MUD-Slinging Breakaway

Attorney Joe Bailey Allen, in the wake of a divorce 28 years ago, pulled up stakes in Waco and lit out for Houston, where he took an unglamorous role as a municipal utility district (MUD) specialist for the powerful Vinson & Elkins law firm. During the next quarter-century he would grow into the prime political power dispenser within an institution known in its heyday to friends and foes as "the second government of Texas."

Now Allen's career marriage to the 860-lawyer firm is on the rocks, and several generations of politicians nurtured at his knee wait intently to see what the fallout will be for both the kingmaker and his kingdom.

Allen and a group of colleagues are leaving V&E to form their own law firm. He is mum about the specifics of what some see as a historic parting of the ways.

"There are a lot of people saying a lot of things, and maybe in August we'll drink a good bottle of red wine and talk about some of those things," allows the recently turned-60 lawyer. "But I cannot do it now."

In the last year, Allen weathered a bout with cancer that resulted in surgery to remove a malignant jaw tumor and follow-up chemotherapy and radiation treatment. He says that midlife crisis apparently has ended successfully.

"Unless a whole bunch of doctors at M.D. Anderson are wrong, I'm in good health and I feel great, and it's time to have a new adventure in life."

For aspiring Houston politicos over the last two decades, an audience with Allen became an essential first step on the road to getting elected. As high priest of the V&E political action committee, Allen had duties that included maintaining what's known inside the firm as the Mystic Book, an electronic ledger documenting the mandatory contributions of the firm's attorneys to a deep pool of political money.

Come election time, he supervised the ladling out of those dollars to hundreds of candidates ranging from the president of the United States to judges, city councilmembers and state legislators. The contributions helped the firm gain influence in the government offices and courts where it would do business, win judgments and earn its massive profits.

The campaign cash became an almost incidental aspect of Allen's power. His role as a friend, mentor and strategist is equally valued.

"It isn't about the money," says Nancy Sims, veteran political consultant and publicist of Pierpont Communications. "It's about Joe's connections, and his great political mind. Because Joe is so strong in strategizing, he became an important resource for political campaigns, beyond just the dollars."

His municipal power as a lobbyist reached its high-water mark during the mayoral administration of Bob Lanier, but dwindled when Lee Browntook office in 1998. Allen's backing of Congressman Chris Bell's unsuccessful mayoral challenge to the incumbent in 2001 further chilled his influence at City Hall. Allen still swings a heavy political bat, having raised more than $200,000 for President George W. Bushas a "Bush Pioneer" and recently hosting an event for Congressman Tom DeLay.

Allen is technically still director of the V&E PAC and takes calls at his office in the firm's First City Tower headquarters, but he and three other attorneys remain there only as temporary prisoners of the firm's partnership rules. Allen, Jim Boone, Stephen Robinson and Lynne Humphriesgave notice April 28 that they plan to form their own law firm: Allen, Boone & Humphries. They must remain at V&E an additional 90 days if the management so decrees. And it does.

"We've got to first look after the needs of our clients and make sure there's a smooth transition, and that's the process we're going through," says firm managing partner Joe C. Dilg, who denies reports that the breakup has been acrimonious.

"They've been good partners for a long time, and we wish them well going forward in what they want to do."

Asked whether there is bad blood between V&E management and his group, Allen comments, "That remains to be seen."

The departing partners head a section within the firm that deals primarily with municipal utility districts, a legal tool of developers to provide water and sewer services to new subdivisions outside the reach of municipalities. Every step in the life cycle of a MUD, from its incorporation to the sale of bonds to raise money for construction to its eventual absorption by an annexing city, requires intensive legal services. Dilg notes that MUD specialists probably have never been busier than now.

"Municipal finance practice is experiencing historic levels of activity due to low interest rates and a lot of construction of single-family residence building," explains the managing partner. "I think to the extent they ever wanted to form their own firm, this was probably the best time to do it."

A partner at another downtown firm says the MUDslingers chose an opportune moment to make their break.

"Times have been good for MUD district lawyers because there has been a tremendous housing boom out there on the prairie," says the attorney. This lawyer cites speculation that Allen and crew left because they felt they were not getting the respect and the money from V&E that they deserved.