Vinson & Elkins’s Church Property Fights: Business of Law

Daniel Tobey, an eighth-year associate at Vinson & Elkins LLP, is working on litigation that is anything but typical for the corporate powerhouse.

He is one of a handful of the firm’s lawyers representing two Protestant denominations trying to wrest ownership of church property from the Dallas-Fort Worth congregations that have voted to disaffiliate over religious and political disagreements.

The disputes reflect those that have occurred nationwide, as questions over church policy rapidly morphed into litigation over church property, with breakaway parishes nationwide battling their former denominations for real estate in addition to religious beliefs. While issues involving gay clergy and gay marriage are often cited as causing a split, other questions of polity and policy have also contributed.

Whether the churches are in affluent areas like Dallas-Fort Worth or in more modest regions like Quincy, Illinois, the denominations are spending millions in legal fees to fight the departures. The cases often involve whether the property -- church buildings as well as investments -- are owned by the congregations outright or are only held in trust for the denomination.

Both small and large law firms have become involved. Goodwin Procter LLP has represented the Episcopal Church in many cases. Troutman Sanders LLP and Winston & Strawn LLP took opposite sides in an Episcopal dispute in Falls Church, Virginia. Bryan Cave LLP has represented the Episcopal Church in Los Angeles, and Andrews Kurth LLP, is representing the breakaway diocese in the Fort Worth case.

“These are incredibly messy cases,” said Robert Tuttle, a professor of law and religion at George Washington University Law School. “They rely heavily on documents that people often weren’t very careful about.”

The breakaway congregations view the property and the investment as their own, rather than belonging to the governing church.

Tobey, however, says that “while the facts vary between the cases, the fundamental issues are the same in both -- a hierarchical church has created a local church to carry out the ministry.” The denominations take the position, he said, that “it’s a fundamental right to worship as you want, but you can’t take the property with you.”

Tobey’s workload in the church cases just got a little lighter. In September, the Grace Presbytery settled its dispute with the Highland Park Presbyterian Church for $7.8 million.

Estimates for the value of the property ranged from $70 million to about $120 million, Lloyd Lunceford, a Louisiana attorney who represented Highland Park, said in a telephone interview.

Lunceford, who has represented breakaway congregations in 20 states, said that “assessing the value of the property is as much art as it is science. There are few comparables.”

Although the Highland Park case has been settled, the litigation involving the Fort Worth Episcopal Diocese -- which seeks to disaffiliate from the governing Episcopal Church -- remains active. Lawyers from Hogan Lovells LLP, along with Vinson & Elkins, have petitioned the U.S. Supreme Court to review a decision from the Texas Supreme Court finding that “neutral principles” rather than a standard of deference should govern these disputes. That ruling overturned the traditional standard of deference, under which a lower Texas state court found that that the property belonged to the Episcopal Church.

Fees in the cases are mounting.

Bishop Jack Iker in Fort Worth, whose diocese comprises the breakaway congregations, said in a telephone interview that his diocese, represented by Andrews & Kurth, has “conservatively spent $3 1/2 million” litigating the cases.

Whit Jordan, the senior Warden of the Falls Church Anglican, which voted to leave the Episcopal church in 2006, said his 2,600-member congregation spent “several million dollars” litigating, which ended in March when the U.S. Supreme Court declined to review the case.

John Shiner at Bryan Cave, who represented the Episcopal Diocese of Los Angeles pro bono in its successful suit to maintain ownership of St. James Parish in Newport Beach, California, said his work was done pro bono. Goodwin Procter’s work for the Episcopal Church is a “mixture of paid and pro bono work,” spokeswoman Lily Bryant said in an e-mail.

Privately, even those lawyers who are billing their clients say that collection can be difficult.

Vinson & Elkins partner Tom Leatherbury declined to disclose fees or whether any of the work is being done pro bono.

Lawsuit News

Buyout Firms’ $590.5 Million Collusion Settlement Is Approved

Goldman Sachs Group Inc., Kohlberg Kravis Roberts & Co. and Blackstone Group LP are among seven firms to win preliminary approval of a $590.5 million settlement with investors claiming they held down leveraged buyout prices.

The original complaint, filed in 2007, listed 19 leveraged buyouts and eight related transactions in which private-equity firms were accused of shortchanging shareholders in target companies of billions of dollars by colluding to suppress takeover bids.

U.S. District Judge William Young in Boston on Sept. 29 approved the accord. A final-approval hearing in the case is set for Feb. 11.

The firms were accused of holding down prices by forming groups to take the sought-after companies private, agreeing not to compete for some deals and allocating transactions among themselves.

Under a settlement disclosed this month, the world’s second-biggest private-equity firm, the Carlyle Group LP, agreed to pay $115 million and avoid a scheduled Nov. 3 trial, resolving the last open claims.

The settling parties, which also included Bain Capital Partners LLC, TPG Capital LP and Silver Lake Technology Management LLC, denied any wrongdoing or liability, according to Young’s order.

The case is Dahl v. Bain Capital Partners LLC, 07-cv-12388, U.S. District Court, District of Massachusetts (Boston).

Law Firm News

Lateral Moves at Steptoe, Akin and Shulman Rogers

Steptoe & Johnson LLP is expanding its trans-Atlantic competition practice with the addition of EU and French competition lawyer Jean-Nicolas Maillard as a partner in the firm’s Brussels office. Maillard, who is qualified in France and the U.K., has practiced competition law for 16 years in London and Paris and has advised French, English and international clients on antitrust matters, including cartel and antitrust investigations and litigation. He was previously counsel at Freshfields Bruckhaus Deringer LLP

F. Mark Fucci and Anne-Marie Godfrey are joining the Hong Kong office of Akin Gump Strauss Hauer & Feld LLP from Bingham McCutchen LLP. Fucci will join as a partner in the financial-restructuring practice, while Godfrey will join as a partner in the investment-management practice.

Twenty-eight partners joined the London, Hong Kong and Frankfurt offices of Akin Gump from Bingham since Sept. 17. All are expected to join the firm in their respective offices within the coming weeks.

Fucci focuses on cross-border matters and has experience in restructurings, insolvencies and complex financial transactions. Godfrey advises investment managers on the establishment and regulation of hedge funds, private-equity funds and regulated funds.

Ralph K. Pope has joined the government contracts and grants practice of Shulman Rogers Gandal Pordy & Ecker PA in Potomac, Maryland, as of counsel. Pope is a former sector general counsel for Northrop Grumman Corp. and former vice president and general counsel of Siemens Enterprise Communications.

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