Giuliani Law Firm Offers Texas Foothold as 2008 Decision Looms

By Thom Weidlich

Jan. 30 (Bloomberg) -- Rudolph Giuliani's alliance with a Texas law firm may help the former New York mayor gain regional appeal and cash as he prepares for a possible Republican campaign for president.

It has been almost two years since the ex-federal prosecutor said he was opening a New York office for Houston-based Bracewell & Patterson, known for its energy work and political ties. The renamed Bracewell & Giuliani got a New York foothold while Giuliani gained Texas connections.

``Usually when a law firm changes its name, no one knows who these people are,'' says University of Houston political scientist Richard Murray. ``But Giuliani has 100 percent name recognition among business people.''

Giuliani, who built his reputation by taking on the mob as U.S. Attorney for the Southern District of New York, has assembled a Manhattan practice of 32 corporate lawyers and litigators. They've helped bring clients that include hedge funds such as D.E. Shaw & Co. and investment banks such as Bank of New York Co. -- a widening Wall Street base that may also hold political value.

Fund Raising

``The first phase of any presidential campaign is all about fund raising, so if Giuliani can use his law firm's network to raise some quick money, it will be an asset,'' says Washington- based Republican consultant Scott Reed, who managed former U.S. Senator Bob Dole's 1996 presidential campaign.

Lawyers working for the firm contributed at least $23,000 to Giuliani's political action committee in the last two years, according to Federal Election Commission filings. The New York- based PAC, Solutions America, isn't a vehicle for raising funds for a presidential race. It doled out $455,000 over the period, primarily to Republican candidates for House and Senate, the filings show.

Giuliani, 62, left City Hall when his second term expired in December 2001, three months after his handling of the aftermath of the Sept. 11 attacks on the World Trade Center earned him the nickname ``America's Mayor.'' Last November, he filed papers with the FEC to create a committee to explore a possible presidential bid in 2008.

Giuliani said in June he will decide his political future this year. His exploratory committee held its first fund-raiser, a $2,100-a-person event, Dec. 19 in New York, and Giuliani made speeches this past weekend in New Hampshire, site of one of the earliest presidential primaries.

Dropping Anchor

Senator John McCain of Arizona and former Massachusetts Governor Mitt Romney have also formed exploratory committees. Giuliani and McCain are the leaders so far, according to a range of recent polls. Most show the two in a statistical tie.

By forging connections in Texas, where George W. Bush was governor before becoming president, Giuliani can more easily circulate in a state with the second-most votes in the Electoral College -- 34 -- after California.

``Any anchors he can put down in traditional Republican strongholds will pay dividends,'' says Lee Miringoff, director of the Institute for Public Opinion at Marist College in Poughkeepsie, New York.

The oil and gas industry, a mainstay of the Texas business community, has been a key contributor to presidential campaigns. In the 2004 election, individuals and political action committees from the industry gave $25.8 million to federal candidates, according to the Center for Responsive Politics, a nonpartisan, Washington-based research group. Eighty percent of those contributions went to Republicans.

Republican Connections

Bracewell's Houston-based managing partner, Patrick Oxford, is a former fund-raiser for Bush and has contributed at least $41,578 to Republican candidates and committees since Aug. 17, 1998, according to filings with the FEC.

Giuliani says a potential White House campaign wasn't a factor when he was considering Bracewell's offer.

``My decision to join Bracewell in 2005 was based upon my desire to be involved with a high-quality law firm,'' Giuliani says. ``I was impressed with the firm's culture, vision and the caliber of the practice.

``My decision was based on this, not politics.''

David Hill, a Republican polling consultant based in The Woodlands, Texas, says the firm has always had politically connected partners. Bush, as governor, appointed Oxford to the University of Texas Board of Regents in 1997.

Bracewell has its own Washington-based political action committee, Bracepac, which gave $218,206 to Republican and Democratic candidates in the 2005-2006 election cycle, the FEC database shows.

`Foothold'

Bracewell's new identity may help Giuliani in Texas.

``I think Giuliani needed a foothold to demonstrate that he's credible,'' says Robert Stein, a political scientist at Rice University in Houston, who has done work for the firm in cases involving school districts. ``It gives him a geographical breadth that he didn't have.''

Still, Giuliani hasn't made many public appearances in Houston, the University of Houston's Murray says. ``He has not been a high-profile guy here.''

The former mayor is scheduled to appear March 13 at a motivational conference in Houston.

The Bracewell firm, founded in Houston in 1945, had 394 lawyers as of Sept. 30, ranking it No. 107 in the U.S., according to the legal newspaper National Law Journal.

Fast Growth

Its 2005 revenue was $172 million, ranking it No. 121 among U.S. law firms, according to a survey by the trade publication American Lawyer. Profit per partner, a legal-industry benchmark, was $595,000, ranking No. 134.

Giuliani declines to discuss his office's revenue.

``It's grown, I have to say quite honestly, faster than I thought it would,'' he says.

Lawyers joining the New York office of Giuliani's firm are bringing clients that include hedge funds and private-equity firms such as New York-based D.E. Shaw, with $26 billion under management; Chicago-based Citadel Investment Group LLC, with $13.4 billion; and New York-based MatlinPatterson Global Advisers LLC, with $3.8 billion.

``If you want to have a serious presence in New York, that means having a corporate capability,'' says Bruce MacEwen, a law- firm consultant in Manhattan who says hedge funds and distressed debt are ``very hot'' practice areas.

``Any lawyer would be interested in hearing what might be available under the Giuliani brand name,'' he says.

Giuliani PAC

The firm's existing Houston-based clients include El Paso Corp., owner of the largest U.S. network of natural gas pipelines; Reliant Energy Inc., the second-largest Texas power seller; and Seitel Inc., which provides seismic data to the oil and gas industry, the firm says.

``We suspect that some of our clients will support Rudy, if he runs,'' says Oxford, 64. ``We don't expect that his political support, if he runs, will have much to do with the firm where he practices law.''

Spokesmen for D.E. Shaw, Citadel and MatlinPatterson declined to comment.

The Center for Responsive Politics database says David Matlin, president of MatlinPatterson, and Mark Patterson, the firm's chairman, each gave $5,000 to Giuliani's Solutions America PAC last year.

Other contributors to the PAC included corporate raider T. Boone Pickens and employees of his Dallas-based hedge fund BP Capital LLC, who gave at least $25,000 in 2005 and 2006, the database shows.

Corporate Cases

When he joined Bracewell, Giuliani said he was itching to return to the courtroom. That hasn't happened.

``I have not found a case to get back into the courtroom yet,'' he says. ``But we still might.''

He has worked on ``three or four'' cases, he says. One was for Banco Santander Central Hispano SA, Spain's biggest bank, which wanted to buy 20 percent of Sovereign Bancorp Inc.

The firm concluded that Banco Santander's acquisition would pass U.S. regulatory hurdles, and the deal was completed in June.

The firm's Texas and Washington partners recently advised Banco Santander in its agreement to acquire 90 percent of Dallas- based Drive Financial Services LP from that firm's management and HBOS Plc, the U.K.'s biggest mortgage lender, for $650.7 million.

Bracewell & Giuliani advises MatlinPatterson on its Brazilian affiliate's pending acquisition of bankrupt airline Varig.

Key Hires

The firm also represents funds, including Citadel, that hold bank debt in Adelphia Communications Corp.'s bankruptcy.

It counseled D.E. Shaw and Xerion Capital Partners LLC in their bid to acquire Oneida Ltd., the 126-year-old flatware maker based in Oneida, New York. The funds withdrew their bids and Oneida exited bankruptcy protection in August.

Giuliani last year made what he says were three important hires to boost the corporate business.

Mark Palmer, 41, who leads the corporate practice, joined in May from the New York office of London-based Linklaters, where he headed that firm's U.S. corporate practice.

Palmer says the New York office's corporate department has two elements: a more traditional practice encompassing mergers and acquisitions, private equity and market regulation, and a special-situations practice advising distressed-debt funds and those buying underperforming assets.

``Corporate in New York is very difficult,'' Palmer says. ``You need a local base. You can't just export work out of Texas.''

`America's Mayor'

David Albalah, 43, joined in July from the New York office of Chicago's McDermott Will & Emery to lead the bankruptcy group.

``Joining a 60-year-old firm with a national platform, coupled with a brand-new office growing in the Big Apple with `America's Mayor' -- it was not a typical opportunity,'' Albalah says.

Julian Rainero, 34, joined from the New York branch of Boston's Bingham McCutchen to head a broker/dealer practice.

Rainero, who brought with him such clients as Bank of New York, Fidelity Investments, Societe Generale and Instinet Group Inc., says the corporate practice is ``focused on the New York investment banks and the private-equity players here.''

``Too many people focus on bankruptcy, litigation and other areas instead of becoming expert in what the investment banks and PE people do,'' he says, referring to private equity firms.

`Midas Touch'

The litigation practice was beefed up with the hirings of Kenneth A. Caruso, 54, and Marvin R. Lange, 58, from New York's Chadbourne & Parke in September 2005.

Marc Mukasey, 39, was hired from the U.S. Attorney's office for the Southern District of New York to head Bracewell's white- collar criminal defense practice.

Giuliani splits his days between the law firm and Giuliani Partners LLC, a consulting business that includes investment bank Giuliani Capital Advisors LLC.

Giuliani Partners, where he is chairman and chief executive officer, has worked with wireless telephone company Nextel Communications Inc. to improve public safety communications and with drugmaker Purdue Pharma LP to curb prescription drug abuse.

``I think joining the firm added to Giuliani Inc., which is now a brand name,'' Reed says of the Bracewell partnership. ``He has had the Midas touch when it comes to business development.''

To contact the reporter on this story: Thom Weidlich in New York at tweidlich@bloomberg.net .

Last Updated: January 30, 2007 00:08 EST

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