The K&L Gates landscape, shaping Durham’s future
Who’s who in the K&L Gates world, including campaign contributions
In the headlines
What does K&L Gates have to do with World Wrestling Entertainment, the film Gasland and a ferry that dumps coal ash into Lake Michigan?
A brief and tortured history of 751 South
Durham City Hall was nearly empty when Patrick Byker and Craigie Sanders arrived in dark overcoats and suits. They strode into Council Chambers with a sense of purpose. They were followed by their go-betweens: Ed Pope, a behind-the-scenes political supporter and businessman, and paid public relations pundit Steve Toler. And behind them, attorney and former Democratic U.S. Senate candidate Cal Cunningham, who was flanked by Alex Mitchell and Tyler Morris, the two entrepreneurs with Southern Durham Development. Their controversial 751 South project was on the council agenda.
It was the first Monday of the new year. Some of the men gathered in a circle and exchanged handshakes. Toler and Sanders chatted about their winter holidays and the virtues of Maker’s Mark bourbon. The room began to fill, citizens queued to speak and soon the divisions became clear: Opponents clustered at the back of the line, and supporters, a larger group of consultants and businessmen gathered up front. Kicking off the presentation were Byker, Sanders and Lewis Cheekthree high-octane attorneys from one of the nation’s largest law firms, K&L Gates.
The lawyers may be the most influential people the Triangle has never heard of; doubtless, they are one of the region’s most formidable and pervasive forces in development and politics. The firm, with offices as far-flung as Beijing and Dubai, has 13 land-use experts planted in Raleigh and Research Triangle Park. The attorneys are known for their relationships with top decision makers as much as for their legal aptitude. They infuse political campaigns with cash and embed themselves on prominent local boards. They wield influence behind closed doors to advance the interests of their clientsdevelopers who are shaping the quality of life in the Triangle.
Crescent Resources is counting on K&L Gates to help it build 318 apartments on Main Street in Durham. K&L Gates is helping a Baton Rouge company build shopping centers and homes on 400 acres near I-540 in Raleigh. And in a notorious case, K&L Gates has battled Durham officials and activists so Southern Durham Development may erect a village near environmentally sensitive Jordan Lake.
The attorneys and their public relations team declined several requests for interviews with the Indy. But the firm’s high-stakes cases are well documented, and so is its slick, and often aggressive, brand of lawyering. To win, the attorneys have used clever legal tactics to steamroll opponents, impugned the ethics of some government officials and singed relationships with allies.
“Even if the techniques are legal, they’re not the best way to endear yourself to a community,” says Durham resident Bill Anderson. He opposed the attorneys’ campaign for Fairway Outdoor Advertising, which wanted to add digital displays to its many billboards in Durham. “I’d like to think we could wipe the slate clean and start all over again. But it is hard to ignore when we keep seeing the same techniques. Even if they’re legal, they’re not palatable.”
As a global company, K&L Gates’ vast scope of specialties includes corporate mergers and environmental law. The firm has earned renown for representing financial giants such as Goldman Sachs and Bank of America, and for its lobbying and policy work in Washington. It is the nation’s ninth-largest firm, with more than 1,700 attorneys, according to 2010 rankings from the National Law Journal. K&L Gates arrived in North Carolina in 2008, acquiring Kennedy Covington Lobdell & Hickman and its 200 lawyers, one of several consolidations in K&L Gates’ worldwide expansion.
Many U.S.-based firms were forced to downsize offices during the recession. But K&L Gates has grown, gobbling smaller practices in Dallas, Boston and Chicago and world capitals Warsaw and Taipei. The firm has expanded without taking on any debt, according to interviews given by its chairman, Peter Kalis, to national news outlets.
“We would rather jump out of a 20-story building than incur a dollar of debt,” Kalis said in a 2009 article with Of Counsel, a national newsletter. This fall, the company even won a No. 1 ranking by The American Lawyer for its performance during the Great Recession. According to the company’s website, the firm’s 2009 revenues topped $1 billion.
Locally, the firm’s stronghold is in real estate, land use and zoning. Of the firm’s more than 80 attorneys across the globe with this focus, nearly a fifth are in North Carolina, according to the company’s website. The state is a rich market for the land-use team. North Carolina continues to grow, and many towns and counties, to keep up with that growth, must change their ordinances. As a result, the approval process has become more complicated and uncertain, creating demand for the lawyers, says Rich Ducker, associate professor of public law and government at UNC-Chapel Hill.
It can require hurdling planning boards, appearance commissions and other bureaucracy. Protected areas such as the Jordan Lake watershed impose restrictions that require entirely separate negotiations.
“Property owners and developers have to go through more hoops than ever before,” Ducker says. “It takes a whole lot longer, and there’s no guarantee that the answer’s going to be yes at the end of the process.”
In Durham, local government has rarely said no. With the exception of individual commissioners and council members who have voted against K&L Gates’ interests, the majority of elected officials have required only minor concessions to accommodate the firm’s projects.
The negotiations are delicate for the firm, but also for elected leaders. Defying the attorneys may cost hundreds of dollars in campaign contributions, or crucial election endorsements from the Friends of Durham, a conservative political group that K&L Gates partners Byker and Bill Brian have chaired. The few leaders who clash with the firm’s clients also risk being cut out of the process altogether.
Becky Heron, a county commissioner since 1982, is a steadfast environmentalist. It’s for that reason that she opposes 751 South, a community that includes 1,300 residences, a shopping center and even a school. Heron’s concerns are apparently why, over three years of tense negotiations, K&L Gates attorneys never asked her to meet about the project. Heron says she has also been dropped from Byker’s social register. “I used to be invited to all the Christmas parties at Patrick’s house,” she said. “But I don’t get invited anymore.”
Members of the Durham Planning Commission, a city-county advisory board, also said they have been excluded from the process. When the commission voted on 751 South last April, some members were armed with privileged informationpackets with vibrant illustrations and in-depth economic analysis. But only select board members received meeting invites and glossy reports.
“It was the only time I can remember that K&L Gates didn’t reach out to me,” says Don Moffitt, who was on the board at the time. “I don’t know whose strategy it was, or why, but it was clearly strategic.”
Even Darius Little had a packet, Moffitt says, and Little hadn’t even started his term. The county commissioners later rescinded Little’s spot because he had legal troubles. He never served, but did appear in the developer’s corner during subsequent public hearings.
On a matter as heated as 751 South, freezing out some members of a voting board divides its members. It elevates public suspicion. The strategy is shortsighted, says County Commissioner Ellen Reckhow, adding that developers and K&L Gates might win allies if they shared more information. Reckhow says she, too, was excluded from meetings with K&L Gates for more than two years after raising initial concerns about the project’s proximity to the watershed.
“It creates a real awkwardness,” Reckhow says. “All board members should be informed.”
Former Raleigh planning commissioner Betsy Kane agrees. A crusader for public participation, Kane had a policy during her tenure not to meet with anyone privately prior to a public hearing. Kane said she reiterated that in 2005, when prominent Raleigh attorney Mack Paulwho now works for K&L Gates and is also chairman of the Wake County Democratic Partyasked to meet with her about the now-defunct plans for the Soleil Center, a proposed four-star hotel. At 480 feet, it would have been Raleigh’s second-tallest building.
“I don’t think it’s really fair or open to receive information about this in private,” says Kane, who also is a land planner and attorney. “It’s not an ethical violation, but I feel like it’s bad practice. It’s public business and it should be conducted in public.”
As Kane later learned, her colleagues had met with Paul and his clients beforehand to ask questions and discuss the project’s merits. What would have been a long and thoughtful debate over several public meetings resulted in significantly less public discussion.
“Most planning projects take six months and five meetings to go through the planning process,” Kane says. “That thing shot through. [The lawyers] had so greased the skids.”
If this sounds like stereotypical big-city politics, that’s because it is. New York University sociologist Harvey Molotch has spent years documenting how developers, attorneys and other pro-growth allies shape urban land policy. They are the true activists, he says, using their social, political and cultural connections to local government “to intensify land use and make money.”
Through routine interactionseven passing the creamer or an envelope full of checks at a business breakfastlawyers and lobbyists build credibility with elected officials.
City Councilman Mike Woodard says Ed Pope, a well known retired businessman, approached him at an event for Downtown Durham Inc. It was a week before the 2009 municipal election. Pope handed him an envelope containing campaign contributionsfive checks totaling $350 made out to Woodard’s campaign committee from K&L Gates attorneys and Fairway. Pope didn’t return phone calls from the Indy.
“That’s the only time I recall receiving a group of checks in one envelope,” says Woodard, who later voted against billboards and a preliminary approval for 751 South.
Elected officials deny that special interests have more influence than citizens. “I treat [K&L Gates] like I treat any other lobbyist or neighborhood group that comes before me,” Durham City Councilman Eugene Brown says.
But citizens and political observers are suspicious of K&L Gates’ motives. In recent cases, the firm’s attorneys have used legalbut, many argue, backhandedmeans to remove obstacles to their projects.
Only the most aggressive law firms try to defeat opponents by discrediting or disqualifying them, a strategy K&L Gates used in 2009. The firm was mired in a dispute with Durham County over restrictions on the land slated for 751 South. While some Durham officials argued that 100 acres was inside Jordan Lake’s protective watershed, the lawyers worked to prove it was not. First, K&L Gates demanded that Planning Commissioner George Brine abstain from voting on matters related to the project. The attorneys argued he had an unethical bias against it by forming an opinion before the vote. Even though it’s Brine’s privilege to form an opinion, he recused himself.
Next, the lawyers tried to topple then-county attorney Chuck Kitchen, commissioner Reckhow and even the planning department. In its June 2009 lawsuit against the county, K&L Gates alleged that the county was improperly limiting its client’s property rights and that Reckhow and Kitchen used their influence to block the project.
The suit accused Kitchen of lying to county officials, intentionally misquoting ordinances and even threatening to get the county manager fired if he didn’t back Kitchen’s legal opinion. Had the accusations been proven in court, state authorities could have disbarred Kitchen. But six months later, a judge agreed that the land was not in the protected watershed and ruled without investigating the other ethics issues. Now in private practice, Kitchen declined to comment on the case. Reckhow denied the lawyers’ allegations against her.
The attorneys have also outmaneuvered citizens who have used petitions to protest developments. The petitions are a legal method for landowners to challenge a change to the use of the land around their properties. For example, a petition would allow a landowner to challenge a builder’s plans to erect a gas station next door when the land was originally intended for a house. If enough adjacent property owners sign, the zoning can’t be changed unless three-fourths of the city council or board of county commissioners approve it. Without a petition, only a simple majoritya lower threshold of approvalis required.
In some cases, it would be tough to win a 75 percent majority. So K&L Gates attorneys have focused instead on invalidating the petitions. Legal? Yes. Manipulative? Absolutely.
In a 2008 land-use case, property owners near Guess Road and Interstate 85 signed a petition opposing new apartments in their neighborhood. A few days later, resident Laura Suski reported, she saw Sanders knocking on neighbors’ doors. “I thought it was very suspicious, that I saw Mr. Craigie walking around,” said Suski, who lives on Omah Street. “And then our petition was nullified, and all of sudden no one will talk to us.” Suski learned several property owners removed their names from the petition they had signed just days before. The city approved the project.
In a Raleigh case last summer, Paul, the attorney who steered the Soleil project, pitched plans for apartments near Hillsborough and Morgan streets, a gateway to downtown Raleigh and N.C. State University. Landowners near the valuable seven acres petitioned the plans, concerned the apartments wouldn’t honor the area’s historic aesthetic and would close a street. So the attorneys excised a three-quarter-acre corner from the rezoning request, which put just enough distance between the land in question and the property owners to void their petition.
Last summer, outrage over the firm’s tactics boiled over when K&L Gates secretly worked to nullify a protest petition in Durham. Their strategy was unveiled in e-mails between N.C. DOT staffers and Durham officials, and finally, during a tense and packed county commissioners meeting.
On July 12, just a day before commissioners opened a public hearing on the 751 project, Byker headed to an N.C. Department of Transportation office. There, he persuaded staffers to accept rights to a strip of land along N.C. 751. The department would need the right of way for long-term plans to widen the meandering two-lane highway. But Byker withheld key information: By accepting the easement, the N.C. DOT would foil the petition filed by property owners across the street on a technicality.
Byker was in a hurry. When staff asked him why the land deal needed to be fast-tracked, he told them his client wanted to demonstrate good faith before the commissioners voted on the project. He didn’t mention the petition, the e-mails said. The N.C. DOT accepted the land and unwittingly undercut the citizens’ right to protest.
When Byker met with county commissioners the next day, he again failed to mention the transaction with N.C. DOT. In fact, he stayed mum until two weeks laterjust one business day before commissioners were scheduled to vote on the rezoning.
Perhaps the most disingenuous part of the maneuver was that even after Byker’s client acknowledged the tactic was designed to stop the petition, Byker still refused to admit it.
“I knew the dedication had to take place,” Alex Mitchell, president of Southern Durham Development, told the Indy in early August. “I chose to do it when I thought it was most advantageous to me.”
In a brief phone conversation with the Indy a few days later, Byker repeated his original statement that dedicating the land to the N.C. DOT was, in fact, to show the developer’s “good faith.” Challenged with Mitchell’s statements, Byker said, “I can’t speak to my client’s motivations.”
This was the job the attorneys were paid to doto clear the path for the development. “If they are less aggressive, then they wouldn’t be the company that they are,” says David Harris of the Durham People’s Alliance, which actively opposed 751 South. “If they can’t do the job, [developers] are going to find someone else to do it.”
The tactic alienated citizens and even public officials who have known Byker for years, since he began a career in Durham as a government liaison for the local chamber of commerce. Some Durham leaders have said privately that Byker’s actions have eroded their trust. Several elected and appointed officials said they’ll treat future dealings with Byker and the firm more cautiously, or even avoid meeting privately with the attorneys in case questions arise about what transpired. Only a few leaders have commented publicly.
“We don’t like what he did. But he was doing his job,” said Wally Bowman, an N.C. DOT supervising engineer whose staffers accepted the right of way on behalf of the department. “That doesn’t mean I’m going to treat him any different.”
Critics of the project are less diplomatic. “It has the appearance that they didn’t care about the residents of Durham,” says Planning Commission Chairwoman Jackie Brown, who voted against the project. “It’s like, ‘We just stomped on ya, and now we’re going to spit on ya, ’cause we’re going to get what we want, come hell or high water.’”
To be the object of such distrustor even contemptis incongruous with the image the attorneys have worked for years to polish. Many business leaders have described Byker and Sanders as friendly and well regarded in political circles. Associates say Byker is often first to ask about their children or a recent family vacation. “He’s just a nice, friendly, intelligent person,” said Bob Booth, a retired president and CEO of the Greater Durham Chamber of Commerce. “I certainly would not ever accuse Patrick of doing something sneaky. I’m sure he wants to do what’s good for his law firm. Law firms don’t always take up cases that are in the best interest of the community. They take the cases that are in the best interest of the law firm.”
“These are people who are part of our community. These are not people from out of town,” said Wendy Jacobs, the planning commissioner. “These are people we go to church with, that our kids play soccer withpeople that we would like to respect and trust.”
The firm involves itself in the community, contributing to charities, spending thousands of dollars to sponsor annual socials for organizations including the chamber of commerce, the NAACP and the Durham Committee on the Affairs of Black People. This month, Byker and Cheek agreed to represent for free the Durham Rescue Mission for its expansion at Main Street and Alston Avenue. But critics see some of the firm’s contributions as opportunistic.
Published on the society page of the current Durham Magazine are photos of the black-tie fundraiser Byker helped organize in honor of Howard Clement, a city councilman for the last 27 years. About 300 people toasted Clement at the September gala, which raised nearly $30,000 for a scholarship at N.C. Central University in his name. Representatives from the area’s most prominent corporations and nonprofit groups attended, including local TV stations, banks, the Greater Durham Chamber of Commerce and K&L Gates.
Yet several months earlier, while Byker was helping to plan the party, he and fellow K&L Gates attorneys were lobbying Clement and council on behalf of Fairway Outdoor Advertising to allow digital billboards within the city limits. Clement quashed the notion that scholarship contributions would earn his loyalty.
“I am not for sale,” says Clement, who later voted against the billboard proposal.
K&L Gates attorneys also work their connections in official government settings, securing appointments to municipal boards and commissions that regulate mundane yet important functions such as building heights and bus routes. Although they are legally prohibited from voting on matters directly related to their business interests, the attorneys build social and political capital with public servants whom they later lobby. The firm even recruited one of those former public servants, Lewis Cheek, who spent eight years on Durham City Council and county commissioners. While studying to become a lawyer, Sanders served on Durham’s planning commission and is on the RDU Airport Authority. In 1997, Byker co-founded the Durham Crime Cabinet, and in 2009, long after he’d left the board, he tried to parlay relationships with its members into a win for digital billboards.
“I think they make an effort to be very informed and establish relationships with elected officials in social and other events,” says Durham City Councilwoman Diane Catotti. “And they pursue those angles to enhance the chances of approval for their projects.”
Some elected officials say they wouldn’t discourage the lawyers from serving on government boards, where they bring valuable expertise. But others are trying to rein in the firm’s emerging influence. In late 2009, the City Council voted 4 to 3 to oust Byker from the city’s Capital Program Advisory Committee, of which he had been chairman for two years. In an interview with the Herald-Sun, City Councilman Eugene Brown was quoted as saying Byker had done a fine job, but “perhaps it’s time for a little distance” between the committee and the attorney. At the time, Byker and K&L Gates were involved in a lawsuit against Durham County and its commissioners. “It’s just a little too close,” Brown told the newspaper.
Last summer, City Council passed over another K&L Gates attorney, Keith P. Anthony, for a position on the Board of Adjustment.
County commissioners, however, did reappoint Sanders to represent Durham on the RDU Airport Authority, a board on which he has served since 2003.
The Herald-Sun quoted Brian in 2009 denying that he and his colleagues were using these strategic appointments to build a political empire. “We are engaged in local affairs not because it’s the professionally smart thing to do, but because we live here,” said Brian, who served 14 years on Durham’s Board of Adjustment, which rules on development matters. “I honestly cannot think of a time I took a position on a matter I didn’t think was in the best interest of the community.”
County Commissioner Becky Heron says her colleagues should consider the stronghold K&L Gates attorneys are building. “We would hope they have the county’s or city’s best interest at heart,” says Heron, who voted for Sanders’ reappointment. “But they also have to make a living.”
The firm’s posts with civic organizations have also allowed them to forge productive alliances. Brian was a member of the Greater Durham Chamber of Commerce board, an outspoken advocate for 751 South and digital billboards. Brian and Byker are both leaders in Friends of Durham, which has campaigned for 751 South and the rezoning of the Jordan Lake watershed that preceded it. Current Friends of Durham Chairman David Smith said that no one involved in the project voted on it.
Occasionally, K&L Gates attorneys have failed to woo neighborhood groups, despite connections to those organizations. For instance, Sanders was president of the InterNeighborhood Council, a coalition of neighborhood groups, while his firm was lobbying for digital billboards and 751 South. Still the INC opposed both.
For some lawyers, securing positions on these boards and with these organizations is “part of their job description,” says Bob Hall, executive director of Democracy North Carolina, a government watchdog group. “I’ve seen that to be the case with similar outfits that specialize in getting the permits approved, or getting regulations that are favorable to their business clients,” Hall adds. “They will cozy up to the regulators, get themselves appointed to the committeesit’s all part of the business strategy.”
As the Jan. 3 Durham City Council meeting chugged along, the dwindling line of speakers signaled the council would vote soon on 751 Southbut not before someone commented on the attorneys’ deft legal maneuvers.
“I’ve been in the land-use business teaching and doing research for exactly 40 years,” said Bob Healy, an environmental scientist at Duke University and member of the People’s Alliance, a progressive political group. “And I have got to say, I have never seen a legal team that has been as clever as this one.” The audienceand councilsnickered.
While K&L Gates lawyers have demonstrated impressive legal skills, those very assets may have hurt their reputation. Just before the winter holidays, Byker and Cheek appeared at a City Council work session to implore city officials to hasten a decision to extend city services to the 751 South site. The developers were racking up $2,000 a day in carrying costs, Byker appealed.
City Council member Clement echoed their concerns. “To me, the developers are being harmed substantially because of the delay,” Clement said to his colleagues.
But City Council member Catotti was unsympathetic. “I appreciate the cost effects, but frankly, the reason this is in court is because of the right-of-way dedication that nullified a valid protest petition,” Catotti said.
As she spoke, Byker fidgeted nervously, clasping his hands and rocking in his loafers.
“[The process] has been legally manipulative all the way through,” she continued. “It’s left a very bad taste in everyone’s mouth. And I’m not happy with some of the actions that have been taken up to this point.”
For all of its power, K&L Gates isn’t invincible. In its long campaign for Fairway Outdoor Advertising, the firm worked for more than a year to generate support from corporations and nonprofits, many of which received free billboard advertising.
But the company damned its own campaign just weeks before the crucial vote. It placed a billboard for a gun and knife show next to a new pedestrian bridge named for Durham civil rights activist R. Kelly Bryant. At a public hearing last summer, several city council members said they were offended and asked Cheek how to remove the billboard. Cheek told the council that the billboard couldn’t be removed unless the city’s ordinance was amended in favor of Fairway. But Catotti, who was well versed in the ordinance, challenged him, and Cheek acknowledged his statements were not entirely true.
“When they go up there and tell a half-truth to an elected official, you know we’re listening,” said John Schelp, a neighborhood activist who helped hand Fairway and K&L Gates a unanimous defeat. “This is Durham. We’re not fooled by these tactics.”
K&L Gates has proven it can court public officials. But the firm knows it can’t so easily court the public.
“Durham already is the most challenging jurisdiction in the Triangle for developers, and it is about to get more challenging,” Brian wrote in a 2009 K&L Gates newsletter about pending changes to the development process. Some of those changes, he said, “clearly have been inspired by Durham’s own special political problems emanating from neighborhoods like Trinity Park and Watts Hillandale.”
Translation: An active, engaged community is making development in Durham more difficult.
“That kind of engagement doesn’t happen in Raleigh or Chapel Hill, or Charlotte or Greensboro,” Schelp says. “We do celebrate citizen engagement. Some people on the outside look at the Bull City and see sausage-making. Othersthose of us in the communitysee democracy.”
In his closing statements to council Jan. 3, Sanders celebrated Durham’s quality of life: “This is a great area of the country. We have moderate weather, world-class health care, Duke University, my alma mater N.C. Central University, an excellent airport … All of this and more is available right here in my hometown of Durham.”
But Durham is also where Sanders, Byker and others with K&L Gates have exposed their own tactics. Their recent cases have thrust their political and legal strategies into public view, and residents and elected officials are watching.