Culvahouse says it’s typical in such a merger—where a smaller firm forgoes its own compensation model to integrate into the larger firm’s system—to guarantee pay to new partners.
Still, the O’Sullivan partners’ big paydays bred resentment in New York, where there was a feeling among some heritage O’Melveny lawyers that Culvahouse favored the new additions. The situation worsened when Suydam left in 2006, causing some former O’Sullivan partners to worry about their future at the firm now that their leader would no longer be there to advocate for them. To reassure these partners, Culvahouse says, their compensation guarantees were extended.
One former partner says the pay extensions heightened the impression that the O’Sullivan attorneys were little more than “highwaymen not committed to the firm but only in it for the money.”
One former O’Sullivan partner who no longer works at O’Melveny says he understands the resentment: “We sort of had a certain swagger and self-confidence. We were also the new toy on the block. We got more attention.”
Though the ex-partner stresses that the combination was successful in securing some new clients for O’Melveny, he says generally the endeavor failed: “Is that a healthy, functioning office in New York? I think you’d be hard pressed to say that.”
O’Melveny began to hemorrhage lawyers. Today the firm has 137 attorneys in New York, down from 199 after the merger.
Though New York has suffered, O’Melveny’s Washington office has remained relatively strong, attracting high-profile new talent, such as former DC US Attorney Kenneth Wainstein, Securities and Exchange Commission deputy director Marty Dunn, and former assistant to the solicitor general Sri Srinivasan.
Culvahouse stands by the New York merger. He points out that Apollo and Bank of America, both among the firm’s largest clients, can be traced to the union with O’Sullivan.
But by 2008, when he was seeking a third term as chairman, former partners say, it was clear to them that the New York strategy had been a failure.
“A.B. put a lot of his personal capital into trying to build that New York office,” says one. “It hasn’t worked out.”
The perception of the Office of the Chair also had changed. It was no longer seen as something needed to steer the firm. Some felt that it—and Culvahouse—had become too insular and detached from the rest of the firm. Partners also questioned the overhead expenses involved in paying the administrative staff in the office.
Unlike during his previous run for chair, Culvahouse faced a battle in 2008. His opponents for the chairmanship included three partners based in O’Melveny’s California offices and one partner—John Beisner—from Washington.
Beisner has since moved to the firm Skadden, Arps and didn’t respond to requests for an interview. But several of his former colleagues say that in the years after the O’Sullivan merger, Beisner questioned Culvahouse’s decision-making on matters such as compensation of the O’Sullivan lawyers and administrative expenses in the Office of the Chair.
The two men started out as friends, but by 2008 descriptions of their relationship ranged from “very challenged” to “a demilitarized zone.”
Beisner ran hard against Culvahouse for the chairmanship. At the end of the race, there wasn’t a decisive winner. The 12-partner policy committee—which, after seeking input from all partners, ultimately chooses the firm chair and sends the choice to the full partnership for ratification—spent months on a compromise.
Finally, it decided to reinstate Culvahouse but with policy changes. The Office of the Chair was dissolved, and a “strategy committee” was created with Beisner as one of its heads. The role was meant to give Beisner a voice in firm decisions.
Apparently not satisfied, Beisner—who had been a significant rainmaker for O’Melveny—left for Skadden less than a year later. Culvahouse’s only comment on the matter is that Beisner is “a very fine lawyer.”
Culvahouse has two years left as firm chair, and given that he’s approaching O’Melveny’s mandatory retirement age of 65, he won’t seek another term.
Though he had prevailed in the chairmanship fight, Culvahouse’s work for the McCain campaign was ongoing. His obligation to the campaign was supposed to be only to vet the VP candidates, but after Palin was selected, the Troopergate scandal required Culvahouse’s attention. He amassed resources to help Palin’s local lawyers respond to the legal and press inquiries.
Culvahouse never actually set foot in Alaska during the campaign, but he dispatched Brian Brooks, managing partner of O’Melveny & Myers’s Washington office, along with Ted Frank to Alaska to advise on Troopergate.
Culvahouse joined in phone calls with them and Sarah and Todd Palin to decide how to handle the Alaska state Senate investigation. They had to strike a balance. If Palin came off as too defensive, it could appear she had something to hide. The legal team couldn’t prevent the scandal from dogging the campaign until the end.
The Palins decided against cooperating with the Alaska state Senate inquiry, though they did cooperate with another investigation by the state personnel board. That probe began after Palin filed an ethics complaint against herself with the board in an effort to overshadow the state senate’s inquiry.
The campaign depicted the whole ordeal as a partisan witch hunt. The state Senate probe determined that, although Palin had acted within her authority as governor when she reassigned Monegan, she had abused her power by trying to get her former brother-in-law, the state trooper, fired.
Palin characterized the investigation’s findings as clearing her of any wrongdoing. The media didn’t buy it.
Just as he couldn’t have predicted the kind of political phenomenon Palin would become, Culvahouse also couldn’t have known that for all of his years and accomplishments in Washington, vetting Palin would be what finally brought him—one of the city’s great secret-keepers and behind-the-scenes players—out of obscurity.
His enthusiasm about Palin has waned since the vetting days. Reached by phone the same December week that she went to Haiti, with a Fox News crew in tow, Culvahouse did what so many Republicans have done recently when asked if they’d support Palin in a 2012 run for the White House: He didn’t answer the question.
“I respect Governor Palin,” said Culvahouse. “But I would have to see, first, if she runs and, second, how serious her campaign is.”
Political-donation disclosures show that since 2008 he has donated to the political-action committee of Tim Pawlenty, another VP short-lister from the 2008 campaign and possible GOP presidential candidate in 2012. His vote of confidence in Pawlenty is significant because Culvahouse’s work vetting those rising stars three years ago means it’s likely no one in the Republican establishment has better insight into the potential pitfalls of many of the possible 2012 candidates. He has not donated to Palin. Culvahouse, it seems, is charmed no longer.
This article first appeared in the March 2011 issue of The Washingtonian.