In this August 19, 1997 letter, attorneys Gilbert Davis and Joseph Cammarata, who at that time represented Paula Jones in her sexual harassment case against President Bill Clinton, clearly told Jones that she should accept a proposed settlement in the case.

The letter, unsealed on June 10, 1998, explains to Jones that the financial benefits she will reap from a proposed $700,000 settlement will outweigh any possible money she could recover in what would be a difficult and lengthy trial process.

Moreover, they argue, apologetic language from Clinton -- along with the hefty settlement price -- would do more to vindicate her name and reputation than any possible trial outcome.

Perhaps most significantly, they explain to Jones that they feel her motivation in the case has shifted from one of personal vindication to a personal crusade to prove that "Clinton is a bad person. That was never before your objective in filing suit."

In a subsequent letter dated August 29, 1997, the two attorneys tell Jones they must resign due to her insistence to carry on what they consider to be an unwinnable suit.

GILBERT K. DAVIS, ESQUIRE
9424-C Lee Highway
Fairfax, Virginia 22031

JOSEPH CAMMARATA, ESQUIRE
1725 K Street, N.W., Suite 1401
Washington, D.C. 20006-1401

August 19, 1997

VIA FACSIMILE AND FIRST CLASS MAIL

Dear Paula:

We wanted to put to paper the substance of our discussions with you on Saturday and Sunday, so you would be able to further consider our strong settlement recommendation.

We presented, by facsimile telephone with you and Steve on Saturday, August 16, 1997, a proposed Stipulation of Settlement which was hammered out in lengthy and difficult negotiations with counsel for defendant Clinton. We firmly believe it is the best we can ever obtain, and that delay in acceptance will be very harmful to your interests. In fact, there is great pressure in the White House urging Clinton not to pay the amount sued for, and a strong possibility that the offer will, in the near future, be withdrawn. We sent to you a copy of this proposed agreement which, we are told is now acceptable to the attorneys and advisors of the President and which we believe will be accepted by the two defendants and the insurance companies, subject first to the communication by us to them of your approval of the proposed settlement.

We recommended to you the acceptance of this settlement. We further told you that it is a complete victory for the interests you seek which are the redemption of your character and reputation.

The primary reason this is a complete victory for you are the unheard of agreement by our opponents to pay the full amount sued for, the admission that the American Spectator's allegations, and inferences to be drawn therefrom, are false, and the admission that you have suffered regrettable damages.

We explained in great detail the adverse consequences of failure to accept this complete victory, including the following:

1. It is very unusual and unlikely to achieve a judgment for the amount sued for; in fact, the amount, if any, will be far less, and there will be no redeeming language.

2. To achieve any judgment will cost a great amount of money, time, emotional distress, and the inevitable sullying of your reputation in the process.

3. Your reputation is now at its highest peak because of your victory in the Supreme Court, and the revision of press attitudes toward your case. The money and language fully redeems your reputation for character and truthfulness, and will be seen by most people as doing so. Your reputation will suffer serious deterioration in the course of litigation, and therefore, failure to accept this settlement will, in effect, "snatch defeat from the jaws of victory."

4. It is most unlikely you will personally receive any money from this suit if it further proceeds.

5. You will lose all prospect of financial reward from the selling of your sealed affidavit once that affidavit is disclosed, as it must be, to our opponents. You will recall they seek its production from you now, and we believe they will be successful in getting it. Once disclosed to our opponents, it is more likely to become a matter of public knowledge. We told you that, as part of the settlement, the President will be allowed to obtain a copy, and if it is not blank, then regardless of what it says, the deal would still be valid. Of course, it is not blank.

6. There is a substantial possibility you may lose this case. This risk exists in most sexual harassment cases. It will be your word against his as to what happened in the room. If the jury, or the judge trying the case without a jury, is uncertain whom to believe, then you lose because you have the burden of proof. Bear in mind defendant Clinton has persuaded millions of voters he is credible.

7. There are pending motions to dismiss which could eliminate one or all of the four counts. Even if we win these motions, punitive damages, which represent $400,000 of your claim, are unlikely to be awarded. Compensatory damages for the President exposing himself on the one occasion would probably be very small and it will be difficult to show retribution by causing you to lose job benefits. if we do prove such loss of benefits, the sum necessary to compensate you will not be large.

8.Even if you win at trial, there will likely be lengthy and expensive appeals.

9. We do not see the likelihood of very much money from outside sources to pursue everything we would like to do in developing the evidence and preparing for trial. Even if there was sufficient money available, it is foolish to pursue this case in the face of a full victory which this settlement provides.

10. Moreover, there will likely never be sufficient legal fees awarded by the court to fully discharge your obligation to us. This means it is very unlikely for you, without this settlement, to achieve aU financial award directly from the case. You have received our bill for services rendered in this case through July 31, 1997, plus unreimbursed expenses through that date which totals, net after some payments, $759,870.40. This does not include any time and expenses for August. Further, you received detail on third-party payables which is now $28,747.61. Although our fees exceed the amount of the proposed payment of $700,000, we would be willing, after payment of the expenses and third-party payables, to divide the settlement payment remaining by three (one third to you and one third to each of us) and we would take an assignment of any proceeds from any other ventures you pursue related to this case and the underlying allegations, to discharge the remaining obligation. Under this arrangement, instead of receiving nothing from the $700,000, you would likely receive approximately $220,000. Given that the payment is in part for physical injuries, a portion of the payment may be nontaxable. You will have to check with your accountant to determine if your proceeds are taxable.

11. The financial situation is greatly worsened by refusing settlement, because of your contract obligation to pay fees and expenses on a current basis.

You told us this proposed settlement agreement is unacceptable for 2 reasons: 1) the agreement does not include an explicit admission by Bill-Clinton that he was in the room with you at the Excelsior Hotel; and 2) the agreement does not include an explicit admission that he engaged in wrongful conduct which you allege. We believe this is an incorrect view of the inferences from Stipulation language. The settlement provides that you committed no sexual or improper conduct, that the allegations about you being a compliant sexual partner of Bill Clinton which are drawn from the American Spectator article are false (including Danny Ferguson's concession of its falsity, and the President's strong implication that he has personal knowledge, i.e., that he was present in the room, to confirm that falsity). The settlement also provides that the defendants admit you suffered damage to your character (i.e., moral excellence) and reputation (your good name, which includes your truthfulness) and that such damage is regrettable. For the defendants to find regrettable the damage resulting from a false story serves to credit your truthfulness, your character and reputation, and to strongly suggest that they personally regret it (the closest one can expect them to give as an apology). And finally no money judgment could ever include such strong language which redeems your good character and reputation as does this language in the Stipulation.

We told you that the language is the very best that we could obtain, but that we would try for additional language and would make certain suggestions to opposing counsel. One suggestion was to have the defendants explicitly state their personal regret for the damage caused by the false allegations, another was to try to get the paragraph concerning "no admission of liability or wrongdoing" omitted, despite this being a standard provision in such agreements, and also to put in language we asked to have admitted, in which the President, while not recalling, does not deny that he met you in the hotel on May 8, 1991. You said that none of these changes would be acceptable, separately, or even together.

Joe also called you on the evening of August 16 and left a message asking you to tell us whether adding the language "Whereas the plaintiff has alleged conduct by both defendants, with which she is upset, and each defendant regrets her feelings in this regard to the stipulation would make the stipulation acceptable to you. In the message, Joe noted that we tried to get this language into the agreement, but it was specifically rejected by our opponents. We would be willing to try again, however it is unlikely we will be successful. Even if we are unsuccessful this does not change our view that the present proposal is a complete victory for you.

We again spoke to you and Steve, at great length Sunday night to be sure we knew your precise and complete view on settlement, and to once again answer your questions to persuade you to accept a resolution which benefits you, and is a full victory which the public will also perceive as a tremendous win by you.

To summarize the highlights of this second conversation:

A.We again explained the rationale for accepting settlement, and the grim consequences for refusal. We told you again that the money and language is the best you can get and more than if you are successful at trial and on appeal. Since you had a day to think, we asked you if you changed your mind and your answer was "No."

B.We asked if the following language would change your mind: "Whereas the plaintiff has alleged conduct by both defendants, with which she is upset, and each defendant regrets her feelings in this regard." You indicated again this is insufficient.

C.What if they dropped the word "wrongdoing?" You said that is insufficient and that you need an affirmative explicit apology (presumably "I'm sorry for my bad acts") Md an admission of wrongdoing. You conceded you know the President will never strictly apologize for his conduct.

D.The mention or Omission of the amount of money spent, and adding the words "time and distress" of litigation to financial concerns are "meaningless" changes, and therefore the present language is not a deal killer, you told us.

E.You again said you want better apology words to settle, but your desire, told to us on Saturday, to carry out the litigation for the purpose of punishing the defendants for their misconduct is no longer true, since you were upset at the time of our Saturday talk.

F.You understand that your present need for an apology was not sought for more than three years after the event and does nothing to enhance your reputation if you have already achieved an acknowledgment by the defendants that you did nothing wrong (contrary to the American Spectator's account). Your focus has thus changed from proving that you are a good person, to proving Clinton is a bad person. That was never before your objective in filing suit. G.You said you understand that by not agreeing to this settlement, which your lawyers believe to be a win, you are asking your attorneys to carry on litigation at great hardship in time and expense (which could be used for other paying legal work), so as to try to obtain a lesser victory than what is now on the table, and which you understand you cannot achieve by carrying on the litigation.

H.You understand our view that you will get little or no money in your pocket later, compared to over $200,000, with some portion possibly tax free, now.

I.You understand that a very large potential obligation will be yours for future fees and expenses which remain unpaid by you or the legal fund.

J.You said you understand that the shelf-life of any value to the Affidavit is very limited, because it will soon have to be disclosed.

K.We told you to expect an "Offer for Judgment" from our opponents. This offer is permitted under the federal court rules (and would likely be exclusive of attorneys' fees which could be awarded to your attorneys by the Court). The concept is that the defendants would offer to take judgment against them for a specific amount. If you refuse the offer, and you obtain a lower amount in judgment at trial, au of the defendants' costs from the date of the offer, including depositions, travel expenses, and the like, will be assessed against you and in favor of defendants Clinton and Ferguson (if Ferguson joins in the offer). 'Mis would operate as a judgment against you, and would be subject to all forms of collection, including garnishments and attachments.

L.We told you there are serious ethical problems for lawyers who continue litigation after all the client's interests can be reached by settlement. The effect is to 'run-up' the defendants' expenses, to achieve a result other than what the litigation is designed to obtain. We do have to examine our professional duties in this situation.

M.You said (through Steve) you would consider seeking independent counsel who has sexual harassment and litigation experience, and preferably also some political savvy, to predict what this proposed settlement means and how your reputation will likely be affected. We have told you that all is positive, in our view, but since you question our judgment on this, we urge you to get confidential advice from another attorney with whom we would be pleased to provide, with your authority, the necessary information to consider. Steve said he would call Gil by 12:00 noon yesterday to give him the decision on getting outside advice. We did not hear either way from you by that time or after.

We again very strongly recommended to you the acceptance of this resolution of the litigation. in addition to what we have already said above, our continuing recommendation is based on the following:

• This settlement is a complete victory for the interests you have stated both privately and publicly which were your sole objective in pursuing this litigation, that is the full redemption of your character and reputation. Obtaining the amount sued for bespeaks most clearly for this redemption. The third "Whereas" paragraph also not only provides those assurances, but if you compare this language to the language you privately and publicly agreed to in 1994, it is more favorable to you. Remember, your reputation and character do not depend on the defendants' conduct; it is your conduct alone counting for good or ill repute. This settlement restores your reputation, and will be so perceived by most of the public.

• The defendants, through the insurance company ¹, will pay the full amount sued for. This is something we do not believe, under the totality of circumstances and the state of the law as it has developed in these past seven years, you would ever be able to attain at trial. Based on recent appellate court decisions on discrimination, you would not likely be able to recover in the six figures. In a recent Fourth Circuit case, for example, a $750,000 verdict was reduced to $500,000 by the trial court. On appeal, the Fourth Circuit upheld the liability judgment, but reversed the damages, calling them grossly excessive, and ordered the trial judge to recalculate the damages in the range of $9,000 to $11,000. The trial judge reduced the amount to $50,000. In that case, the discriminatory conduct took place over several years toward a police officer.

  Remember you cannot recover for emotional distress you have suffered because of the press coverage and public scrutiny. Your damages will be limited to the actual distress you suffered because of the sexual harassment, and the defamation, assuming these issues are not dismissed now or later, and both go to the jury.

• This will be the best posture you can likely ever be in for paying your attorneys' fees. Recall that under ¶ 5 of the Fee Agreement, you are obligated to pay the full amount of the attorneys' fees, whether you win or lose, and without regard to the amount you receive in any verdict or judgment. Under ¶ 4 you are obligated to pay all costs. As you know, you have currently incurred well over $700,000 in attorneys' fees and Costs.² Although you have not paid out of your pocket any of these amounts, you will have to begin to do so in order to keep this litigation on track, given the low numbers in the fund.³

  Although Section 1983 civil rights actions, such as those alleged in your Counts I and II, permit the recovery of attorneys' fees and costs, the amounts awarded are never the full amount expended, and are usually tied to the amount of recovery. In addition, the Court will automatically reduce the attorneys' fees and costs for any time expended toward the defamation and intentional infliction of emotional distress causes of action, since attorneys' fees and costs are not permitted to be recovered under those causes of action. It is possible the Court will reduce by 1/2 or 2/3 the full amount on that justification alone. For example, if $1.5 million in fees are incurred by you by the time of trial, and you receive a verdict of $25,000, the Court may reduce the attorneys' fees and costs by 1/2 to 2/3 of the $1.5 million (a $750,000 to $1 million reduction) for the state torts, then another large amount because the $25,000 recovery may be considered by the judge as relatively small, given the ad damnum (the amount sued for). Notwithstanding what the Court awards in attorneys' fees and costs, that does not change your obligation for the full amount charged by us, less anything paid from the fund. This means that even if the Court did not up front reduce the fees by 1/2 or 2/3, but only reduced the total attorneys' fees by $25,000, you would end up with no money if you received a verdict of $25,000 or less. The Court is likely to reduce the award by at least several hundred thousand dollars, if not substantially more. Even if you were to receive the full amount of the ad damnum, and you were permitted to hold on to it through post-trial motions and appeals, it is very possible the Court will reduce the attorneys' fees award by an amount greater than $700,000 because of the state torts, which would still leave you with no money.⁴

  You know we have worked very hard under great financial stress and time constraints to get to this point. Although carrying this case to trial would mean much more money down the line for us, we take our professional responsibilities to you very seriously and they are of utmost importance to us. You come out way ahead in this scenario of settlement. We would welcome you to suggest another, other than this settlement, where you would come out as well.

• You are in the best posture now to increase your financial gain from outside sources. If you decide not to settle, you will have to eventually turn over the Affidavit, and you will have to describe the distinguishing characteristics in discovery. It will be leaked by someone, as these things seem always to be, even if there is a protective order. There will be no value left to your revealing this information to any other entity. Likewise, any interest in your writing a book, and appearances, after a settlement for the full amount sued, but before the discovery has been pursued, will be very high. So much information is not in the public domain now but will be after discovery, and certainly after trial. In addition, you will be perceived to have won a tremendous victory from this settlement. Everyone wants to meet and watch a winner. If you should lose at trial or have a low recovery, or if the verdict is appealed, the interest in you and what you have to offer, will be substantially less, and the power of negotiation for you will be significantly lessened.

• The favorable perception of you by the public to this settlement will be overwhelming. Based upon the language of May 8, 1991, Danny Ferguson has admitted lying, defendant Clinton does not deny being in the room, and you have been completely exonerated of any sexual or improper conduct. What inference can the public draw, other than that what you said all along is absolutely correct? Moreover, the timing,of the settlement looks very bad for defendant Clinton. You have issued multiple subpoenas with hard requests, the deposition of Ms. Willey is looming over the President's head, and you have responded to the Motion to Dismiss. The President is trying to prevent discovery of himself until a ruling. His settling in this posture looks like he has a great deal to lose. In reality, however, the posture will change quickly. If you lose any of the four counts on a motion to dismiss -- not unusual in federal court with cases of this nature -- it will be hyped as a big win for Clinton. if the deposition of Ms. Willey is quashed (and remember that fate is left to a Virginia judge -- the most restrictive district in the country), it will be a loss to you. If any of the subpoena requests are quashed -- particularly those relating to Clinton's conduct -- it will not only be perceived as a tremendous loss, but also will harm your chances of success at trial. Settling after any of these events will not give anywhere near the positive spin and strength from which settlement will provide. And, of course, after any of these events happen, it is highly likely the offer will be withdrawn.

• While Clinton has not explicitly apologized, the clear implication of paying the full amount, at this time, and exonerating you completely from the events of May 8, is that he is doing just that. We recognize you must have enormous pressure from family, friends and wen-meaning supporters to stop at nothing less than a formal written apology or trial. Bear in mind they are not lawyers, they do not have the investment and risks you do, and those hard and fast positions will not pay for your children's college and make your life more comfortable. Holding on to that position means Clinton wins, not you. He will never give a written apology. He will deny that it happened in Court. You cannot get a written apology from the court or jury. So demanding what you can never get sets you up for financial and emotional devastation. If you go to trial and lose (and remember the risk of one Clinton supporter on the jury who does not disclose his support - you may have a mistrial - and have to retry the case, perhaps multiple times -- or you may get a defense verdict), then you have lost so much more. You may win and get a small amount for damages. Clinton will spin any award less than $700,000 as a win, and will tell the world he was willing to pay that. The press and the court will know you received nothing because of the attorneys' fees and costs and it will be touted a huge loss to you, even if the jury finds in your favor. You may win a verdict and have the appellate court overturn it. The state of sexual harassment law is constantly changing -- much to the detriment of the victims. Remember, you have gone through this appeals process once, and had decisions that ultimately were wrong, but it took many years. And in the meantime, a loss would be recorded, you would have no apology, no money, and even more attorneys' fees and costs.

• You never wanted the written before. You have stated in the press repeatedly that the reason for filing this suit was because of the American Spectator article. You did not file suit for three years. If the apology was what you wanted, rather than what other well-meaning, but self-interested persons may be pushing for you, surely you would have filed suit in those three years. Moreover, the language you have publicly stated you would accept does not include an apology. It is so easy to harden because of the intense political and press scrutiny this case has brought, and because you want all the others to say 'All right Paula!' But you need to think of yourself and your family. True friends and family will say "All right Paula" to this settlement and will support you 100 percent. The apology that will never happen will not feed your family or provide financial security for your children's future. The apology that will never happen will not provide you with comfort for the months ahead while enduring depositions and press attacks on your reputation and character. The apology that will never happen will not give you the sense of victory and exultation that settlement, at this time, should give you. The apology that will never happen will not give you even an ounce of vindication. The apology that will never happen will not make you a winner. It will not make what happened better. It will not punish defendant Clinton. Holding out for the apology that will never happen will only hurt you. Those well-meaning people pushing you on this issue can never feet or appreciate that, because they will not reap the benefits you will if you settle, declare complete victory, release your affidavit, and tell your story in any forum or fora you desire.

• We believe we may be able to improve upon some of the language in the Stipulation to make more it more acceptable. As we discussed, we will work to have ¶ I removed, add the language "time and distress of protracted litigation" to ¶ 2, work to get the original regret language in, try to omit or soften the "wrongdoing" language, and have the parties personally sign. In our conversation last night, you opined that none of these changes would be acceptable. We urge you to think again about this, and hope that is what you have been doing today. Please let us know if any of the changes, and each specific change, would affect your decision-making.

If you are having difficulty assessing this, and we can understand the pressure you may be feeling from those around you, we urge you to employ someone of your choice who has an expertise in sexual harassment law, as well as possesses experience in the political arena to be able to communicate with you about the public perceptions of this settlement. We will cooperate fully with anyone you choose. Beware of some other attorney who promises grand results. He or she may be using this case not to advance your claim but to advance their own agenda.⁵

We are encouraged that there might be a small ray of hope for you to change your mind when you said you would think about this for a short while. We urge you in the strongest possible way to do so and communicate your willingness to accept what is a complete and spectacular victory for you, permitting you to go forward in the public relations battle to obtain both further vindication and financial rewards, instead of a financial drain and devastation.

We have given our heart and soul to your case for over three years. Paula, we believe you and we believe in you. You are a good person. You have become like family to us. When you asked if we would recommend this to our family (or daughter) we told you we would. Our view is unchanged. No one can do more for you than we have. The case is in a perfect posture for you to ride the crest of our efforts. On the other hand, you must consider what refusal to accept this settlement will mean to you and your attorneys who you would be asking to devote many more hours and expense (which you must pay on a current basis) to obtain a lesser result. We do not feel it is ethical for us to pursue a claim solely to punish the defendants by tough litigation when you have rejected the biggest victory to pursue a much smaller one.

Please reread this letter and study each of the points. We believe that as you do so, you will conclude that settlement, on the proposed terms, is both wise and the best thing for you to do. Please call us so we may discuss this further with you. As always, we are available night and day to discuss your concerns and questions.

Very truly yours,

/s/
Gilbert Davis

/s/
Joseph Cammarata

1. You indicated displeasure at the insurance company paying, rather than defendant Clinton out of his own pocket. While we understand your unhappiness with that, if you were to obtain a verdict, that too would be paid by the insurance company. Instead, you should view how significant it is that the President is willing to approve this settlement for $700,000, where he is not paying. In other words, it costs him nothing to contest your claims in order to prove his own innocence. Why would he approve this unless he had done something wrong?

2. These amounts, as incurred, operate as a lien against any recovery. In other words, they are already due and payable, and must be paid before any amount is paid to you or towards any future fees or costs, charged by us or anyone else. As you know, we agreed to defer some of that if you accept this settlement, to enable you to receive a significant sum now. Please also bear in mind that the amount you would receive now, in excess of $200,000.00, is more than we believe you would recover at trial, under almost all of the possible scenarios.

3. As an aside, we have not received the amounts you told Joe you would send out of the fund. If you have not had a chance to do so, we would appreciate your sending a check at your earliest convenience.

4. Please remember that the amount reduced by the Court does not in any way affect or relieve you of your obligation to pay the full amount of attorneys' fees and costs actually expended.

5. And bear in mind any attorney who suggests he or she take your case from this point on inherits the $800,000, plus attorneys' fees and costs lien and must be informed of that.