Having outlived the good ol' boy era, when it had a hand in every deal, houston legal giant
Having outlived the good ol' boy era, when it had a hand
in every deal, houston legal giant Vinson & Elkins is entangled
in a legacy of litigation from its past. By Tim Fleck
"The Second Government of Texas"
The arrogance of power was revealed to Ann Moran one day in 1990 as she was leaving a Harris County courtroom.
Moran, who lived in Boston at the time, was in Houston for a hearing on a lawsuit her younger brother Pat had filed against his fellow executors of the estate left by their grandfather, Conroe oilman William Moran. Later that year, Ann Moran would file suit against Vinson & Elkins, accusing the giant law firm and its allies at First City Bank of mismanaging and manipulating William Moran's estate for its own benefit, and of failing to disclose conflicts of interest in the firm's representation of the estate.
As Moran exited the courtroom that day, she was accosted by a burly spectator, a man unknown to her then and whom she still can't identify, who pressed her against a wall in the hallway and hissed, "Get on back up there where you belong. You can't come down here being Carrie Nation. This is the way things are done down here."
Rice Owls Men's Baseball vs. Southeastern Louisiana Lions Baseball
TicketsFri., Feb. 24, 6:30pm
TicketsFri., Feb. 24, 8:00pm
Gridiron Glory: The Best of Pro Football HOF -- 10A-3PM
TicketsSat., Feb. 25, 10:00am
Rice Owls Mens Basketball vs. Louisiana Tech Bulldogs Mens Basketball
TicketsSat., Feb. 25, 7:00pm
Four years later, a jury of 12 Harris County residents reached a different conclusion, returning what eventually added up to a $35 million judgment against Vinson & Elkins -- the second largest legal malpractice judgment ever rendered in Texas.
The court battle is far from over, however: Vinson & Elkins' appeal of the judgment is pending before a three-judge panel at the state 14th Court of Appeals, and the firm has given no indication that it wants to settle the Moran lawsuit outside the courtroom. Even so, Evans Attwell, the firm's former managing partner and a central figure in the Morans' accusations of conflicts of interest by Vinson & Elkins, concedes the jury decision was equal to any public relations setback in the firm's storied 78-year history.
Although the malpractice suit was brought in Ann Moran's name, it was Pat Moran, a Georgetown-educated lawyer, who a few years earlier had begun questioning the firm's billings for its estate work. It was about that time that Pat Moran got his own wake-up call on the prerogatives of power, which, he says, came in the form of a blunt cease-and-desist issued by V&E partner Donald Wood, who, up until then, Moran had considered a close friend.
Wood told him, Moran says, that if he didn't back off, "These people are going to come at you and do everything they can to destroy you. They're very powerful. They will drag out everything in your past and say all kinds of things about you."
Moran says he told Wood, " 'Don, since I've met my wife I've never touched another woman, I don't gamble, I don't drink, I take care of my kids. So let 'em.'
"And he looked at me, sort of like, 'You poor stupid thing.' And he said, 'Pat, it doesn't have to be true.' "
Donald Wood declined to be interviewed for this story. But during the trial of Ann Moran's lawsuit, when he was questioned on the stand about Pat Moran's version of their conversation, Wood testified that he could not recall it.
Ask Pat Moran today if his grandfather would have undertaken the same fight against the law firm if he were alive, and his answer trenchantly conveys the depths of the bitterness he and other members of his family still harbor toward Vinson & Elkins.
"I promise you they would have never made it to the courthouse," Moran says. "First of all, they would never have tried it, and if they did, my grandfather wouldn't be screwing around with a lawsuit. They would be not robbing any more graves. They would be in their graves."
Evans Attwell, a congenial but somewhat distant man whose role at Vinson & Elkins has diminished considerably in recent years, hardly batted an eye when told of Pat Moran's remark, seeming to dismiss such rhetorical excess as simply a lapse in manners. "That's uncalled for," was his only response. Yet Attwell took his own backhanded slap at Moran with a comment that suggested he considers William Moran's grandson an impertinent upstart.
"You know," said Attwell, "I thought he was an attractive young man. I hate to say that now, in light of what he has said about me personally and the firm. He appeared to be very articulate, smart, very knowledgeable, but I had very limited contact with him."
Attwell and his successor as managing partner, Harry Reasoner, maintain that Vinson & Elkins did nothing wrong in its representation of the Moran estate and other trusts that have been the objects of lawsuits against the firm. In their view, the 525-lawyer firm, perhaps the most powerful private institution in Houston's history, was the victim -- of both the changing standards of what constitutes a conflict of interest and a public frenzy to punish arrogant members of their profession.
For Ann Moran, a single mother who struggled in her early years for an independent identity amid the mostly male Moran clan, Reasoner's defense is too much to swallow.
"We stood up to them, we went after them, and we kept going after them," she says. "Now they are saying we victimized them. These are moral eunuchs -- they have no moral sense of the injustice of what they have done. They have the power and control, they use shame, they violate families at a very vulnerable time."
Neither Pat nor Ann Moran looks much like a victim.
Husky and round-faced, 47-year-old Pat Moran lives with his family in a sprawling ranch-style home on a forested acre in the tony Memorial-area enclave of Hunter's Creek Village. His sister Ann -- "Sissy," as he calls her -- is an earnest, middle-aged brunette who now resides in Seattle and holds a doctorate in public health from Harvard.
Both Morans exude the self-assurance of people who were born into wealth and are familiar with its entitlements. But probe beneath that veneer with a mention of their ongoing battle against Vinson & Elkins, and you'll tap a gusher of unrefined outrage. For Pat and Ann Moran do indeed see themselves as victims. They are, in fact, charter members of what must be the wealthiest victims' rights group in existence, a collection of heirs who claim Vinson & Elkins attorneys cost them millions in lost assets through mismanagement and by failing to disclose potential conflicts that lawyers for the firm may have had in estate-related transactions.
Another member in good standing is Betsy Mecom, daughter of the late oilman John Mecom, whose lawsuit against Vinson & Elkins accused the firm of mismanaging her inheritance and having a conflict of interest in representing both her and her then-husband, Don Mullins.
Larry Doherty, a lawyer who specializes in suing other lawyers for malpractice and negotiated a sizable settlement from V&E on behalf of Mecom, says the firm's history in Houston has spawned a genre of jokes in legal circles, including the well-circulated one-liner that "Vinson & Elkins never met a conflict it didn't like."
"It's not just notorious," elaborates Doherty, a bald, wildly expressive man with bulging eyes who seems perpetually to be trying a case to an invisible jury. "[The lawsuits] are something of a prophetic payback. Vinson & Elkins lawyers used to surreptitiously refer to themselves as the 'second seat of government in Texas.' The truth of the matter is that kind of arrogance could not go unrewarded very long ... Texas is bigger than V&E."
Doherty recalls that early in the discovery phase of the Mecom case, he asked a lawyer he was considering using as an expert on the firm whether a young attorney could rise to the top at V&E "simply by administering a wealthy person's estate and maximizing the person's income and charging them hours and seeing they kept all their money and saved all their coupons and dotted all their I's and T's.
"He just fell out laughing," Doherty says. "That was not the pathway to partnership. You need to get in and actively do something with the client and their money, and move it around and justify your existence. And you were expected to show some creative interaction to rise in the ranks."
To this day, a monthly "heroes sheet" circulates among V&E lawyers, listing the attorneys who billed the most hours to clients. According to former partners, the heroes sheet provides suggestive role models for aspiring associates.
Veterans of lawsuits against V&E are a select crew, and they trade information and advice, sharing the juiciest depositions from past cases and researching earlier instances of alleged conflicts of interest by the firm. Betsy Mecom even extended that cooperation by putting Ann Moran up at her Bayou Bend apartment for several months while Moran's lawsuit was being tried.
Among the cases that form that body of lore mined by V&E opponents is a suit filed by the George Foundation of Fort Bend County, to which V&E returned $1.5 million in legal fees rung up by a partner who served as trustee and decided his entire practice could consist of working the foundation for the firm. Vinson & Elkins prefers to characterize the settlement as a "donation" given to the foundation over a five-year period, but Evans Attwell acknowledges that V&E asked the partner to leave the firm after the episode. And there is the suit lodged by heirs of Central Texas oilman Herman F. Heep, who in 1991 extracted an $11 million settlement from Vinson & Elkins for actions that apparently occurred three decades earlier.
The recipient of one sizable settlement from the law firm says moral and tactical support is needed in successfully fighting an institution such as Vinson & Elkins.
"Their reputation in Texas and Houston is that they are so powerful, and they use it to control businesses and families. It's hell to come up against them because you've got to take on the whole city. They tried to get me to break, but it just made me stronger."
Harry Reasoner is Vinson & Elkins' present and its foreseeable future. Elected by the firm's partners to his first biennial term as managing partner four years ago, Reasoner is an affable, bespectacled man with dark, wavy hair and an athletic frame. At 56, he is the human face of the impersonally large 20-section law firm. When he learns his questioner has not invested in mutual funds, he solicitously suggests, "If you don't, you should. You need to start putting away some money. Dangerous to have faith in the Social Security system at your age."
Pat Moran describes Reasoner as "smoother than owl shit," but admirers in Houston's legal community credit him with trying to guide the firm into the modern world through a transition sprinkled with unexploded legal mines laid by V&E's practices over the previous two decades.
"He's a minesweeper," says one legal expert, "and there are plenty of explosives out there that have not yet gone off." In fact, another major estate-related lawsuit is expected to be filed against the firm before the year is out.
Ask Reasoner a question based on a supposition, and he invariably starts his answer by disagreeing with the premise. But before he's finished, the answer suspiciously begins to sound like an agreement. He rejects the "minesweeper" analogy, but then goes on to explain how the firm has established a committee on professional responsibility, maintains an elaborate computer system to keep track of possible entanglements and provides "engagement letters that spell out what it is that [clients] are asking us to do or not to do." It is true, Reasoner adds, that "those procedures have been implemented since I became managing partner."
In short, the firm did not have such safeguards before 1991.
Reasoner is not without a subtle sense of humor. While being interviewed in a conference room on the 28th floor of First City Tower, he produced a Russian nesting doll commissioned for him by lawyers at the firm's Moscow branch office. Painted on the outer shell of the gourd-shaped doll is Reasoner's face, dated by a now-vanished mustache. But pop off Harry's head, and underneath is the head of Evans Attwell. Beneath Attwell's head is yet another, and then another, managing partner's face. At the bottom of the doll is the small head of the firm's founder, James A. Elkins.
It's funny, but the doll also provides a dead-serious historical metaphor for Reasoner's position. He may be the new, scrubbed visage of Vinson & Elkins, but he's also saddled with everything that has gone before -- including the firm's representation of the Moran estate.
An old Texas truism coined by UH law professor and ethics expert Eugene Smith holds that in Dallas the banks used to run the law firms, while in Houston the big law firms ran the banks. And until the energy bust of the mid-1980s, that was certainly true of Vinson & Elkins and First City.
From its inception in 1917, the law firm has been one of the prime political and economic forces in Houston's development. Judge James A. Elkins, who got his title from his brief stint as Harris County judge while in his twenties, captained V&E to its preeminent position by pairing the firm with what was to become First City Bancorporation. The synergy was simple: If you wanted a loan from First City or its predecessors, you took your legal work to Vinson & Elkins. And vice versa. And if you couldn't get what you wanted at V&E or First City, well, it probably wasn't available in Texas.
Elkins started the bank, then called Guaranty Trust, in 1924, just in time to soak up a tide of wealth that rolled into the city as local oilmen began exploiting the massive East Texas field. He cultivated the trust of independent Texas operators suspicious of East Coast bankers, and the firm and the bank, which became City National Bank in 1934, grew together. In 1956, Elkins merged City National with the older First National to form the nucleus of what later became First City Bancorporation, a holding company operating banks around the state. Under managing partner Attwell, V&E grew in the 1980s to be the third largest law firm in the nation, with sections serving almost every civil specialty imaginable. One of the few specialties the firm has shied away from is divorce, because of the messy social reverberations, and it rarely handles criminal cases.
By 1987 -- just about the time Pat Moran began asking questions about the firm's handling of his grandfather's estate -- V&E's net profits were pegged at $50.7 million, and its profit-per-partner was $295,000 a year. Fees from First City amounted to $5 million alone for V&E, and the firm performed 60 percent of First City's legal work.
Judge Elkins, the dominant voice in the firm from its beginning, ran the show pretty much as a benevolent dictator. Long after he had relinquished the formal reins of command to successors and until his death in 1972, Elkins continued to exercise considerable behind-the-scenes clout. The judge had definite ideas of what a respectable Houston lawyer should look like, and in his lifetime a V&E attorney was a white male expected to work killing hours as an associate. He also was expected to wear a hat year-round, specifically a Homburg in winter and a bowler in summer.
Some of those traditions have been discarded, of course. Women and minorities are now represented in the V&E workforce, primarily in the associate ranks, and the hat tradition long ago passed into history. But a more profound trademark Elkins stamped on the firm has not only continued, but has been amplified. Elkins believed Vinson & Elkins should be represented on all levels in the political life of Houston and Texas. Contributions from Vinson & Elkins' political action committees and fundraising by the PACs' head, partner Joe B. Allen, now figure in almost every political contest of note in the city. [See "Into the Mystic (Book)," page 14].
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.
The Morans charge that V&E lawyers misled them on tax matters, raising a red flag over the possible loss of a federal estate tax deferral that beneficiaries had elected to take. The provision allows estates containing family businesses to defer taxes at favorable interest rates. The Moran estate qualified, so long as the businesses were not sold.
Reasoner says problems with the estate were caused by feuding among the Moran survivors, not by anything his firm did or didn't do.
"I think where we made a mistake was continuing to represent the executors when there was obviously such bad blood among the various factions of the family," he says. "Two of the executors testified [in Pat Moran's suit] that we had behaved in a completely proper fashion and to the great benefit of the estate. We were trying to help the executors solve difficult problems, and in retrospect we should have said, 'Sorry, too much controversy. People at each other's throats and we need to get out.' "
By the mid-eighties, Pat Moran had grown alarmed over reports of financial problems at First City and the bank's placement of more than $60 million in estate funds in short-term, low-interest deposits. According to court briefs filed by the Moran family for Vinson & Elkins' appeal, V&E lawyers justified the arrangement as necessary to provide liquid assets in case the estate should lose its estate tax deferral. During last year's trial of the Moran lawsuit, however, financial experts testified there was never a risk of losing the deferral and no justification for the unusual placement of the estate funds. With First City facing growing financial difficulties, the Morans say their estate funds were used to provide desperately needed cash assets. The V&E attorney who monitored the trial, Marie Yeates, contends that the record does not support the assertion that the estate was used to prop up the bank.
With questions raised about the financial condition of First City, Vinson & Elkins' Washington attorneys prepared an opinion letter declaring that the Moran assets "might" be protected in the event of First City's insolvency. Pat Moran contends the document was useless because it was strewn with qualifiers and conditions. Eventually, the firm billed $21,000 to the estate for production of the letter, which Moran says was intended for the benefit of First City, not his family. Moran had had enough, and proposed moving half the estate's funds out of First City to Texas Commerce Bank.
The Morans allege that a major undisclosed conflict of interest in V&E's representation of the estate was the presence of Evans Attwell, then V&E's managing partner, on the board of directors of First City Bancorporation. It's a claim at which the firm has scoffed, explaining that the relationship between the bank and the law firm was very well known.
"The Morans didn't just drop off the back of a watermelon truck," laughs one former V&E partner. "Everybody knew about the ties between the bank and the firm."
Attwell says his presence on the board was public knowledge, and, in any case, First City Bancorporation was simply a holding company for First City Bank and 19 other banks, and his position allowed him no input on either loans or trust management by the Houston bank.
First City reacted to Pat Moran's proposal to remove the estate funds by cutting off his line of credit, but the transfer of half the estate funds to Texas Commerce was eventually made, shortly before the First City Bancorporation was declared insolvent in 1987. (First City Bancorporation was recapitalized in 1988 under Chicago banker Robert Abboud, but eventually failed altogether and its assets sold to other financial institutions.)
With the approval of the executors, First City earlier had brought in an executive recommended by Vinson & Elkins to run the Moran companies. He was W.J. Wooten, a friend of Attwell's and a former consultant to First City, according to Pat Moran. The Morans claim Wooten took a number of actions that damaged the family companies, including moving the Moran Corporation, the umbrella for the estate's corporate assets, into expensive new headquarters in First City Tower, where both the bank and the law firm officed.
According to court documents, Wooten awarded himself a large bonus without the approval of all the executors, and in an act hugely symbolic to Ann Moran, appropriated the use of the Moran family's coveted Astrodome box for the Houston Livestock Show and Rodeo.
"My grandfather was one of the original founders, had tickets, and the employees of our companies used them for their kids," says Ann Moran. "[Wooten] took it and crossed off my grandfather's name and wrote, 'To the account of W.J. Wooten' and he gave his home address. And that was the end of a piece of property that belonged to the employees of the Moran Corporation and my family. In that one piece of paper it says [to me]: 'We are entitled to take whatever we want from these people and do what we want with it.' And that entitlement is what you see in their behavior."
Pat Moran says both the family pipeline and the utility company steadily lost value under Wooten's management. Industry competitors began calling, he says, and inquiring why the pipeline wasn't being marketed and why a favorable gas purchase contract was allowed to expire. According to the Morans, Wooten and First City then began a push to have the estate sell Moran Utilities to Entex, which offered $6.8 million, an amount Pat Moran considered grossly under the company's market value.
His brother Bill Moran, a financial analyst, put together a counter-offer from some family members to buy Moran Utilities from the estate at a slightly higher price than what Entex had offered. When Entex made a second offer, the family again topped it. At that point, the negotiations, in which V&E represented the estate, were called off.
The Morans say they were unaware at the time that both V&E and the bank had ties to Entex. First City had made credit advances to Entex to facilitate the purchase of Moran Utilities, and Pat Moran later learned that First City Bancorporation and the V&E Lawyers Retirement Plan had a limited partnership whose purpose was to purchase Entex oil and gas properties and lease them back to Entex.
Eventually, Entex withdrew its offer for Moran Utilities.
Then, in 1988, the family began hearing disturbing rumors that Seagull Energy and a senior attorney at Vinson & Elkins had the estate's pipeline "in the bag," says Ann Moran. When she questioned First City managers about the report in a telephone conference, her worries were dismissed as "paranoia," she says.
Several months later, Seagull made an offer of $30 million for the utility company and the pipeline. Entex, the Morans say, was an undisclosed partner in the offer, with its eyes on the utility.
V&E asked to represent the estate and offered a disclosure letter mentioning that the firm also represented Seagull, Pat Moran says. But the Morans say the firm never disclosed that managing partner Attwell was on the Seagull board, owned 20,000 shares of stock in Seagull valued at $600,000 and had actually voted to submit Seagull's bid for the Moran companies. In addition, three other members of the Seagull board also sat on the boards of First City Bank or First City Bancorporation. John McDonough and First City representatives, two-thirds of the estate's executors, moved forward with the sale.
Pat Moran then sued his co-executors to stop the sale; they countersued to force the sale on a 2-to-1 vote.
Today, Attwell says that under then-acceptable legal standards, there was nothing wrong with his having an interest in a company seeking to buy assets of the estate, since he was not directly involved in the representation of the estate. Moreover, Attwell says, he did not know the details of the Seagull offer when he voted to approve its bid and thereafter did not participate in any deliberations on the purchase of the Moran companies. Additionally, he says a letter was sent to the estate beneficiaries during the recapitalization of First City that disclosed his presence on the Seagull board.
"If anybody had ever asked me, are you a director of Seagull, own stock in Seagull, serve on committees, I would have said, 'Certainly,' and give them the particulars in all respects."
Pat Moran dismisses that argument as belatedly self-justifying.
"Essentially, they're saying, 'This is a part of the public record. That Attwell was on the board and he owned these shares.' Well, yeah it is. It is a matter of public record. Guess where? The SEC in Washington," he says. "You're supposed to run an asset check on your lawyer? It is self-dealing for a lawyer to participate as an officer or shareholder of an entity that is buying assets from that beneficiary's estate."
Pat Moran's lawsuit against his co-executors and their countersuit ended in a mid-trial settlement in 1990. Under the deal, he, McDonough and First City resigned as executors, River Oaks Bank became the estate administrator, and First City paid an undisclosed amount to the Moran estate. The executors released each other and their individual lawyers from future claims, but Vinson & Elkins was not released by anyone. Later in the year, Entex finally bought Moran Utilities for $15.2 million -- some $8.4 million more than its original offer. The pipeline company, Morgas, was sold for $21.5 million to KSC Energies, with limited family participation. After their grandfather's estate was settled, the Morans say, the employee pension funds he had mandated had lost half of their value as a result of mismanagement in the eighties.
The Morans then took their battle to another front, with Vinson & Elkins as the target. Pat Moran had fallen seriously ill with a blood clot in a lung in early 1990, forcing him to take a back seat to Ann in the fight. He assigned his interest in any future claims against the law firm to his sister, a move that allowed Ann to discover a natural calling as a crusader against perceived injustice. She says she made the decision to go after the law firm after consulting with a Boston probate lawyer who was appalled at V&E's apparent conflicts of interest.
"Part of the reason that I felt I had to do it myself, the reason I just could not let it go, was I was beginning to realize this was not an isolated incident, that basically the way they violated this family and violated everything my grandfather wanted to have occur, destroyed the employees' trust and their retirement plan, was a pattern.
"I thought, 'This is something nobody else can do. And if I let it go, I've let an opportunity go to live out something I believed in.' "
Ann began collecting assignments of the rights to sue the law firm from other estate beneficiaries. Eventually, she had all major parties except sister Susan and her husband, John McDonough. In their search for lawyers to press their claims against V&E, the Moran beneficiaries were advised that it would be best to go out of town, and they settled on Austin's Broadus Spivey and his firm of Spivey, Grigg, Kelly & Knisely.
Four years later, after a closing appeal from Spivey to send a message to big-firm lawyers, a jury of six men and six women filed back into state District Judge Kathleen Stone's Houston courtroom with a crushing verdict: it found V&E had been grossly negligent in its handling of the legal matters of its clients relating to the Moran estate; that the firm had knowingly engaged in a civil conspiracy with First City, Seagull Energy, Entex and W.J. Wooten to breach its fiduciary duties to its clients; and that it had charged $2 million in excessive fees to the Moran estate. It left Vinson & Elkins bloodied, but unbowed.
"I believe in the jury system," says managing partner Reasoner, who then adds rhetorically, "Do juries make mistakes? Sure. Most verdicts like this are reversed because of error, and I believe this one will be. When the facts are fully illuminated it will be clear we did nothing improper. If we had it to do over again, would we send 50 pages of disclosures to Pat? Well, you know, if that's what he wanted."
So how did the biggest public-relations Waterloo in the firm's history come about, if V&E did nothing wrong?
"I listened to Mr. Spivey's closing argument," says Reasoner slowly, "and his major theme was, 'This is your chance to teach those arrogant lawyers a lesson.' Appeals to prejudice are sometimes quite effective."
Reasoner delivered the line dryly, apparently not appreciating the built-in irony of a lawyer blaming another lawyer for blaming the lawyers.
When told of Reasoner's summation of his argument, Broadus Spivey, who earlier had counted himself as an admirer of the V&E chief, said Reasoner had blown a chance to close the door on his firm's conflicted past and start afresh.
"I'm disappointed," Spivey said from his Austin office. "I think he has missed an opportunity to rise to a higher level. In my cross-examination of Harry Reasoner, when he told about all he had done [to eliminate conflicts of interest], I said, 'I believe you, and if you had been managing partner of this firm at the time, I don't think it would have happened.' "
"Now I'm having some second thoughts about that," he said.
Meanwhile, a family friend says Ann Moran has funneled most of her inheritance from her grandfather's estate into the fight against V&E. The legal fees thus far are estimated at $500,000. Paul Knisely, another of the Morans' attorneys, estimates that the final disposition of the litigation is still years away. So far, V&E has shown no inclination to settle, he says.
Evans Attwell never testified in the Moran proceedings, except through a deposition. He's now in the process of gradually retiring from Vinson & Elkins and devotes much of his time to his trusteeship on the Rice University board. His office on the 34th floor of First City Tower is cluttered with mementos, among them miniature basketballs and a hoop, testimony to his status as an avid fan of the Owls and the Rockets.
It's a worn and comfortable place befitting a fading star, but obviously an area from which real power vacated some time ago. Something of a socialite and one of the few members of the V&E hierarchy with a fortune independent of the firm, Attwell seems headed for comfortable golden years pursuing his private interests.
Yet the former managing partner is clearly seething to have a final say concerning the Moran lawsuit, particularly since neither side called him to testify.
Attwell says he doesn't know why he was not called to defend his own firm. "I'm being perfectly candid," he insists. "I wish I had been called, I thought I should have been called, and I particularly would have liked to have been confronted with the accusations that are now made against me in [the Morans' appellate brief] so I could have responded to them. One by one."
Like Reasoner, who did testify, Attwell argues that Vinson & Elkins was caught between the bitter factions of a fractured family and did nothing wrong.
"Our malpractice insurer," he says, "tells us this is the single area where there is the greatest concentration of malpractice suits. And I think it's because you're dealing with individuals, many of them in an emotional state ... a lot of them have differences of opinion [on] what was left to them, whether that was proper. Or how wills should be interpreted.
"What happened with us [in the Moran case] was we found ourselves in a situation where we represented these executors and they were fighting among themselves and that difficulty was compounded by the fact the beneficiaries were fighting among themselves."
The lawyer still seems stunned that a jury found in favor of the Morans.
"I couldn't believe it," he recalls of the day the jury verdict was announced. "I thought there was no basis for them coming back with it."
Attwell reiterates Reasoner's claim that his board memberships did not constitute a conflict of interest. "Obviously, in retrospect," he says, "we would have clearly said, 'Here are all the things with Seagull. What do you want to know about our relationship with Seagull?' We would have just handed [Pat Moran] a proxy statement of Seagull, handed him a proxy statement of First City Bancorporation that shows all our relationships. That's hindsight, because that's the basis on which they made their case."
But testimony during the trial from Steve Peterson, a former counsel to the State Bar of Texas, ran directly counter to Attwell's reasoning.
"The responsibility is the attorney's responsibility to disclose," Peterson told the jury. "Disclosing from some other source just doesn't count." Such omissions, Peterson went on, "can work harm to the client. Because the client now is not armed with the information necessary to make a rational and reasonable decision as to whether to continue the representation."
In 1988, V&E partner Donald Wood, the same lawyer who Pat Moran says warned him of the consequences of fighting the firm, wrote Attwell a memo in which he reported that Moran was pushing to limit Vinson & Elkins' representation of the estate.
"As a result of Pat's decision, it seems certain that the level of our representation of the estate will significantly decline," Wood reported. He added, in a handwritten note out to the side of the memo's typed text, "Obviously, his current actions are not of benefit to our firm."
To Pat Moran, that notation tells the world exactly where Vinson & Elkins strayed from the practice of ethical jurisprudence.
"This is turning the whole concept on its head," he says. "I, as a lawyer, can tell you that never, ever in my career did the thought ever cross my mind that a client should be acting in my best interest. I always understood it was the other way around."
Attwell says he "didn't necessarily interpret" the note that way. Rather, he says, he viewed it more as an attempt by Wood to help a V&E associate seeking to make partner by explaining to Attwell just how difficult the work on the Moran estate had become. But, Attwell concedes, "I guess everybody could put their own interpretation on the matter. I took it from a different perspective."
When asked whether he was let down by the firm he helped build to a pinnacle of power by not being allowed to testify in the trial, the former managing partner was reflective.
"I don't think the firm let me down," he said. Then his voice dropped to an almost inaudible murmur as he added, "The firm always supported me in anything I did or wanted to do."
It's possible the legacy of that past freedom will be giving Harry Reasoner headaches for years to come.
Get the ICYMI: Today's Top Stories Newsletter Our daily newsletter delivers quick clicks to keep you in the know
Catch up on the day's news and stay informed with our daily digest of the most popular news, music, food and arts stories in Houston, delivered to your inbox Monday through Friday.