Milbank, Tweed, Hadley & McCloy
Milbank, Tweed, Hadley & McCloy
Founded: 1866 as Anderson, Adams & Young
Sales: $204.5 million (1997)
SICs: 8111 Legal Services
With offices in New York City, London, Tokyo, Hong Kong, Singapore, Moscow, and Washington, D.C., Milbank, Tweed, Hadley & McCloy is one of the world’s oldest and most distinguished international law firms. Well-known for its historic representation of the Rockefeller family and its businesses, especially the Chase Manhattan Bank, the law firm also claims several other prestigious clients, including the New York Stock Exchange. Considered one of the nation’s top “white-shoe” law firms, Milbank, Tweed started the first U.S. law office in Tokyo and in 1999 continues to have a notable practice in Asia and other parts of the world.
Origins and Early History
In 1866 the law firm of Anderson, Adams & Young, the predecessor of Milbank, Tweed, Hadley & McCloy, opened for business on Wall Street in New York City. Originally located on Nassau Street, the firm moved 16 years later to an office across the street from the New York Stock Exchange.
Partner Henry Anderson, a prominent minister’s son, handled affairs of the Vanderbilt family. That close affiliation with families and their business dealings was typical of law firms in the late 1800s and early 1900s.
After George Murray joined the firm in 1888, he met John D. Rockefeller, Sr. (“Senior”), through Protestant church activities, and soon the oil tycoon retained him for personal and business legal advice. That began the decades of association among the firm’s attorneys, the Rockefeller family, and Rockefeller businesses.
In 1901 Ezra Parmalee Prentice joined the firm after marrying Alta Rockefeller, Senior’s daughter, so the firm changed its name to Murray, Prentice & Howland.
Another marriage brought the law firm and the Rockefellers even closer. John D. Rockefeller, Jr. (“Junior”), married Abby Aldrich, which led to Abby’s brother Winthrop W. Aldrich joining the firm in 1907. Aldrich provided Junior with legal counsel, just as Murray had Senior. In 1921 the firm’s name became Murray, Prentice & Aldrich.
The 1920s and 1930s
In 1921 Harrison Tweed joined the law firm, in part because his father was a close friend of Murray’s father. Such family connections helped the firm maintain its representation of such clients as the Manhattan Gas Light Company and Consolidated Gas Company. In 1929 the law firm represented John D. Rockefeller, Sr., when he signed a lease with Columbia University to take over 199 separate lots. Young lawyers with the firm formed Metropolitan Square Corporation to manage these properties. In 1932 the corporation became known as Rockefeller Center, Inc.
In May 1929 the two law firms of Murray & Aldrich and Webb, Patterson & Hadley merged to create Murray, Aldrich & Webb. Vanderbilt Webb specialized in real estate. His main contribution while with the law firm involved developing Virginia’s Colonial Williamsburg and working with Junior to acquire properties that became the Grand Tetons National Park. Webb left the firm in 1938. Robert P. Patterson departed to work on his own and to serve as a district and circuit court judge and eventually secretary of war under President Roosevelt.
Morris Hadley brought notable clients, including Aluminum Limited, to the law firm and served on its management committee. His outstanding memory and math abilities made “it quite unnecessary for the firm to rent IBM equipment” for several years, according to Pfeiffer’s history.
By 1929 the firm’s main client was the Equitable Trust Company, of which John D. Rockefeller, Sr., had purchased a controlling interest in 1911. Aldrich became Equitable’s president in 1929, after being pressured by Junior to do so. The following year, Chase National Bank acquired Equitable Trust, making Chase the world’s largest bank. That led to a 1931 merger of the law firms that had represented the two banks. Equitable was represented by the firm of Masten & Nichols, formed in 1886 by Arthur H. Masten and George L. Nichols, both graduates of the Columbia Law School. Masten & Nichols with its senior partner Albert Milbank merged with Murray, Aldrich & Webb to create the new firm of Milbank, Tweed, Hope & Webb, with 20 partners and 28 associates. At that point, Masten, Nichols, and Murray all retired and became “of counsel” to the newly merged firm.
For decades Milbank, Tweed served mainly the Rockefellers and their businesses, including working on the estate of John D. Rockefeller, Sr., valued at $26 million in personal wealth when he died in 1937 at age 97. Other major clients were the Horn & Hardart Company and also the Borden Company, not surprising since Albert G. Milbank in 1917 had become Borden’s first board chairman.
During the Great Depression the law firm received considerable work because of the many bankruptcies and conflicts at that time. For example, it represented Title Guarantee and Trust Company in many of the 800 lawsuits involving foreclosed mortgages and broken contracts filed in just three years during the Depression. Although most of those foreclosure cases were routine, Milbank represented New York State’s Senator Robert F. Wagner in the foreclosure lawsuit concerning New York City’s 55-story Lincoln Building.
In 1931 the law firm started representing several chain stores that claimed bankruptcies. Their major client in that area was Liggett, a national chain of 500 drugstores. In 1938 Milbank gained the New York Stock Exchange, one of its major long-term clients.
Post-World War II Expansion
In 1946 John McCloy joined the firm, the only lateral hire between 1931 and 1980. Before 1946 he spent five years as the assistant secretary of the War Department, where he met Nelson Rockefeller, who eventually persuaded McCloy to join Milbank, Tweed. Later he became president of the World Bank, high commissioner of Germany, chairman of both the Ford Foundation and the Chase Manhattan Bank, and President John F. Kennedy’s special assistant on disarmament. From 1962 until his death in 1989, he remained a general partner of the law firm.
In 1955 Milbank, Tweed survived a crisis when its main client Chase National Bank merged with the Bank of Manhattan to create Chase Manhattan Bank. For years Milbank shared the bank’s outside legal counsel duties with the firm later known as Dewey, Ballantine, Bushby, Palmer & Wood that had served the Bank of Manhattan for some time. Close ties with David Rockefeller, a grandson of John D. Rockefeller, Sr., who became Chase Manhattan Bank’s chair in 1967, helped Milbank retain its historic ties to the family and bank.
Milbank, Tweed greatly expanded its operations in the postwar period. For example, it began assisting in setting up or revising pension plans established by Ford Motor Company, General Motors, Western Union, Credit Suisse, Swiss American Corporation, and Rockefeller Brothers, among others.
In 1977, ten years before any other U.S. law firm, Milbank, Tweed opened its Tokyo office. Other offices were started in Hong Kong in 1977, London in 1979, and Washington, D.C., in 1980. One Milbank, Tweed partner played a key role in the Iranian hostage crisis begun in November 1979 when Moslem fundamentalists captured 52 Americans and held them in the U.S. embassy in Tehran. President Carter a few days later froze all Iranian assets in U.S. banks. Chase Manhattan Bank, represented by Milbank, Tweed’s Frank Logan, and other U.S. banks had huge loans to the Iranians. Logan was asked by Citibank’s attorney John Hoffman of the law firm Shearman and Sterling to help negotiate financial settlements and draw up the contractual papers. Hoffman, aided by Logan and attorneys representing ten other banks, worked closely with U.S. diplomats to solve this crisis. Finally, on January 20, 1981, the situation was resolved. According to the author of The Partners, “The $3.7 billion in assets were electronically credited to the accounts of the twelve American banks whose lawyers, in a sense, had just bought the hostages’ release.”
Growth in the 1980s
In the early 1980s many law firms expanded rapidly and became more business-oriented. This trend was fueled by the U.S. Supreme Court’s decision that most restrictions on advertising by professional societies violated antitrust laws and also that such promotional activities were protected as free speech under the First Amendment. Furthermore, law firms increasingly competed for prominent attorneys after Steve Brill in 1979 began publishing the American Lawyer, which covered the inner workings and finances of law firms.
Such firms as Skadden, Arps, Slate, Meagher & Flom and also Cravath, Swaine & Moore boomed by providing legal services to the many corporations involved in mergers and acquisitions in the early 1980s. Milbank, Tweed, however, relied on its historic Rockefeller clients and thus ignored these new opportunities. By 1984 some Milbank partners expressed concern that the firm had dropped to number 27 in national rankings with just 229 attorneys. Its $74 million in revenues and $24.5 million in profits were far less than some other firms.
That led to Milbank’s executive committee in 1984 choosing partner Alexander D. Forger as its new chairman. Forger had served as the New York State Bar Association president in 1981 and 1982 and as board chair of the Legal Aid Society in 1983. Meanwhile, in the early 1980s he represented clients such as Jacqueline Onassis and Joan Kennedy, which helped the firm’s Trusts and Estates Department after work for Rockefeller family wills and estates had declined.
’ ’The practice was changing, client loyalty was changing, we were into the era of competition,” said Forger in the American Lawyer in October 1996. He began his chairmanship by promoting several new ideas to the conservative law firm. He placed bankruptcy rainmaker John Jerome in charge of encouraging one department’s clients to use other Milbank departments for their other legal needs. He also pushed “marketing … a totally new thing for us,” according to Pollock’s book on the firm.
The firm expanded its presence in Tokyo and Hong Kong and in the mid-1980s opened an office in Singapore. That Asian growth, along with a booming California economy, led Milbank to open its Los Angeles office in January 1987. Guido R. Henry, Jr., with 22 years experience as a corporate attorney at the Los Angeles firm of O’Melveny & Myers, was hired to start and manage the new Los Angeles branch. Soon bankruptcy partner David Frauman and five other attorneys moved from New York to the Los Angeles office.
One of the lateral hires who really helped Milbank in Asia was Alice Young, a Chinese-American who had graduated from Harvard Law School in 1974. She worked six years with the San Francisco firm of Graham & James before joining Milbank in the late 1980s. Almost 40 major clients followed Young when she joined Milbank.
Milbank in the late 1980s also brought in new bank clients such as Citibank, added new practice areas, and changed its partner compensation from a strict lockstep method based on seniority to having several levels of profits and bonuses depending on how much business each partner generated. The firm grew from 282 lawyers and $370,000 profit per partner in 1985 to 398 lawyers and $665,000 profit per partner in 1989, according to the American Lawyer’s “The Am Law 100.”
Bad Times and Then Good Times in the 1990s
Milbank at the start of the decade continued its growth. For example, in early 1991 the firm moved its Los Angeles office from the 50,000-square-foot location at 515 Figueroa Street into a new 80,000-square-foot office space in the high-rise Sanwa Bank Building. At that time Milbank ran the second largest Los Angeles branch of a New York-based law firm.
In 1991 Milbank also opened a branch office in Moscow. Milbank and other U.S. law firms had gained opportunities after the Soviet Union in 1987 under Premier Mikhail Gorbachev passed its first foreign joint venture law allowing foreign firms to own part of Soviet companies. That led some business leaders to ask U.S. law firms for help in transactions in the U.S.S.R. Milbank had counseled the Soviet government about setting up a stock exchange and writing new securities laws before deciding to start its own office in cooperation with a private Russian law firm called Moscow Lawyers, opened in June 1990 by two lawyers who had been Milbank interns.
Like other law firms, Milbank’s profits declined and the firm reduced its size in the early 1990s when the nation’s economy declined. Milbank’s profits per partner reached a low of $480,000 in 1992, when it had 450 attorneys in the firm. By that time Milbank asked senior associates, those who had not made partner after eight years, to leave the firm, unlike the 1980s when such senior attorneys were allowed to remain. About 32 Milbank partners and 70 associates lost their jobs by 1993.
Meanwhile, Milbank personnel endured a “very unpleasant and difficult environment in which to work,” according to a former partner in the American Lawyer in October 1996. “The focus was exclusively on billings and collections and nothing else.”
Milbank slowly improved under the leadership of Francis D. Logan, elected executive committee chairman after Forger in May 1992 resigned his position to attend to his terminally ill wife. Logan replaced the firm’s aging 286 personal computers with 486 models, an initially expensive change that in the long run saved the firm millions each year. Under his leadership, Milbank also cut costs by subleasing two floors in the Los Angeles office and one floor in the New York office and moving its Washington, D.C. office with 35 lawyers to less expensive office space.
In June 1993 Logan announced that Milbank was not only reducing the number of its partners by 15 percent, it also was decreasing its practice in litigation, real estate, and trusts and estates, while focusing on banking, project finance, aircraft leasing, and corporate securities and mergers and acquisitions. By 1995 such strategies helped firm profits per partner reach $590,000. In May 1996 the firm’s partners elected a new and relatively young executive committee made up of Chairman Mel M. Immergut, age 49; banking and corporate finance expert Frank Puleo, age 50; and structured finance partner Trayton Davis, age 41.
Milbank’s London office in October 1996 lost four partners and six associates to its New York-based competitor Shearman & Sterling. This “frenzy of lateral partner movement … in London … shows how the market is forcing both English and American firms to bridge the Atlantic,” according to the American Lawyer in December 1996.
Such law firms competed in Europe not only against each other but also against large accounting firms with their affiliated law firms. By December 1996 Arthur Anderson claimed that through its affiliated firms it was continental Europe’s largest provider of legal services. Its London-based affiliate Garrett & Company had grown to 155 lawyers in just three years. Meanwhile, Price Waterhouse legal affiliates included 350 lawyers in 17 European nations.
In November 1998, Milbank, Tweed for the third year in a row ranked as the number one law firm advising clients in global project financing, good evidence of its international status and influence. According to the survey in Euromoney’s Project Finance magazine, the firm in 1998 completed 45 transactions with capital costs of $32.7 billion. Milbank ranked number one in the Global, North American, Eastern European, Latin American, Asia Pacific, and Central Asian areas, plus it was the third ranked law firm in South Asia and the Middle East. It also ranked first in mining, petrochemicals, and the rail, roads, bridges, and tunnels sectors, with additional top ratings in oil and gas (second), power (third), telecommunications (fifth), pulp and paper (sixth), and airport and port (seventh) industries.
Milbank, Tweed received these high rankings in 1998 by helping the following clients: the main lenders in the $4.5 billion Sincor Heavy Oil Project in Venezuela, the largest Latin American project financing on record; the senior lenders in the $1.5 billion expansion of Mexico’s Cadereyta Oil Refinery; JEXIM and other Japanese lenders who financed the $937 million construction of the Philippine’s San Roque Hydro-Power Plant; and Fujian Pacific Electric Company in its development of the $755 million Meizhou Wan Power Plant, the “largest wholly-foreign-owned power project in China successfully financed to date,” according to a Milbank press release.
Such Milbank success in Asia occurred in spite of major devaluation of currencies in the Philippines and other nations. For example, Milbank, Tweed had done well in Indonesian project finance projects, but in September 1997 the Indonesian government suspended about 30 projects worth $13.2 billion due to its much publicized financial problems. However, Milbank’s Eric Silverman, the head of the firm’s project finance practice, remained optimistic that in the long term the projects would continue.
Milbank, Tweed in 1998 continued to represent Nippon Telegraph and Telephone Corporation (NTT), Japan’s largest telecommunications provider, a relationship over 20 years old. Specifically, Milbank helped NTT sell part of its ownership of NTT DoCoMo in an $18.4 billion transaction that was “the largest IPO ever,” according to a Milbank press release.
In December 1998 Glasgow, Scotland-based electrical producer ScottishPower plc announced it was acquiring Portland-based PacifiCorp. Milbank, Tweed attorneys represented ScottishPower in this deal, and earlier helped it gain a listing on the New York Stock Exchange. Pending approval by federal and state agencies, this was the first time a foreign company purchased an entire U.S. utility.
The troubled Russian economy caused most U.S. law firms to make little if any money in the late 1990s. Rents were expensive—four times what it cost in downtown Manhattan, though rents started decreasing in the late 1990s. Other high overhead costs and too little work caused some U.S. law firms to shut down their Moscow offices, but Milbank kept its office open and hoped for the best.
Milbank, Tweed’s growth in the late 1990s included a major expansion of its litigation practice. In a January 1998 press release, Chairman Mel Immergut said, “Milbank’s litigation practice has tripled in the last two years.” The firm also announced that it had hired Christopher E. Chalsen from Morgan & Finnegan as a litigation partner to lead its intellectual property litigation practice. Chalsen since 1983 had specialized in electrical and computer issues.
Elliott L. Richardson, a Milbank litigation partner from 1980 to 1992, was honored in 1998 with the Presidential Medal of Freedom, the nation’s highest honor for a civilian. Richardson’s career included several cabinet posts in the 1970s. During the Watergate scandal, he resigned his position as the nation’s attorney general.
In 1998 two Milbank, Tweed attorneys played a key role in saving Long-Term Capital Management from collapsing. Partners Lawrence Lederman and Michael Goroff advised the hedge fund’s principals. They and over 100 other attorneys from Skadden, Arps, Slate, Meagher & Flom; Sullivan & Cromwell; Simpson Thacher & Harriett; and other New York City law firms met to negotiate a last-minute deal in which 14 financial institutions agreed to lend $3.6 billion to keep Long-Term Capital alive.
Milbank, Tweed’s participation in that transaction was just one example of the law firm’s influence over the years, and statistics confirmed it. The American Lawyer in its July/August 1998 issue ranked Milbank as the nation’s 37th largest law firm, based on 1997 gross revenue of $204.5 million. The nation’s top firm was Skadden, Arps with $826 million in gross revenue. Milbank’s profits per partner were $860,000, though ten other firms recorded over $1 million in profits per partner. In any case, Milbank, Tweed remained one of the nation’s premier and most newsworthy law firms.
Anderson, A. Donald, et. al., “Milbank, Tweed, Hadley & McCloy,” in Los Angeles: Realm of Possibility, Chatsworth, Calif.: Windsor Publications, 1991, pp. 310-11.
Barker, Emily, “Making Milbank Over,” American Lawyer, October 1996, pp. 49-56.
Beck, Susan, and Karen Donovan, “Saving Long-Term Capital on a Short Deadline,” American Lawyer, November 1998, p. 28.
Hansen, Susan, “Lost in the Ruble,” American Lawyer, November 1998, pp. 80-85.
“Matchmaker,” Forbes, March 27, 1995, p. 138.
“Milbank Partner to Lehman,” Wall Street Journal, April 27, 1993, p. B7.
“Milbank Slims Down,” Wall Street Journal, June 18, 1993, p. B4.
Morris, John E., “Joyride Is Over in Indonesia,” American Lawyer, November 1997, p. 13.
_____, “London Braces for the Big Six Invasion,” American Lawyer, December 1996, pp. 5-6.
Pfeiffer, Timothy, Law Practice in a Turbulent World, New York: Milbank, Tweed, Hadley & McCloy, 1965.
Pollock, Ellen Joan, “Milbank to Dismiss ’Senior Attorneys’,” Wall Street Journal, February 13, 1992, p. B8.
_____, Turks and Brahmins: Upheaval at Milbank, Tweed; Wall Street’s Gentlemen Take Off Their Gloves, New York: Simon & Schuster, 1990.
Smith, Lee, “Ex-Boss of FBI, CIA Now Has More Fun,” Fortune, December 14, 1992, p. 177.
Stevens, Amy, “Law Firm Plans for Soviet Offices Are Shelved As a Result of Coup,” Wall Street Journal, August 21, 1991, p. B4.
Stewart, James B., The Partners: Inside America’s Most Powerful Law Firms, New York: Simon & Schuster, 1983, pp. 19-52, 283-326, 366.
—David M. Walden