AUSTIN, TEX., AUG. 21 -- People joke about lawyers, sometimes out of anger, sometimes out of envy, but usually the legal eagles get the last laugh. That often happens on payday, especially the type enjoyed today at Vinson & Elkins, one of the largest and most powerful law firms in Texas. On this day, $100 million in bonuses was distributed to 490 employees, from senior partners to mail clerks.
"It was a very good day for us," said managing partner J. Evans Attwell, a master of understatement.
The $100 million was the final share of a mother lode of contingency fees earned by the law firm for representing a consortium of companies that wanted to build a coal-slurry pipeline from Wyoming to Texas.
When the consortium, ETSI Pipeline Project, was thwarted, it sued five railroad companies, charging that they had disrupted, delayed and destroyed the project through administrative maneuvers and by refusing to allow rights of way.
Vinson & Elkins took the case on a one-third contingency fee, meaning that if it won, it would receive one-third of the settlement and, if it lost, it would get nothing. For six years, the firm worked for nothing, in a sense, doing an estimated $25 million worth of work before the railroads started to settle.
Four settled before the issue reached federal court, and the fifth, Santa Fe Railway Co., fought and lost in court, then settled instead of appealing. It was the Santa Fe portion of the settlement that appeared in the firm's paychecks today.
Overall, by Attwell's estimate, the firm received slightly less than $200 million from a settlement that neared $650 million for the winning consortium, which included Panhandle Eastern Corp., the Bechtel Group, Enron Corp. and K N Energy Inc.
Considering that Texas was the state in which Pennzoil, represented by lawyer Joe Jamail, won a $3 billion settlement against Texaco, the railroad case seems modest. But it is the largest settlement in Vinson & Elkins's history, "a once-in-a-lifetime" windfall for any firm, Attwell said.
Some employees received more than others, according to a formula worked out by the firm's management committee. Attwell would not discuss specific bonuses but acknowledged that the distribution process included secretaries and mail clerks. He also said a few employees became instant millionaires.
Senior partners and those associated with the case got the most out of the deal. "There were a few parties around here today," said Attwell, who added that "it would be safe to say" even more parties were held outside the firm's Houston office.
If the partners at Vinson & Elkins had a good day, even theirs paled in comparison with the bonanza reaped by lawyer Gilbert "Buddy" Low of Beaumont. It was his good fortune to be the local attorney chosen by Vinson & Elkins to be on the legal team when it filed the civil lawsuit before U.S. District Judge Robert Parker in the state's southern district in Beaumont.
The suit was filed there rather than Houston because its docket is lighter. Traditionally, the leading law firms add a local lawyer to their team in such cases.
For his role, which largely consisted of taking depositions from the Santa Fe board chairman in Chicago and the Santa Fe president at a resort in Colorado Springs, Low took in $13 million. He has invested most of it and spent some on a two-week vacation through Europe with 12 relatives and friends.
How does it feel to gain sudden wealth? "I wasn't wealthy before, and I'm not wealthy now," Low said. "Money doesn't make a man wealthy."