By Jeff Balke
By Aaron Reiss
By Angelica Leicht
By Dianna Wray
By Aaron Reiss
By Camilo Smith
By Craig Malisow
By Jeff Balke
Another tradition that hasn't fully gone the way of the bowler is V&E's desire to be a player in many areas of the city's commerce and to have its lawyers sit on as many corporate boards as possible. In an increasingly litigious era, when conflicts of interest are a prime concern, that vestige of Elkins' day can spell trouble.
"That's how it worked in the good ol' boy era," says one former V&E partner. "It was good to be on all sides of a deal, sitting on the boards. You could get a better price for your client."
But with the advent of new, expanded definitions of legal malpractice and conflict of interest, V&E is "having to learn how to change," says the lawyer.
Thus far, it has been an expensive lesson.
The late William Moran was an East Texas wildcatter with a shrewd, native intelligence that surmounted the disadvantages of a third-grade education. Moran built a stable of oil and gas-related businesses that, at the time of his death in 1983, was expected to provide for the needs of his wife Louise and several dozen other family members, as well as employees of Moran's companies, for years to come.
The estate he left behind was valued at about $100 million, including some $65 million in liquid assets and the string of family businesses, primarily Moran Utilities, a natural gas provider in Conroe, and Morgas Pipeline Company, whose main asset was a strategically placed gas pipeline running north-south along Interstate 45. According to Moran's will, the estate was to be divided among his family, with roughly quarter shares going to his widow and daughter Betty Ann Franke, a 20 percent share to grandson Pat, and 3 percent shares to Pat's siblings Ann, Bill and Susan (the Morans' father, an alcoholic, had died young, and Pat and Ann Moran say they and their siblings were basically raised by their grandfather). William Moran also designated in his will that the employees of his companies were to receive 6 percent of the estate in trust for salary and pension guarantees.
In a miscalculation that laid the seeds for the coming conflict, the will designated three co-executors: Pat Moran, John McDonough, a Chicago lawyer married to Susan Moran, and First City Bank. According to Pat Moran, his grandfather had intended that he administer the family businesses after the old man's death. William Moran had also intended that the law firm of Hirsch & Westheimer handle probate chores. Up until the time of Moran's death, Vinson & Elkins lawyers had worked on business matters for Moran, but his close friendship with attorney Mark Westheimer had led him to designate Westheimer as chief probate counsel.
Westheimer didn't last long. After William Moran's death, Vinson & Elkins went to probate court on behalf of Louise Moran, challenging the structure of the will. At issue was whether it provided a marital deduction for Moran's widow. Because Westheimer might possibly have been a witness in the court proceedings, his firm was forced to withdraw from the probate work. V&E then assumed the lead role in providing legal service for the Moran estate.
Beginning in 1984 and continuing up until the lawsuit against V&E was filed in 1990, the firm charged more than $2.5 million to the estate and billed thousands of work hours. Pat Moran, who had moved from Washington back to a Houston he had not spent much time in since college, became close friends with a cluster of Vinson & Elkins attorneys, the primary connections being Donald Wood, Jay Cuclis and Boone Schwartzel. The lawyers visited one another's homes and celebrated their children's birthdays together. Cuclis even accompanied Moran on a cross-country outing to California's wine country. None of Moran's friendships with the V&E lawyers have survived his family's lawsuit.
"I think that in the culture of the Vinson & Elkins law firm, there is an aspect of an assignment to friendship," Moran says. "You see this pattern in every one of these estate deals. They glom on to what we call, for lack of a better word ... the 'dominant males,' because that's the language they understand. They try to cut them out from the herd, and the deal is they want to get you in all these deals and meet all these people."
Moran recalls one V&E friend urging him: "Pat, in your situation, and [with] your share of the estate, you could be a real player in the state. A lot of deals, a lot of money to be made here."
Managing partner Reasoner doesn't deny that friendship is a key component of a V&E lawyer's work, but he suggests it's not the ominous self-dealing arrangement that Moran perceives.
"Let me say it is very common for our clients to be our friends, and certainly you want to have friendly relationships with clients," says Reasoner. "You have to bear in mind, when you're talking about Pat Moran, you're talking about an extremely intelligent, highly sophisticated lawyer. I mean, we neither did nor would try to seduce Pat Moran into anything."
According to Ann Moran, First City's grip on her grandfather's estate tightened when its representative began conducting meetings of the Moran beneficiaries and controlling the flow of information to them. The bank also had taken a role in the day-to-day management of the family companies. She claims First City tried to divide and conquer the Morans by telling different family members different things, leading to disagreements over the disposition of assets.