Ventures

How V&E Staged a Virtual Trial — and Secured a Real Big Win — for Gavilan Resources

“It says a lot about how fantastic our infrastructure and back office is. All sorts of planning and preparation took place so that the trial would go smoothly.”

It was cause for celebration for Vinson & Elkins partners Matt Stammel and Jim Thompson. On July 1, 2020, after a six-day trial, Judge Marvin Isgur of the Southern District of Texas Bankruptcy Court handed a complete victory to V&E client Gavilan Resources. Judge Isgur even took the unusual step of reading his lengthy opinion out loud, noting that he ruled against Gavilan’s adversary Sanchez Energy “in a very big way.”

While normally Stammel and Thompson would have listened to the judge’s decision in court, this time they were miles away. That’s because nearly the entire trial was conducted virtually using a video conferencing app.

As courts across the country seek to reduce the spread of coronavirus by restricting non-essential court appearances, they’re increasingly conducting trials and hearings via telephone and video conference. Such changes have created unprecedented technical and substantive challenges for litigators.

But thanks to some strategic decisions and extensive planning by the V&E lawyers and their support team, the firm was able to overcome those obstacles.

“It says a lot about how fantastic our infrastructure and back office is,” Stammel said. “All sorts of planning and preparation took place so that the trial would go smoothly.”

The trial was the culmination of a long-running, contentious dispute between Gavilan and Sanchez. Back in 2017, the two companies had jointly paid $2.3 billion to acquire Anadarko Petroleum’s 50% operated working interest in more than 300,000 acres in Texas’ Eagle Ford Shale, known as the Comanche asset.

But a year later, the asset was underperforming expectations and the two partners were feuding over approaches to developing oil and gas wells. In its lawsuit, Gavilan argued that Sanchez was in default of a joint development agreement that the two partners had signed governing how the asset would be managed. As a result, Sanchez had forfeited its right to operate the Comanche asset, Gavilan claimed.

A very busy judge and a hearing on a boat

The fact that the trial moved forward in the virtual world in the first place owes much to Judge Isgur.

Since the pandemic hit, the bankruptcy judge has presided over a flood of oil and gas bankruptcies, including the Chapter 11 filing of Sanchez Energy. “He’s one of the hardest working judges in America,” Stammel said.

In spite of Judge Isgur’s busy docket, he was ultimately willing to hear the Gavilan case remotely. At one point, the judge went so far as to conduct an emergency hearing, dressed in his robe, stationed on his boat in Galveston Harbor.

“He is proficient with the technology and I think he appreciated the need to get this tried and ruled upon quickly,” Thompson said.

Choosing the home court

The Gavilan trial began, in-person, on March 9, 2020, but was shut down after just one day as a result of the pandemic. When the V&E lawyers learned that the trial would recommence virtually in late May, they first had to decide where their team would be stationed.

Stammel and Thompson thought it would be best to present Gavilan’s case from V&E’s in-house mock courtroom situated on the 24th floor of the firm’s Houston headquarters. Having the team gather – with appropriate social distance – in a mock courtroom helped them feel more at ease and allowed for easier communications than had they been apart.

“I think people are going to gravitate toward this model,” Thompson said. “It feels like you’re in your normal setting. We could go offscreen during breaks and communicate freely with each other.”

150 exhibits over a video conferencing app? No problem

Working out the logistics would fall to V&E’s IT team, who set up cameras and video monitors for the lawyers and for the Gavilan witnesses, who were spread out in Houston, New York and Denver. The V&E lawyers would also benefit greatly from the work of V&E paralegal Tony Masington, who mastered join.me, the tech platform used by the Houston bankruptcy court.

As a result of Masington’s preparation and technical agility, the lawyers were able to pivot seamlessly between presenting witnesses and documents. Over the course of the trial, V&E would introduce more than 150 exhibits as evidence over the join.me platform.

Gavilan trial

One of more than 150 exhibits V&E introduced as evidence over a video conferencing app during the Gavilan trial.

 

But even with extensive planning, the V&E lawyers encountered some technical difficulties. Judge Isgur had to stop Stammel during his closing argument because the audio connection was weak.

A key witness finds himself alone in a room with a camera

The quirks of participating in a trial via video conference took some getting used to. Gavilan CEO Dave Roberts, who testified in court on Day 1 of the trial and virtually on Day 2, noted the differences.

Normally during a trial, witnesses can see the judge and the lawyers when they testify and gauge their reactions. But during the virtual portion of the Gavilan trial, the witnesses were each secluded and saw only themselves on camera. The goal was to avoid any possible suggestion that they were being coached by their lawyers.

“There’s no way to get feedback on what the judge is looking at, what the opposing lawyers are looking at — or to see a look of horror on your own lawyer’s face, perhaps, if you said something that he didn’t want you to say,” Roberts said.

“It was less comfortable being on video,” Roberts added. “But the facts didn’t change, and the preparation didn’t change.”

Gavilan’s CEO gave the V&E team high marks for the way they managed the trial virtually and for how they handled the case overall.

“They are just good people, and they are skilled litigators as well,” Roberts said. “They put us in a position where we could be successful. That’s all you really want from your lawyers.”

An important trial takes center stage in the virtual world 

While coronavirus upended the way the Gavilan trial was presented, there was a silver lining.

The outcome of the trial was of interest to the creditors of both Gavilan and Sanchez, which like its adversary had also filed for bankruptcy. Because the trial was virtual, and open to public viewers, it enabled many more people to watch than could normally fit in a courtroom.

“Sometimes we would look and there would be over 100 people watching the trial,” Stammel said. “The courts are almost more open today because they are virtual.”

Looking back at what they had accomplished, what lessons would the V&E litigators impart to other lawyers facing the prospect of a virtual trial?

“A virtual trial is an absolutely viable way to get justice,” Stammel said. “With the proper planning and preparation, you can effectively present your case just as if you were in a courtroom.”