Word: texaco
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When lawyers in the Pennzoil-Texaco multibillion-dollar battle turned to the Texas Supreme Court, they were not approaching strangers. Since 1980 Houston Attorney Joseph Jamail and his firm, Pennzoil's victorious counsel, doled out $248,000 in campaign contributions to the justices. As for Russell McMains, Texaco's chief appellate lawyer in Texas, he has donated some $40,000 to members of the high bench, and his former Corpus Christi firm gave $150,000 more. Such cozy bench-polishing tactics are not illegal, since Texas is one of only nine states where virtually all judges are chosen in partisan...
...certainly look unseemly. After the Texas justices declined to upset the pro-Pennzoil trial judgment and Texaco decided last month to settle by paying $3 billion, local court watchers were reminded of published estimates of the greater electoral largesse of Pennzoil's 23 Texas attorneys: they ladled out more than $300,000 to the jurists in 1986 alone. Now that case, along with the quickening torrent of lawyer donations to judges at all levels, is sparking what could be the first serious reform effort since the system settled into place in 1873. This week Chief Justice John Hill will take...
...helped force both sides to talk was TWA Chairman Carl Icahn, better known as a raider than a mediator. In November, Icahn became Texaco's largest shareholder by gaining control of 12.3% of its stock. Then he began a round of shuttle diplomacy between Liedtke and Kinnear. Icahn knew that his holdings, plus a 2% stake in Pennzoil, would surge in value if a deal was struck. Sure enough, as word of the settlement leaked last week, Texaco shares rose 8%, to 38 1/2, while Pennzoil stock jumped...
...only Icahn but a committee of Texaco shareholders that pushed the two companies into agreeing on a $3 billion figure. The settlement will remove the dark cloud of uncertainty that has hovered over Texaco and enable it to emerge from bankruptcy. As for Pennzoil, the money may encourage the company to go shopping for smaller oil firms. The biggest winner of all may be Texas Lawyer Joseph Jamail, who will reportedly get a $600 million cut for leading Pennzoil's attack against Texaco...
...moment too soon, because the oil industry may be facing rough times. When the Organization of Petroleum Exporting Countries failed last week to reach a meaningful pact to curb production, the price of oil futures plunged from $18 per bbl. to $15.58. If prices collapse, at least Pennzoil and Texaco can start putting their resources into the businesses again instead of into the pockets of their lawyers...