ALM Properties, Inc.
Page printed from: http://www.law.com
Select 'Print' in your browser menu to print this document.
Giuliani Set to Return to His Houston-Based FirmRudy Giuliani, the high-profile Bracewell & Giuliani partner who just gave up a well-financed campaign seeking the Republican nomination for president, plans to "decompress" for a while. But then he's going to roll up his sleeves and start lawyering at Bracewell again. For the so-called "America's Mayor," the end of his 2008 presidential ambitions has triggered the resurgence of Giuliani's productivity for the firm, which is set to see more changes as its managing partner, Patrick Oxford, steps down.
Texas Lawyer2008-02-12 12:00:00 AM
Rudy Giuliani, the high-profile Bracewell & Giuliani partner who just gave up a well-financed campaign seeking the Republican nomination for president, plans to "decompress" for a while.
That's what Patrick Oxford, the Houston-based firm's managing partner, told his partners on Feb. 4 at their weekly meeting about Giuliani's immediate plans. Giuliani quit the presidential race on Jan. 30, the day after the Florida primary, in which he finished in third place. Giuliani didn't practice law while seeking the Oval Office, but he continued to lend his name, clout and rainmaking might to Bracewell and continued to draw a multimillion-dollar compensation package.
Less than a week after Giuliani dropped out, Oxford also told his partners that, after some decompression time, Giuliani would roll up his sleeves and start lawyering at Bracewell again.
The fact that Giuliani, former mayor of New York City, is ready to practice law again is "great for us," says Oxford, who served as campaign chairman for Giuliani's presidential bid. For the so-called "America's Mayor," the end of his 2008 presidential ambitions has triggered the resurgence of Giuliani's productivity for the firm, Oxford says. "Rudy is a lawyer and a damn fine lawyer. He thinks like a lawyer, and he likes being around lawyers," Oxford says.
Giuliani isn't the only Bracewell partner in transition. As of Thursday, Texas Lawyer's press time, Oxford planned to step down as managing partner of the firm.
Oxford began discussing stepping down with his partners last fall, say two senior partners at the firm who request anonymity. One of the senior partners says Oxford will most likely retain a role akin to firm chairman. The partners were expected to select Oxford's successor at their annual meeting on Friday. The same senior partner notes that several Bracewell partners are on the short list to become the next managing partner, including Mark Evans, Carrin Patman, Greg Bopp and Tullos Wells. Bopp and Patman decline comment about the managing partner position. Evans and Wells did not return telephone calls seeking comment about the post before press time on Thursday.
What's certain for Giuliani, Oxford, their partners and the firm is that Giuliani's noncandidacy starts a new chapter in the odd-couple marriage between hizzoner and the Houston firm. In the wake of Giuliani's expensive political loss -- he earned zero delegates, according to CNN.com, for the more than $32 million his campaign spent on the Republican presidential nomination -- Oxford and five other Bracewell partners insist the 2-year-old union between the firm and Giuliani shows no signs of weakening. Indeed, they contend the value of Giuliani as a partner will strengthen now that he no longer needs to woo voters.
Already, they say, Giuliani has helped the one-time regional firm leapfrog onto the national stage. They credit Giuliani's star power with helping establish a 49-lawyer New York office, which Oxford says will generate enough revenue to cover its own operating expenses this year and repay this year's portion of a $25 million, 10-year loan the firm took out to finance the Manhattan office in 2005.
In 2006, the firm's gross revenue totaled $201.6 million, up 17.2 percent from $172 million in 2005, and net income improved by 19.4 percent, when comparing $73.8 million in 2006 with $61.8 million in 2005, according to Texas Lawyer's Annual Report on Firm Finance. Oxford attributes much of the firm's robust performance in 2006 to the New York office.
Bracewell partners tell stories of Giuliani wowing clients and lawyer-recruits alike. Evans, a 31-year Bracewell veteran, recalls sitting with his international bank clients and Giuliani in a private room at the famed 21 Club as the former New York City mayor identified the history of the city buildings depicted in a wall mural. "He's very good at talking to people," says Evans.
In June 2007, the firm's New York summer associates spent a day with Giuliani as the candidate was interviewed on several live radio shows and gave a speech at a downtown club. Evans says that five or six of those summer associates accepted the firm's job offers to become associates in the fall of 2008 -- a higher number than expected.
Throughout his career, however, Giuliani hasn't worked more than four years at any firm. In 1989, after six years as the U.S. Attorney for the Southern District of New York, he joined New York City's White & Case as a partner and prepared for his first (and unsuccessful) run for mayor of New York. He left White & Case 18 months later. The stint, Giuliani wrote in his autobiography titled "Leadership," was unsatisfying.
Duane Wall, White & Case's managing partner from 2001 to 2007, says the firm declines comment on the former presidential candidate since he remains a political figure.
Between 1990 and 1993, Giuliani was a partner in New York City's Anderson Kill & Olick while he launched his second mayoral bid, which was successful. According to an account in Wayne Barrett's book "Rudy! An Investigative Biography of Giuliani," Giuliani's name appeared in 1993 on a list of partners who had underperformed in terms of billable hours.
Jeffrey Glatzer, Anderson Kill's former president and chief executive officer, says he has no comment about ancient past. "I've always wished him well and thought of him well," says Glatzer, now a partner in Reed Smith.
Giuliani's relatively short tenures at those firms bear "no relationship" to the bond he has forged with his Houston partners, Oxford says. Evans says he doesn't know all the details of Giuliani's dealings with his former firms, but Bracewell already has reaped many benefits from the relationship with the former mayor, intentionally capitalizing on it in short order since Giuliani could have departed for the White House.
"We always knew we might have a limited period of time," says Evans. "That's why we built up this [New York office] quickly."
For Giuliani, ties with the Texas firm so far have offered obvious advantages.
The financial disclosure form that Giuliani filed with the Federal Election Commission in May 2007 reports that the firm guaranteed Giuliani a base pay of $1 million a year, and in 2006 he received $1.2 million and 7.5 percent of the revenues of Bracewell's New York office -- an amount the report doesn't specify and the firm declines to provide.
Under the arrangement, Bracewell also paid the former mayor's consulting business, Giuliani Partners, $10 million up front. Giuliani brought his partners in Giuliani Partners, Michael Hess and Daniel Connolly, who had worked for him in city government, to Bracewell. Connolly, who did not return two telephone calls for this article, is managing partner of Bracewell's New York office. Giuliani Partners' offices are only five blocks from Bracewell's midtown Manhattan location. Giuliani shares his time between the two enterprises, Oxford says.
Bracewell partners also boosted Giuliani's political coffers. In his bid for the presidency, Giuliani raised $60.9 million in 2007, $6.5 million of that from Texans, and $95,000 specifically from lawyers identified as working at Bracewell, according to the Washington, D.C., Center for Responsive Politics' analysis of recent Federal Election Commission filings.
Giuliani earned support from some of Bracewell's well-heeled clients, including Richard Kinder, chairman and chief executive officer of Houston's Kinder Morgan, and his wife, Nancy, a well-known campaign finance bundler for President George W. Bush. Giuliani also gained the backing of Oxford, a major Bush campaign fundraiser and no slacker when it comes to raising money for Republican candidates.
When Giuliani announced on "The Tonight Show With Jay Leno" in March 2005 that he would become a partner in Bracewell, the firm's partners considered the hiring "a real shift in gears" for the firm, Oxford says.
Oxford, who has been managing partner at the firm for seven years, first considered the idea of hiring Giuliani while attending a party at the Republican National Convention in New York in 2004. There, Oxford met Roy Bailey, a partner in Giuliani Partners and a former Dallas insurance executive, who served as Giuliani's campaign finance chairman. Bailey says he told Oxford that Giuliani was interested in joining a firm.
"We just found the perfect match," says Bailey, who helped Giuliani set up a small conglomerate of businesses, including Giuliani Partners.
The partners at what was then Bracewell & Patterson, Oxford says, had evaluated opening a New York office in an effort to become a national player. "We went through every possible alternative," Oxford says, evaluating the costs of acquiring a boutique, building an office from the ground up or merging with a large firm.
But the opportunity to move into the New York market by hiring Giuliani was unprecedented, Oxford says. During those early stages of discussions, Bailey says, no one talked about Giuliani's presidential ambitions. "There was never a tie-in," says Bailey.
Giuliani did not respond to a request for comment for this article.
BIG APPLE BUSINESS
But five partners at the firm and a former partner say from the get-go they sensed that Giuliani might launch a presidential campaign and that such a bid offered a potential gain to the firm.
"It was understood that he might run for president, and he might lose, but the theory was that any kind of publicity was going to be very good," says Joseph Moody Ford, a former partner who left in 2005 to join DLA Piper in Dallas.
During Giuliani's presidential bid, his firm did make headlines. Feature stories about Giuliani and his Texas-based firm appeared in The Nation, Newsweek, The New York Times and The American Lawyer (a Texas Lawyer affiliate), among others. Journalists covering the campaign regularly scanned Bracewell's client list for trouble spots, and the firm's lobbying work before the Texas Legislature on behalf of Citgo Petroleum Co., which is controlled by Venezuelan President Hugo Chavez, became an issue. In 2007, the relationship between Citgo and the firm ended. Citgo spokesman Fernando Garay says the company terminated its relationship with the firm.
Bopp, a corporate section co-chairman who sits on Bracewell's management committee, says the positives in hiring Giuliani outweigh the negatives. Unlike other firms that struggle to establish New York offices, Bopp says Bracewell, with Giuliani, has attracted in a short period of time "very high-quality practitioners" and their clients. Bopp points specifically to Mark Palmer, a partner who came from London-based Linklaters with a private equity practice; Mark Mukasey, a former Assistant U.S. Attorney for the Southern District of New York and the son of the U.S. Attorney General Mike Mukasey; and Evan Flaschen, former co-chairman of Bingham McCutchen's restructuring practice in New York City.
Bracewell's results in the Big Apple impress a partner at another Texas firm who knows from his own experience about the high risks and high price of a Manhattan office for newcomers.
Peter Riley, managing partner of Dallas-based Thompson & Knight, which has 13 lawyers in the New York City office it opened in 2005, says Bracewell's roster of 49 lawyers in New York translates into a triumph. "Without knowing anything else about the economics, they should claim success if they have that many lawyers in that short a time," Riley says.
At Bracewell, partners who did not support Giuliani for president don't think his candidacy hurt the firm.
Andrew Edison, a Houston Bracewell partner who has donated money to the campaign of Democratic presidential contender U.S. Sen. Barack Obama of Illinois, says, "We were looking to launch a presence in New York, which we didn't have. Who is better than Rudy Giuliani to do that? He gave us instant credibility. He helped, and I hope that he will continue to help us."
Patman, a Bracewell partner in Houston who supports U.S. Sen. Hillary Clinton of New York in her effort to win the Democratic presidential nomination, says she didn't feel compelled to give to Giuliani. "There was no pressure to do anything but follow my heart in the presidential race," says Patman, who donated $4,600 to Clinton's campaign and co-hosted a Houston fundraiser for her.
Ford, who left Bracewell in 2005, says his friends who are still working at the firm's New York office have told him the outpost is successful.
William C. Cobb, a firm consultant in Houston, says Giuliani's campaign was largely a plus for Bracewell's national reputation.
"It certainly moved the firm's name into the limelight," Cobb says. "Name recognition -- or branding, if you want to call it that -- is critical to law firms today, so that branding would have helped them."
The only significant downside for the firm may have been the diversion of firm assets to the campaign, particularly the time Oxford spent on campaign and fundraising work instead of managing the firm, Cobb says.
Oxford says for the past six months he has devoted about half his time to the firm and has been grateful for the help other partners provided. After a week on the beach, Oxford, who was attending the annual partners' meeting last week, will be back full time. Oxford expects Giuliani to be out longer. Giuliani, while also taking some time off, found time on Jan. 31 to return to Leno's show where he appeared with his presidential pick, U.S. Sen. John McCain, R-Ariz.
Cobb, who worked as chief operating officer at Bracewell for several years in the 1970s, says Giuliani's campaign probably did little to harm client relationships.
"Some clients are saying they would rather have a Democrat in the White House. Some are saying a Republican in the White House. Some are saying, 'I'd rather have Romney in the White House.' But as far as the relationship with the firm, as far as legal services, I don't think it would hurt them, because a lot of those clients are tied to individual partners," Cobb says.
Joseph Listengart, vice president, general counsel and secretary of longtime Bracewell client Knight Inc., formerly known as Kinder Morgan Inc., says he was hopeful the link with Giuliani and the firm's plans to open an office in New York would improve the depth and breadth of the firm's practice -- and it has.
Listengart says he spent some time in the New York office in late 2007 and early this year working on a pipeline deal, and "it was a thriving office, and it was very helpful to us."
Listengart says the company hires Bracewell for corporate securities, mergers-and-acquisitions and financing work, litigation and employee benefits matters. He says he continues to deal directly, for the most part, with lawyers in Houston, but he knows the firm now has greater resources because of lawyers in the New York office.
Notes Listengart, "It's been a positive."