IT FELT LIKE the parley before some medieval battle—an oasis of calm amid a hungry ring of horsemen, where gentlemen on both sides could lay out some terms and shake hands before going for blood.

On Friday, March 21, Jack Graham, the city's fired former chief administrative officer, was sitting with his attorneys in Portland City Hall's stately Rose Room. A bit after 3 pm, the man who fired Graham, Mayor Charlie Hales, breezed in. Hales shook Graham's hand before sitting down across from him.

The meeting was something called a "name-clearing" hearing, a relatively rare (and awkward) event that gives fired employees a chance to publicly give their side of the story.

And the clash that seemed to be looming over this peculiar parley? A lawsuit.

Graham was given notice last year after a sustained barrage of Oregonian reports on his decision-making and leadership style hit a tipping point in Hales' office.

One of those stories involved a weird email fight with a subordinate. But by far the most damaging was an accusation, back in 2012, that he tried orchestrating a politically tone-deaf and possibly illegal plan, despite being warned otherwise, to tap some $200,000 in reserve funds from the city's sewer and water bureaus.

An independent investigation, finished in December 2012 and leaked to the Oregonian months later, found "credible evidence" that the accusations were correct.

And that's where Graham focused his ire. Reading from a seven-page statement, he ripped into the investigation and its findings, calling any suggestion he tried to improperly transfer sewer and water funds a "false and stigmatizing misstatement." He dipped into a technical reading of the city's policies on fund transfers to make his point. He also argued he was never warned that doing so might violate city policy.

He said it was just a "judgment call." And he wondered why a somewhat similar fund transfer a year before, presided over by one of the subordinates who complained about him, wasn't similarly investigated.

The testimony won't do much to change Hales' mind. Graham has been out of city government since January 30. But it does offer a glimpse of how Graham and his lawyers might pursue their legal vengeance.

Graham could be laying the groundwork for a claim he was fired unfairly. His testimony in the 2012 investigation mentioned race—Graham is black, the subordinates who complained about the funds transfer are white. Worse, the 2012 investigation was launched months later, right when Graham was fighting a plan to sap his office's power by creating a new city budget office.

But that argument won't be easy. Graham wasn't disciplined over the transfer. He was fired over "distractions." And the city paid him big bucks to go away—suggesting it was an "at will" decision.

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Which could lead to a defamation lawsuit instead. One of his attorneys, Dana Sullivan, laid out what's really bothering Graham: He "has repeatedly been passed over" for new jobs in light of the bad press.

And for Graham, that's probably worth fighting over.

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