Managing a Crisis: Oil Spill Case Tests Sutherland’s Rachel Clingman

© 2012 The Texas Lawbook.

By Janet Elliott
Staff Writer for The Texas Lawbook

HOUSTON – Rachel Giesber Clingman stepped up to a wall-sized white board and furiously started scribbling from notes written on a restaurant napkin. In no time, she and her law partner Steven Roberts had filled the board with lists of problems they expected to face in coming months.

Class-action and multidistrict litigation. Insurance disputes. A web of liability laws, obvious and arcane. A torrent of government investigations. A nagging news media. Identifying, gathering and preserving mountains of documents.

The enormity of their task soon hit them. “There was no existing template for a matter of this scope,” recalls Roberts, without fear of contradiction. For the two lawyers were trying to predict the legal fallout from the largest offshore oil spill in U.S. history – while it was still happening 250 miles away.

On April 20, 2010, the Deepwater Horizon drilling rig exploded in the Gulf of Mexico, killing 11 workers and unleashing an estimated 4.9-million-gallon underwater gusher of crude that would last three months. Almost immediately, Swiss-based Transocean, the world’s largest offshore drilling contractor and operator of the rig, retained Clingman and her firm, Sutherland, Asbill & Brennan, to prepare and lead the comprehensive defense – in court and in public – that it already knew it was going to need.

Now, more than 320 depositions, 100 million documents, countless court hearings and even a Congressional appearance later, Clingman is approaching the culmination of that effort. A long-awaited civil trial over liability for the Deepwater Horizon disaster is scheduled for Jan. 14 in a New Orleans federal court.

For Clingman, the case is the high point of a 20-year career, showcasing, and at times testing, the skills that have propelled her from a small Texas Hill Country town to her current position, at age 45, as the go-to defender of energy companies in trouble.

While she won’t discuss particulars, the stakes are huge. Transocean faces potentially billions of dollars in environmental fines and compensation for spill victims, and risks another dent in its corporate image. It already has reserved $2 billion to cover losses and taken $5.2 billion in estimated goodwill impairment.

BP, owner of the ruptured Macondo well and the most visible defendant, last March agreed to settle an estimated $7.8 billion worth of economic damage and medical claims. On Sept. 10, Transocean Ltd. said in a regulatory filing that it is in discussions with the U.S. Justice Department to pay $1.5 billion to resolve federal civil and criminal claims, but has not reached an agreement. Other major issues remain, not the least of which are accusations made against each other by BP, Transocean and other defendants.

Deepwater Horizon is “one of the biggest pieces of litigation ever, if not the biggest, and the fact that (Clingman) is leading one of the target defendants’ litigation is pretty impressive,” offers Murray Fogler, a Houston lawyer and former colleague.

In interviews, fellow lawyers and Clingman herself make clear that relentless preparation is the cornerstone of a process she has developed to help clients in crisis. “She has a good ability to anticipate what might come, what might develop, particularly when things do not follow” a predictable path, says Roberts.

For example, the detailed brainstorming session she and Roberts conducted right after Transocean hired them proved worth the effort, Clingman says. “I’m pretty sure – I hope I’m not being overly boastful – we never encountered anything that was not on that original white board,” she says.

Clingman also urges damage-control steps with government officials, the media and even people who are adversaries. When she encountered the father of a Deepwater Horizon victim at a Congressional hearing in Washington not long after the explosion, she personally extended condolences, even though the man was there to urge tougher laws for drillers and to decry the treatment of deceased workers’ families. In a media interview later, he favorably compared her gesture to what he said was BP’s failure to express sympathy personally.

Transocean Wins Key Ruling
To facilitate decision-making, Clingman took the rare step of becoming Transocean’s acting general counsel for three months. By moving from outside counsel to direct employee, she propped up the company’s small legal staff and became Transocean’s official voice when she testified before the House Judiciary Committee five weeks after the explosion.

Clingman delivered a surprise first legal strike a month or so into the on-going disaster, filing suit under an old maritime law that would limit Transocean’s liability to only $27 million. The law allows a ship owner to cap its liability at the post-accident value of its craft and cargo, and in this case, that was the estimated worth of the sunken Deepwater Horizon wreckage.

In her appearance before Congress, Clingman said the filing was requested by the company’s insurers. She also assured lawmakers that it wouldn’t limit victims’ ability to recover damages under the Oil Pollution Act, a modern law that created a compensation process for oil-spill damages after the Exxon Valdez ran aground in Alaska in 1989. But the tactic did give Transocean a shot at keeping mounting litigation in front of a judge rather than a jury, and consolidating it in a single Houston federal court, a venue perceived as friendly to energy companies.

As it turned out, a group of federal judges assigned the multidistrict litigation to U.S. District Judge Carl Barbier in New Orleans instead of the Houston court. The $27 million liability limit request is now part of that case, alongside damage claims by government and tens of thousands of individuals and businesses.

Transocean won a significant victory last January when Barbier ruled that its drilling contract with BP required BP to pay for any economic damage caused by pollution from spilled oil. Transocean still could face punitive damages and fines, however, if he eventually rules its behavior was grossly negligent.

The company also is battling BP allegations that, as rig owner and operator, it bears responsibility for the accident. Transocean has countered in court filings that BP officials overseeing the Macondo well ignored questions about safety tests done before the blast.

Lessons Clingman learned from responding to a variety of incidents, including offshore claims and litigation arising from Hurricane Katrina, are proving remarkably effective in dealing with her biggest case.

“There are going to be a certain number of adverse events that will happen in the energy industry,” she says. “They will not be the extent, hopefully ever, of the Gulf oil spill, or previously the Valdez or Piper Alpha. But the crisis management aspect of it is the same.”

She says businesses should follow the same set of practices “whether it’s a massive spill that’s on CNN for 35 days or a power outage affecting a community.”

Her advice to other lawyers representing companies in high-profile investigations: be candid and well-informed but do not get ahead of what you know even if you suspect the answer.

“One of the overarching principles we’ve had is don’t make it worse,” says Clingman, noting that the only indictment to date to arise from the Deepwater Horizon disaster is of a mid-level BP employee who deleted text messages after the blowout.

The ‘Dirty Side’ of Energy
Clingman’s success in the male-dominated world of energy litigation has earned her a place on many lists of top women litigators. Her experience also includes financial, aviation and trade secret litigation.

One client, Jack Lewis, managing counsel of litigation for Chevron North America, says he is impressed with Clingman’s deep understanding of the energy business.

“She has really seen the industry from a lot of different perspectives, not only the courtroom side,” Lewis says. “I think it’s uncommon for a woman litigator to be involved in a first-chair role in casualty litigation on the energy side of things. Macondo has been a male-dominated field.”

Clingman, who remembers a sulphur-smelling cluster of oil pumps near her hometown of Seguin, is comfortable with what she calls the “dirty side” of energy.

“I can’t tell you how many times I’ve been in hard steel-toe boots and work hat on everything from an offshore rig to an on-shore drilling site to a pipeline terminal or chemical facility,” she says.

Fogler, who met Clingman when both worked with Fulbright & Jaworski in the early 1990s, says his friend is not afraid to take other risks, too. “She’s fearless, she’ll go in anywhere,” he says.

One unlikely place she entered – legally and physically – was the world of global terrorism in 2005. At a time when it was politically unpopular, Clingman joined Fogler in a pro bono attempt to represent a Sudanese national who had been locked up as a suspected terrorist at Guantanamo Bay for three years without a trial.

She and Fogler spent months fighting the federal government for recognition as his lawyers and for clearance to see him, only to find him largely uncooperative when they finally met. He was later released to Sudan.

Clingman received hate letters after her involvement was publicized, but says she believes it was important to defend the American criminal and jury system. “It may not be perfect, but it’s the best and we should be proud of it,” she says.

Built Sutherland’s Litigation Team
Sutherland, founded in Atlanta, opened its Houston office in 2002, one of the first in what would become a rush of major national firms entering the Texas market. In 2007, the firm lured Clingman from Fulbright to build a litigation team.

“She left a partnership position at a big law firm where she was already successful and would undoubtedly have been involved in management at some point, and decided to start a satellite office of a law firm that had no real reputation in the Houston market,” says Fogler, a partner in Beck, Redden & Secrest. “She turned it into a very successful, high profile situation.”

Clingman’s first hires were Fulbright partners Roberts and Daniel Johnson. She eventually built a litigation team that includes 25 lawyers in the Houston office and nine in other offices.

That team now is managed by Kent Sullivan, a former appeals court judge based in Austin. Clingman is partner in charge of the Houston office, a position that includes overseeing 35 lawyers and an additional 46 who work on contract.

With a ready laugh, Clingman says it is probably her level of impatience that led her into management. “When I want something done, I want to do it immediately,” she says. “I just kind of have that forward momentum, which is why they won’t let me have caffeine.”

Clingman credits her mother, retired schoolteacher Elaine Giesber, for her let’s-tackle-it-now attitude and her father Frank Giesber, a lawyer turned college economics professor, for teaching her to follow her passions.

A lean figure typically dressed in a stylish gray suit, Clingman lets her reddish-brown hair fall naturally and keeps her face devoid of obvious makeup. Her sometimes stern expression can suddenly transform as her hands fly to her face to cover up a bright smile of amusement.

She has tried 18 cases and counts “some big wins and some big losses” among them. “She’s able to talk to jurors and witnesses in language that is easily understood,” says Roberts, her partner at Sutherland. “She looks people straight in the eye and deals with them fairly.”

Or as Clingman describes it, “I approach jurors with common sense and candor.”

Exhausting Pace
Sitting in her corner office on the 37th floor of a Houston skyscraper, Clingman recalls the surreal pace of pre-trial work on the oil spill case that had lawyers taking six depositions a day for months on end.

She recalls one Friday in New Orleans when U.S. Magistrate Sally Shushan, trying to fit one more witness into the calendar, mentioned that there were “only” five depositions scheduled on one date. Shushan then paused and surveyed the room. Clingman followed her gaze.

“I looked around and thought, ‘My god, do I look as bad as these people?’ ” says Clingman. “Everybody looked pale, haggard, circles. I could tell she saw it and she said, ‘Maybe we’ll just do this one the following month.’ ”

Judge Barbier has divided the claims into a three-part trial. The first phase will focus on causes of the blowout and rig explosion. The second phase will determine liability for the months it took to stop the gusher and a third phase is reserved for claims related to the use of chemical dispersants and other efforts to clean up the spill.

Roberts says Transocean wanted to be represented by the best trial lawyers available rather than a team solely from Sutherland. So, five lawyers from four firms were assembled for the trial’s initial phase. Clingman concedes it has been a challenge to work with litigators who are as independent and competitive as herself.

“How do you deal with having five trial lawyers who all have amazing experience, all have been single lead counsel in numerous trials and now are dividing up witnesses? As you would expect with a bunch of alpha dogs, it was not without some controversy,” she says.

One of those lawyers, Richard Hymel of the Louisiana firm Mahtook & LaFleur, says Clingman works hard to keep the team on track.

‘She’s very detail oriented as you would expect. She knows how to handle the different personalities. And she’s very, very organized in setting meetings, moving meetings along and getting the assignments out to people who need to get them done,” says Hymel.

To reinforce the notion that they were one team, Clingman had ball caps printed with Transocean’s logo and 2012 RIG Team, a reference to the corporation’s stock ticker.

Late last February, Clingman and about 30 lawyers, paralegals, assistants and witnesses were gearing up for trial in New Orleans. The case already had been delayed for a week to allow BP to continue settlement talks. Then on Friday, March 3, with the trial set to begin in two days, the lawyers were told that BP had reached terms with the plaintiff’s steering committee and the trial would be put off until further notice.

“That was truly kind of the big exhale, we had lawyers wandering around New Orleans all night,” says Clingman, who watched her first non-animated movie in several years. (At home, she’s Mom to two kids, ages 8 and 10.)

Houston Legal Market Shakeout
Clingman didn’t set out to be an energy litigator. After graduating from the University of Texas School of Law in 1992, she worked with companies on environmental compliance but was soon drawn to the litigation side of an industry that regularly battles inhospitable conditions and political turbulence to produce its product.

“Energy people joke that oil is not found in nice places,” she says.

Clingman has balanced her legal work with civic activities that include co-founding a legal advisory board for Children at Risk, a nonprofit that advocates for pro-child policies. Bob Sanborn, the organization’s CEO, says Clingman enlisted attorneys to research and draft legislation that has been passed to protect victims of human trafficking, reform the juvenile justice system and improve childhood nutrition.

“She brought a lot of excitement about the idea and a group of top-notch attorneys to the table to serve on the Law Advisory Board,” says Sanborn.

Roberts, whose 30-year career has focused on offshore drilling, says his partner’s combination of legal skills and business acumen is like having a general counsel at the law firm.

“When I began working with Rachel on energy matters, I quickly realized she’s one of the best there is,” he says. “For that reason, when I wanted to go in the second half of my career and create an energy litigation group, I wanted to create it with her.”

Clingman says the influx of national firms broke up a number of established legal teams that had worked together for decades. Now after 10 years of lawyer shuffling, she sometimes doubts the lateral moves can continue at the same pace, but adds: “Every time I say that I get a recruiter call.”

© 2012 The Texas Lawbook. Content of The Texas Lawbook is controlled and protected by specific licensing agreements with our subscribers and under federal copyright laws. Any distribution of this content without the consent of The Texas Lawbook is prohibited.