Paul, Hastings, Janofsky & Walker LLP
Paul, Hastings, Janofsky & Walker LLP
Sales: $219 million (1998)
SICs: 8111 Legal Services
With over 630 attorneys in early 1999, Paul, Hastings, Janofsky & Walker LLP is a major international law firm representing individuals and organizations of all kinds, from nonprofit associations and Fortune 500 corporations to government agencies both in the United States and abroad. From its home office in Los Angeles, the firm expanded first in California, then nationwide, and finally overseas. From its nine offices, seven in the United States and others in Tokyo and London, Paul, Hastings’ attorneys practice in five major areas: business law, employment and labor law, litigation, real estate, and tax law.
Lee G. Paul, Robert P. Hastings, and Leonard S. Janofsky founded the law firm of Paul, Hastings & Janofsky in Los Angeles on November 1, 1951. Janofsky, who had graduated from Harvard Law School in 1934, focused on employment law, while partners Paul focused on litigation and Hastings on business law.
The practice was one of many established in the area during this time, and business remained steady. Charles M. Walker, who had received his A.B. in 1937 and his LL.B. in 1939 from the University of Missouri, joined the firm in 1962 as a partner and founded the firm’s Tax Department. Although Walker would resign from the firm in 1975 to serve as President Gerald Ford’s appointment as the U.S. Treasury Department’s assistant secretary for tax policy, he returned three years later to practice again at the law firm’s tax department.
Two events in the 1970s influenced law firms like Paul, Hastings to become more business-oriented and expand their practices in competition against other law firms. First, in 1975 the U.S. Supreme Court decided in the case Goldfarb v. Virginia Bar Association that most attempts by professional societies to restrict advertising violated antitrust laws. Thus lawyers, doctors, and other professionals began or increased their advertising, just like other businesses.
Second, in 1979 Steve Brill started The American Lawyer to look at the inner workings, including finances, of law firms. Before that time, most lawyers lacked knowledge of what lawyers at other firms earned. However, with such data available, competition for top attorneys increased, and a new practice sometimes called lawyer lateral hires or raiding rival firms developed. Thus some large law firms used this method to expand. Instead of approaching potential clients directly, they simply hired top lawyers who in turn brought their clients with them to the new law firm.
After retiring in 1981, Charles M. Walker continued to serve his chosen profession on a pro bono basis. He was a director and trustee of the American Bar Retirement Association for six years and served as its 1986-87 president. Beginning in 1988, he was named a regent of the American College of Tax Counsel that included about 500 of the nation’s top tax lawyers, academics, and judges. In that capacity, he helped found in 1989 the nonprofit American Tax Policy Institute. For six years he served as this think tank’s president.
When Alan Barton joined Paul, Hastings in 1980, he became the firm’s first attorney to specialize in venture capital transactions. A graduate of Boalt Hall law school, Barton was by the summer of 1987 heading up a team of venture capital attorneys, including seven at the downtown Los Angeles office, seven in Costa Mesa, and another seven in Santa Monica. The firm represented International Furniture and Accessories Mart Inc. in a $12.5 million private equity placement. Barton’s group, including fellow attorneys Mike O’Connell, Richard Roeder, and James Hamilton, provided counsel not only to firms needing funding, but also venture capital companies like Brentwood Associates, U.S. Venture Partners, and Interven Partners. Paul, Hastings also represented investment bankers like Morgan Stanley and Merrill Lynch in private placements, public under-writings, and mergers and acquisitions. Moreover, the law firm was special counsel to the Bank of America’s Trust Department that oversaw the investment of corporate pension funds in venture capital projects.
In 1986 Barton’s team at Paul, Hastings was involved in venture capital funding with capital commitments of $500 million, and Barton noted in the June 15, 1987 Los Angeles Business Journal that, “I am not aware of any other law firm as active as we in this area (venture capital) or that has devoted as much resources to it.”
The firm started its Tokyo office in 1988. It was founded by Kaoruhiko Suzuki, a Japanese citizen who came to the United States as a high school exchange student and later received an A.B. from Harvard College. After receiving a J.D. from Harvard Law School, Suzuki joined Paul, Hastings as an associate and then in 1984 became a partner. The firm’s Toyko office was one of 20 in Japan in 1989 and was one of the first to hire a Japanese national.
By January 1989, the end of Paul, Hastings’ fiscal year, the firm had grown to almost 350 lawyers and had for the first time reached the milestones of 100 partners and $100 million in annual revenues. It was Los Angeles’ fourth largest law firm, exceeded only by Gibson, Dunn & Crutcher, O’Melveny & Myers, and Latham & Watkins.
Many other law firms expanded about the same time as Paul, Hastings. In 1975, before the boom time, less than 48 American law firms had at least 100 lawyers, but by 1993 over 250 firms had that minimum number.
Although most partners at Paul, Hastings continued to rise through the ranks on an eight-year associate track requiring about 50 hours per week, managing partner Robert G. Lane in the January 2, 1989 Los Angeles Business Journal said that hiring “key lateral partners” from outside the firm had also been an effective management tool.
A 1960 graduate of the University of Southern California Law School, Lane commented on other reasons for the firm’s growth: “We have been very fortunate in that we have not lost partners to other law firms … and have had steady growth. Nationwide, we are probably best known for our practice in employment law, but … we cover a wide range of legal issues.”
By 1989 Paul, Hastings maintained eight offices, including the original in Los Angeles and others in Costa Mesa, Orange County, established in 1974; Atlanta (1980), Washington, D.C. (1980); Santa Monica, California (1983), Stamford, Connecticut (1983), New York City (1986), and the newly opened Tokyo office.
The 1990s: The Firm’s Five Departments and More
Paul, Hastings continued its expansion as the new decade began. By 1991 it included over 400 lawyers from over 12 nations representing about 60 law schools. The firm grew without a single merger or acquisition of another law firm. No more than three attorneys from another firm joined Paul, Hastings, and most lateral hires came as individuals. The firm’s partners were relatively young; only three of the more than 100 partners were over 60 years old. All partners shared equally in making decisions about the firm.
In 1990 the firm met with a legal challenge of its own, when the U.S. Equal Employment Opportunity Commission filed a civil lawsuit in the Manhattan federal court alleging that some Paul, Hastings personnel had sexually harassed three female employees in its New York office. According to the November 9, 1990 New York Times, this case apparently represented the EEOC’s “first charge of harassment by a major law firm.” Partner Dennis H. Vaughn noted that the law firm had defended several clients accused of sexual harassment, which obviously made this case’s outcome even more important. The case involved accusations of sexist language as well as the firm’s having allegedly ignored and then dismissed women who complained; no demands for sexual favors were alleged. By the end of the year the firm had settled the case without admitting any guilt, agreeing to completely comply with federal sex discrimination laws and to offer training to all its attorneys in regards to the sexual discrimination problem, which was being faced by other law firms, including Chicago’s Baker & McKenzie, one of the world’s largest law firms.
Also during this time, the firm stepped up its efforts to use the latest in computer technology. To give clients better access to information, Paul, Hastings’ Michael Stanko, director of information services in the Los Angeles office, designed proprietary software called ValuMaker, which all Paul, Hastings offices began using. This electronic system provided detailed billing records and project management data online.
In the 1990s Paul, Hastings closed its Santa Monica office and opened two new offices. In February 1997 it started its San Francisco office by attracting key attorneys from other firms. The new office emphasized commercial litigation, especially in securities and high-tech issues. Later that year, the firm opened another international office—in London’s International Financial Center on Old Broad Street. This office focused on international business concerns, such as those involved when American firms start up European subsidiaries and vise versa.
In the 1990s the firm organized its practice around five specialties, all represented by attorneys in each of the firm’s geographic locations: business law, employment law, litigation, real estate law, and tax law. The company was perhaps best known for its expertise in the areas of labor and employment law.
Paul, Hastings’ Employment Law Department included over 155 attorneys who dealt with labor and employment issues, such as discrimination, wages and benefits, downsizing, and hiring and firing topics. Name partner Leonard S. Janofsky had established the firm’s national reputation in this specialty and in 1979, when the American Bar Association elected Janofsky president, he became the first employment lawyer to serve in that position. Other key employment attorneys included Christopher A. Barreca, the chair of the firm’s Stamford office who in the late 1990s chaired the ABA’s Labor and Employment Law Section, and R. Lawrence Ashe, the firm’s East Coast employment law chair. Paul Grossman, a 1964 Yale Law School graduate, served as chair of the Employment Law Department. His clients included major California employers, including manufacturers, oil firms, defense contractors, and financial institutions. Named in The Best Lawyers in America, Grossman in a 1992 survey in the National Law Journal was “widely acclaimed as the top employment lawyer representing management [in the United States],”
Paul, Hastings’ attorneys helped the National Association of Manufacturers (NAM) win a pro bono lawsuit in the U.S. District Court for the District of Columbia against the U.S. Department of Labor. The department had tried to tighten rules concerning temporary employment of foreign skilled workers, a nationwide controversy in which many high-tech firms argued they needed more skilled immigrants because they could not find enough American programmers and engineers.
The firm’s employment attorneys often contributed their expert knowledge to state legislatures, Congress, courts, the National Chamber of Commerce, and others. And Paul, Hastings’ literature pointed out that, “Perhaps as a testament to our particular expertise, we are frequently called upon by many of the nation’s leading law firms to represent them in connection with their employment law matters.”
Paul, Hastings’ Business Law Department dealt with a wide range of corporate legal issues, from mergers, acquisitions, antitrust, government regulations, and bankruptcy to technology licensing, capital formation, franchising, and entertainment industry transactions.
Five business law attorneys joined the firm’s New York office in 1992, including Charles B. Ortner, chair of the American Bar Association’s Computer Law Division, and 20 colleagues who left the New York-based firm of Milgrim, Thomajan & Lee. The five attorneys specialized in entertainment, intellectual property, and software litigation issues. This expansion increased the size of Paul, Hastings’ New York office to more than 100 attorneys and added such famous clients as Madonna and Sting to its previous stable of entertainment clients, including Walt Disney, MCA, and Warner/Chappell Music. Ortner represented many other entertainers and companies as well, including Whitney Houston, Michael Jackson, Motown Records, and A & M Records. Another well-known business law partner was Ralph B. Everett, the former chief counsel and staff director of the U.S. Senate Committee on Commerce, Science and Transportation, who would head the firm’s Federal Legislative Practice. Everett served as the managing partner of Paul, Hastings’ office in Washington, D.C. with 62 attorneys. Business law partner Kaoruhiko Suzuki, founder of the Tokyo office, worked out of the Los Angeles office but often traveled to Japan. In addition to his law practice, Suzuki cofounded The Century of the Pacific Conference to help build relationships among young professionals in Tokyo and Los Angeles and edited Japan Transaction Guide, “the most comprehensive publication on Japanese law in the United States,” according to the firm. Partner Daniel G. Bergstein, in the New York office, chaired the firm’s Business Law Department, which boasted about 200 attorneys in 1999.
The firm’s Litigation Department included about 160 attorneys and 28 paralegals in early 1999, using their considerable experience in trials, appeals, and administrative hearings to help clients from many industries and backgrounds.
Some 85 attorneys worked in Paul, Hastings’ Real Estate Department for clients involved in commercial development, land use regulation, zoning, real estate investing, and environment issues.
The Paul, Hastings Tax Department, its smallest with about 25 attorneys in 1991, advised clients on complex taxation issues involving international operations, off-shore incorporation, mergers and acquisitions, estate planning, and state and federal taxes.
In 1999 Donald A. Daucher served as the firm’s managing partner, a member of its Policy Committee, and chair of its Partner Compensation Committee. A 1971 graduate of Duke University Law School, Daucher was a litigation partner in the Los Angeles office and also served as the former chair of the Watts Summer Games and as a director of many community and educational organizations.
As the century drew to a close, the attorneys of Paul, Hastings faced many challenges, in the forms of increased competition and a well-informed public. Specifically, consumers asked more questions of professionals than in the past, gained information easily from the Internet, and could use software for simple legal forms, thus reducing the need for some professional legal services.
Nevertheless, the need for legal services remained a pervasive part of modern life, especially due to rapid socioeconomic and technological change, the increasing use of lawsuits to solve conflicts, and the maze of government laws and regulations. The bottom line was that Paul, Hasting, Janofsky and Walker had plenty of work to do and thus continued to grow as the new millennium approached.
Anderson, A. Donald, et. al., “Paul, Hastings, Janofsky & Walker,” in Los Angeles: Realm of Possibility, Chatsworth, Calif.: Windsor Publications, 1991, pp. 338-39.
Buckley, Bruce, “Paul, Hastings Law Firm Expands,” Billboard, August 29, 1992, p. 89.
“Cheap Computer Services Compete with Lawyers,” Omaha World-Herald, December 26, 1994, p. 5.
Cole, Benjamin M., “Capital Idea: Alan Barton Reaps the Fruits of a Strong Local Venture Capital Market,” Los Angeles Business Journal, June 15, 1987, p. 4.
_____, “Paul, Hastings Partner Reflects on 2 Milestones,” Los Angeles Business Journal, January 2, 1989, p. 14.
Margolick, David, “Curbing Sexual Harassment in the Legal World,” New York Times, November 9, 1990, p. B5.
Olson, Walter K., The Litigation Explosion, New York: Truman Talley Books, 1991.
Podgers, James, “Legal Profession Faces Rising Tide of Nonlawyer Practice,” ABA Journal, December 1993, pp. 51-57.
“President Appoints Paul, Hastings Partner to Lead International Telecomm Delegation,” PR Newswire, October 13, 1998, p. 0219.
Schmitt, Richard B., “From Cash to Travel, New Lures for Burned-Out Lawyers,” The Wall Street Journal, February 2, 1999, p. Bl, B8.
—David M. Walden