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.