In some respects, the institution Culvahouse inherited in 2000 when he became head of his law firm was similar to the situation he found himself in when he became White House counsel in 1987.
Both institutions were in trouble, and in both cases Culvahouse was responsible for digging them out.
He was vacationing in Cancún with law-school friends when he got the phone call from the White House. Reagan’s chief of staff, Donald Regan, had resigned, and the President had tapped Howard Baker to replace him. Baker accepted the position, but he had one request. He wanted to bring on Culvahouse as White House counsel. Reagan had never met Culvahouse, but he agreed.
By the time Culvahouse arrived at his office on the second floor of the White House, the Iran-Contra investigations were heating up and Reagan’s presidency was on the line.
Baker gave Culvahouse a mandate. “He looked at me and he says, ‘We’re going to survive Iran-Contra if we deserve to,’ ” Culvahouse recalls. “ ‘You don’t want to be the first White House counsel to have your client convicted in an impeachment trial in the US Senate.’ ”
The Reagan administration had fallen behind in its response to the independent counsel and congressional probes into the scandal. Reagan and other officials had secretly orchestrated arms deals with Iran. But the big question plaguing investigators was whether Reagan had known funds from those sales had been diverted to support a group of Nicaraguan rebels, the Contras. Though the President had volunteered to produce documents, his administration had been slow in doing so. Culvahouse was deluged with complaints from the investigators.
He needed to get organized, and he needed manpower. Culvahouse recruited William Lytton, a friend he’d made during his Senate days, to head a team of lawyers devoted to Iran-Contra. They staffed the team with attorneys, secretaries, and analysts from various federal agencies who had the necessary security clearances to review the Iran-Contra documents.
Culvahouse, Lytton, and Baker began having meetings with Reagan in the Oval Office three times a week to talk through documents and to formulate the White House’s responses to the investigators.
These responses were crucial. “Any minor misstep would be blown hugely out of proportion,” says Lytton, now senior counsel at the law firm Dechert.
Culvahouse acted as a liaison to Capitol Hill, a role that Reagan’s press secretary at the time, Marlin Fitzwater, says he was ideal for given his experience on the Hill. “He knew how to talk to them and what their needs were,” says Fitzwater. “He could interact with members of Congress in ways that most legal-counsel people aren’t able to.”
The turning point came when Reagan’s former national-security adviser John Poindexter said under oath that Reagan hadn’t known about the diversion of funds from the Iran arms sales to the Contras.
Reagan’s presidency survived, and Culvahouse emerged as one of the President’s most trusted aides.
The legacy he’ll leave behind at O’Melveny isn’t so clearly defined.
In 2002, Culvahouse found a merger partner in New York. O’Sullivan was an 85-lawyer boutique firm with a transactional practice focused on private-equity clients. Acquiring those lawyers would boost the head count in O’Melveny & Myers’s New York office from 114 lawyers to 199. The O’Sullivan attorneys would also bring new Wall Street clients, such as Apollo Investment Corporation.
Former partners, all of whom spoke on condition of anonymity, say the merger was billed as a way for the existing O’Melveny lawyers to access new business opportunities. The combination required—and received—approval of two-thirds of the partnership.
It was soon apparent that the O’Sullivan lawyers had a different approach. Partners who have left since the merger describe the O’Sullivan lawyers as uncooperative about sharing client work and much more focused on the bottom line.
Some of O’Sullivan’s top partners, including its chairman at the time, John Suydam—who has since left O’Melveny—were given three-year pay guarantees of $3 million a year. When the private-equity market went into a slump shortly after the merger and the O’Sullivan lawyers weren’t meeting expectations, some original O’Melveny lawyers began to question their compensation.
Next: Standing by the New York merger.