawyers for the mentally ill who are settling the decade-old lawsuit
with the state over mental health trust land.
Courts have ordered the state to remake a million-acre land
trust after Alaska took land once set aside by the federal
government before statehood to pay for mental health programs.
Under a proposed settlement with the state drafted last year,
those lawyers can lay claim to almost any chunk of state land
outside parks, preserves and refuges. And in the process, they
control many of state's own decisions on what will happen to
millions of acres of state-owned land.
If you want to dig for coal on land once owned by the
trust, go see Jim. If you want to build on land once owned by
the trust, go see Jim. That's what the state does.
State officials downplay the power of the mental health
lawyers. "They have a little more juice than the Joe Citizen, but
they don't have a lot of control," said Ron Swanson, the state's top
Tell that to people who mine the land, cut the forests and
drill for oil.
Uncertainty over how a new mental health trust would
administer the land it acquires was enough to prompt a Japanese
company to halt plans to mine the Wishbone Hill coal deposit near
Palmer, said David Germer. He's a consultant to developer Idemitsu
Alaska Inc. Part of the proposed mine site is on original mental
health trust land.
The risk that the mental health lawyers will claim
resource-rich land adds enough uncertainty to the development
process that miners are running to the sidelines until the
controversy is settled, said Debbie Reinwand of the Resource
Development Council for Alaska Inc. And everyone involved says that
could take years.
Already trust lawyers have claimed all of the Cook
Inlet oil and gas leases and land at Girdwood's Glacier-Winner
creeks now being eyed for a ski resort.
So powerful is the group that Natural Resources Commissioner
Glenn Olds said Gottstein and the mental health lawyers can
overturn his decision this summer to give Usibelli Coal Co.'s mine a
break on the fee paid to the state to extract coal. Alaska's only
coal mine, Usibelli is located on original trust land near
Healy and the trust advocates want it back.
But as happens with anyone who has power and wields it,
Gottstein is coming under attack. Critics are trying to
torpedo their settlement proposal by saying, in part, that
Gottstein, David Walker and Jeff Jessee the lawyers
who settled with the state have a conflict of interest for accepting
$880,000 so far in fees, paid by the state, that grew out of the
Gottstein, who had been at the case longer than any
other of the mental health lawyers, counters that his side won in
court and the state has been ordered to pay the costs. That is
common in lawsuits. But beyond that, the mental health case is not
just a lawsuit. For him, it's a legacy passed on from his
mother.FIRE DOWN BELOW
Natalie Gottstein had a fire for righting wrongs, a
fire for helping the mentally ill, said Robert Gottstein, one
of her five children.
She kindled the mental health land trust lawsuit. That
blaze ignited Jim Gottstein, he said. And after his mother
died of cancer in 1986, Jim "continued to light the torch of his
mother," brother Robert said.
In 1978, Natalie Gottstein became executive director
of the Alaska Mental Health Association. That same year the
legislature abolished the mental health land trust.
With that mandate, the state set about draining the
million-acre land bank by giving away, selling or making parks out
of land once designated to fund mental health programs.
Natalie Gottstein recruited Jim to the association
board of directors. That group decided in 1982 to sue the state to
get the land trust back.
Ironically, Gottstein was drafting that suit when he
had his 1982 breakdown. The experience brought him up close with the
weaknesses of the mental health system, he said.
He was drugged against his will, he said. Doctors took away
his hope, telling him he would be mentally ill for the rest of his
life and should just accept that, Gottstein said. But he
rejected that notion. And with the help of Dr. Robert Alberts, an
Anchorage psychiatrist, he came to understand he could recover and
that others could, too.HASN'T BEEN EASY
Recovery hasn't been easy. In 1985, Gottstein got
overloaded again and wound up in Providence Hospital for a week, he
Two years later he helped start Mental Health Consumers of
Alaska, a group for survivors of mental illness.
Back in 1982, however, Gottstein was in no shape to do
legal work. So the Mental Health Association hired Fairbanks lawyer
Steve Cowper who later became governor to file a class-action
lawsuit, said Jim Parsons, former association president.
With the association paying the bills, Cowper located
mentally ill people who might have been wronged by the state's
decision to abolish the trust, Parsons said. Those clients
then came to embody a whole group of people in a similar situation.
In class-action suits, lawyers hold much more power than in
typical civil suits. Lawyers make decisions on behalf of a number of
people, many of whom may not know that someone is fighting for them.
In 1984, a dispute between Cowper and the association brought
Gottstein into the fray, he said. The mental health
association, with Gottstein as its lawyer, fought for and won
a voice, under its own name, in the lawsuit.WORKED FOR FREE
Aside from the fact that he was a Harvard-trained lawyer
committed to mental health issues, Gottstein brought another
strong point to the case. He was willing to work for free, at least
for a while. In 1986, the court ordered the state to pay the legal
bills for him and the rest of the mental health lawyers.
In the early years it was low-profile work, a case ignored by
almost everyone except those involved.
Even after the Alaska Supreme Court ruled the state must
remake the trust, few took notice.
But when the Hickel administration latched on to the mental
health land as a way to get land into developers' hands,
Gottstein, who understood the power of land, found an ally.
In a marathon set of negotiations, state and mental health
lawyers hammered out a deal to enable the state to remake the
trust. The state put up 6.7 million acres as collateral until
the trust is returned.
Jessee, who took part in the negotiations, said
Gottstein, as lead negotiator, was a master.
"He's a very tough negotiator. But just at the point where
you think, 'We'll never get agreement if we keep this up,' then
somehow, there's a little glimmer of light that enters the picture,
and he'll do what it takes to get an agreement. He's probably the
best negotiator I've ever seen," Jessee said.
But the backlash against the deal has been growing.
Environmentalists challenged the plan in court. Nine days ago a pair
of oil companies sued to stop the state and mental health lawyers
from entangling Cook Inlet oil and gas wells in the settlement.
Through it all Gottstein maintained the settlement is
a good one. It will give the trust land to make money for
people who need counseling, hospitals and other mental health
services.PASSION FOR LAND
In his office overlooking Fourth Avenue, Jim Gottstein
sits in front of the computer, cranking out legal documents, a
yellow bowl of popcorn at his left hand.
Surrounding him is the comfortable clutter of someone who
works for himself. Photos of his wife, son and airplane sit on the
window sill and hang on the wall. Eskimo masks and carvings hang
there, too, and the tables are piled high with legal files.
Down the hall, the mental health lawyers have their land
office. This miniature state Department of Natural Resources has a
computerized data bank filled with information on state land, file
drawers brimming with maps, and a small staff to help select and
value state land for the trust.
Tom Hawkins, a former deputy commissioner of the Department
of Natural Resources, ran the mental health lawyer's land office
until he joined Bristol Bay Native Corp. this spring.
Gottstein passionately believes in the power of land
as a vehicle to earn money, Hawkins said.
"Perhaps it's part of the family lineage. Jim is the one (of
the three lawyers) who keeps his eye on the real estate ball the
Jim's father, Barney Gottstein, built a business
empire as much on real estate as he did on pallets of groceries. The
owner of food wholesaler J.B. Gottstein & Co. Inc.,
teamed with grocer Larry Carr to build Alaska's largest retail food
chain, more than a dozen shopping centers and malls as well as
residential and commercial developments all over Anchorage.
Carr and Gottstein sold the food and transportation
sides of the business in 1990 for an undisclosed sum and retained
much of their real estate holdings.
The Gottstein family is chocked with twins. Jim, 39,
has a twin sister Ruth Anne. His younger brothers, Robert and David
are also twins.
As a teen-ager, Jim Gottstein said, he "humped
groceries," loading trucks in his father's warehouse. Later he
worked in the computer operation at J.B. Gottstein, where
computers are essential tools for tracking all their inventory and
Jim Gottstein inherited his father's passion for
flying. At their father's insistence, all three Gottstein
boys got their pilot's licenses in high school, said Robert
When most kids were pleading for the car keys for the night,
Jim was borrowing his father's Cessna 172 for flights to Kenai or
Although his brothers no longer fly, Jim still does. And he
proudly recalls how he flew a trio of musicians from the band
Grateful Dead to Homer for dinner during their 1980 show here.
Without much searching, he reached behind a stack of legal files and
unfurled a wrinkled poster from the band's West High concert.
When he started college at the University of Oregon in 1971,
Gottstein figured he would study business and return to
Alaska to work with the family company.
But after his first course in business law, Gottstein
said he found a calling, and after ripping through the university in
three years, he went to Harvard Law School.
Gottstein returned to Alaska and since then worked for
two private law firms, as in-house council for Carr-Gottstein
Inc. and for himself. Working with lawyer Robert Goldberg,
Gottstein helped Ahtna Inc. with its land disputes.
Lidia Selkregg, a longtime family friend who worked as a
land-planning consultant to Ahtna, said Gottstein set up a
computerized land program for that project, a technique
Gottstein adapted for the mental health land issue.
"He's a real computer jock," said Walker, the lead attorney
in the mental health case. "Frankly it's saved our bacon numerous
times in terms our ability to turn things around quickly."
When legal briefs are due, Gottstein writes the first
drafts, said Jeff Jessee. "He's a word machine."
Billings submitted to the state show he's a money machine,
Gottstein's billings have been the highest of the
three mental health attorneys settling with the state.
A July 23 letter from Walker to one of his clients, the
Alaska Alliance for the Mentally Ill, shows Gottstein billed
$262,548 since spring 1991 to implement the preliminary settlement
with the state. That amount also included work done by two other
independent attorneys working for Gottstein, the letter
Walker, also a sole practitioner, billed $230,781 for himself
and the work of two law firms assisting him.
Jessee, a staff attorney for Advocacy Services of
Alaska, an agency for the developmentally disabled, billed $26,648
for fees and expenses.
The land office, consultants and some of the out of pocket
expenses paid by three lawyers cost an additional $360,234, the
For Gottstein and the other lawyers to collect that
kind of money from the state to implement a settlement that hasn't
even been approved by the court is a conflict of interest, charges
lawyer Philip Volland.
He's a lawyer representing chronic alcoholics who need mental
health programs. At one time Volland was allied with the other three
lawyers. But he has split with them saying the settlement with the
state is a bad deal that could give less money to mental health
programs and keep the lawsuit alive.BIG FEES
The big fees Gottstein, Walker and Jessee get
from the state may be clouding their abilities to tell their clients
of the deal's drawbacks, Volland wrote.
What's more, Gottstein, Walker and Jessee were
more preoccupied with negotiating a fee agreement with the state and
writing a report to sell their proposed settlement to their clients
than they were with moving forward onnegotiations of unresolved
legal questions on the deal, Volland charged in court papers.
Gottstein and Walker both said Volland's claims are
groundless. They negotiated the best deal they could for their
clients, they said. Volland gets his fees from the state, too, they
said. He just submits his bills to the court first.
Volland will argue the issue in a court hearing in Fairbanks
next week and plans to put his colleagues on the witness stand, he
Gottstein figures he will prevail in court, but not
necessarily in the public eye.
"There's kind of no way for us to win on this fee issue,"
Gottstein said. "People just think lawyers are getting rich
off of this. But I think that's really a red herring. You have look
at who created this problem. It wasn't us."
Copyright (c) 1992,
Anchorage Daily News