Is WR Lazard out for the count? Marianne Spaggins' departure cast dark shadow on the firm's future.

In the two weeks between late September and early October, WR Lazard's chief executive, Marianne Spraggins, abruptly left the black-owned investment bank. Days later, that was followed by confirmed reports that the firm's two largest clients in money management had pulled their funds from the firm. Just two days after Spraggins' departure, the New York City comptroller's office pulled out $500 million of bonds that Lazard manages for the city's pension fund. Lazard's second-largest client, the Los Angeles County Employees Retirement System, followed suit by removing its $178 million from Lazard management.

Analysts say this sizable loss of business means likely death for the company since Lazard's asset in management division was the only real money-earning business left at the struggling firm. Nevertheless, Betty Lazard, co-chairwoman and widow of the firm's founder, Wardell R. Lazard, is now on a valiant mission to preserve her husband's legacy.

Once the mightiest of all the black-owned investment banks, WR Lazard has been slowly crippled over the past three years by a declining bond market, a series of financial and legal problems, staff defections and regulatory violations. The firm's greatest blow occurred in May of 1994 when Wardell Lazard, the firm's preeminent dealmaker and CEO, was found dead of an accidental drug overdose in a Pittsburgh hotel room.

Betty Lazard convinced Spraggins, the flamboyant former managing director at Smith Barney, to assume the helm of WR Lazard. Regarded as the firm's savior in 1996, Spraggins found deliverance didn't come easy.

Faced with shrinking capital and dwindling assets under management, Spraggins, 51, began an intense search for equity from banks such as Chase Bancorp and Fleet Financial, as well as brokerage firms like Salomon Brothers and Bear Stearns. When that didn't pan out, according to inside sources, Spraggins approached several potential buyers, including M.R. Beal, Sloan Capital and Fletcher Asset Management. But before a deal could be hammered out, sources say Spraggins was asked to resign.

"We made two offers that were both rejected," says Maceo Sloan, president of Sloan Financial Group.

In a released statement, Spraggins said "The unwillingness of the board of directors to accept a reasonable restructuring plan prevented a successful recapitalization of the firm." Betty Lazard and Jerome Shuman, a Howard University law professor, as well as Spraggins, made up the board.

Lazard is betting on a new financial savior, 36-year-old Jonathan Carroll, president and CEO of Houston-based Carroll & Co. Carroll has been an investment advisor and behind-the-scenes deal-maker for almost a decade, buying troubled companies, turning them around and selling them for a profit. Now he's set his sights and cash on resuscitating the firm.

"My goal is to fix this situation, one way or another," says Carroll, whose most publicized turn-around story is his 1994 purchase of money-losing Long Island-based Direct Gas Supply, a natural gas and marketing company. Four years later, the company was raking in $300 million in sales and was later acquired by Enserch Corp.

But, industry watchers say, considering the loss of business, negative net worth and multiple million-dollar lawsuits from former employees, Lazard needs a miracle to bring it back to life. People familiar with the firm say that Lazard now has about $300 million in assets under management and a negative net worth. "There's nothing of value there anymore. The hemorrhaging is too great," says Tony Chapelle, publisher of Securities Pro, a newsletter about African Americans in finance. "No Band-Aid remedy can save it now."