Wall Street Law Firm Increases Attorneys’ Compensation

On June 6, the law firm of Cravath, Swaine & Moore, the crème de la crème of Wall Street law firms, announced that it was increasing the salary for new attorneys just out of law school to $180,000 and for eighth-year associate attorneys to $315,000. (At the end of the eighth year an associate attorney is either chosen to be a partner or asked to leave the firm.) Such employees also may obtain annual bonuses. The average compensation for the firm’s partners, on the other hand, was $3.56 million.[1]

Cravath, according to a profile from Chambers & Partners, has offices in New York City and London with a total of 90 partners and 426 associate attorneys. The firm’s website says it hires “only the top students from the nation’s finest law schools, we train our associates through a rigorous rotation of practices, we elevate partners exclusively from within and we compensate partners in a lockstep system throughout their careers.”

I react to this news from at least three perspectives.

First, as I explained in an earlier post, immediately after law school graduation in 1966 I joined Cravath as an associate attorney with an annual salary of $9,000 ($66,941 in 2016 Dollars). In 1968 the firm jumped the starting salary to $15,000 ($104,657 in 2016 Dollars) with similar boosts to the salaries of more senior associates. I left Cravath and New York City in 1970 even though being a Wall Street lawyer was challenging and exciting as was living in the city with a wife and two young sons. I value those years, but did not want to remain another four years to compete for a chance to become a Cravath partner with all the sacrifices of time, energy and stress that would require and with all the income and prestige that it would entail. Instead I chose to move to Minneapolis to practice law with Faegre & Benson (n/k/a Faegre Baker Daniels), about which I also have written.

Second, the Cravath move to a starting salary of $180,000 is clearly an outlier in the overall U.S. legal job market. While observers speculate that other prominent Wall Street law firms probably will match this increase, law firms in other U.S. cities and business corporations, in my opinion, will not do so, and clearly governments and nonprofit organizations with lawyers will not be able to do so.

Third, this increase in compensation comes after widespread weaknesses in the demand for lawyers in the U.S. Indeed, in recent years the openings for new attorneys have shriveled. Many recent law school graduates, often with large student-debt loads, have been unable to find law-related jobs. Some recent law graduates have sued their law schools with claims they had been scammed. Law school enrollments have been declining. I hope the Cravath increase is a sign that there may be increasing opportunities for new lawyers, but I am not holding my breath.

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[1] Olson, Law Firm Salaries Jump for the First Time in Nearly a Decade, N.Y. Times (June 6, 2016); Randazzo, Law Firm Cravath Raising Starting Salaries to $180,000, W.S.J. (June 6, 2016); Lat, Breaking: NY To $180K!!! Cravath Raises Associate Base Salaries!!!, Above the Law (June 6, 2016).

The U.S. Army’s Hiring of Attorney Joseph Welch for the Army-McCarthy Hearings

The Army had many lawyers of its own, and it had a call on lawyers from the Department of Justice. Why then did the Army decide to hire a private attorney? The answer has not been discovered. One reason could be that the Army’s chief legal Counsel, John G. Adams, was included in the charges of improper conduct by McCarthy, and this presented a conflict of interest that prevented his representing the Army and other officials.

In any event, the Army did search for a private attorney. Its first choice, an unnamed prominent Washington, D.C. lawyer, declined the request because he had been associated with a person who might be vulnerable to a McCarthy smear.

Sherman Adams
Thomas E. Dewey
Bruce Bromley

 

 

 

 

 

 

 

Welch apparently was number two on the Army’s list. He was retained, pro bono publico (without fee), for the Army by Sherman Adams, President Eisenhower’s Chief of Staff, upon the recommendation of two Wall Street lawyers: Thomas E. Dewey, the former Republican Governor of New York and the Party’s presidential nominee in 1944 and 1948, and Bruce Bromley, a former New York State judge (appointed by Governor Dewey) and a senior litigation partner in the law firm of Cravath, Swaine & Moore.[i]

Bromley knew Welch and his reputation as an exceptional trial lawyer with the eminent Boston law firm of Hale and Dorr (now WilmerHale), where since 1919 he had been handling all kinds of commercial civil litigation in courts in New England. Bromley introduced Welch to Dewey, who after an interview joined in a joint recommendation of Welch. But Welch had no experience with national security or political matters, and like almost all lawyers of the time no experience in congressional hearings, especially those on national television. These facts, however, did not disqualify him and indeed may have been seen as qualifying characteristics.

Perhaps one reason for Welch’s selection was his being from Boston as was the first outside lawyer for the Committee, Samuel Sears, who immediately withdrew because of public comments he had made in favor of McCarthy. Before Sears’ withdrawal, however, Welch told him, “I want to talk with complete frankness. You and I can’t afford to have any holding out on the other. I want your confidence, and I want you to have my confidence, and I want to come out of this with each of us the friend of each other.”

Edward R. Murrow

Bromley’s recommendation of Welch suggests another possible connection between the two men. At the time, Bromley and his firm had been retained by the CBS television network to help it prepare for the anticipated counterattack by Senator McCarthy in response to programs attacking the Senator by Edward R. Murrow. Given how practicing lawyers operate, based upon personal experience, Bromley and Welch probably exchanged information and suggestions about doing battle against the Senator.

David Stratheim as Murrow
George Clooney as Friendly

 

 

 

 

 

 

By the way, Murrow’s programs about McCarthy were at the center of the recent film, Good Night, and Good Luck. The film has a scene of Murrow (played by David Strathairn)and his show’s producer ,  Fred Friendly (played by George Clooney), watching a video clip of the famous 1954 clash between Senator McCarthy and Welch.

Before Welch accepted the offer to be counsel for the Army, he told his law firm partners that he had been asked “to undertake a grueling assignment. It will be long drawn out. I shall have to stay in Washington and I must take two of our best Juniors with me. In exchange, the Army will pay no fee and will not even pay travel and hotel expenses. Also, it is a dangerous assignment. Senator McCarthy is a powerful antagonist. If we have any skeletons in our closets let us say ‘No’ at once.” The partners then unanimously voted to accept the case. One partner ironically observed that another partner, Reginald Heber Smith, who was a national leader for legal aid, had “talked Legal Aid all his life, and now he has a Legal Aid client in the person of the Army of the United States.”

Although I have not found information as to why the Army apparently insisted on a private attorney’s undertaking this representation on a pro bono basis, the Army (and the Eisenhower Administration) may have wanted to avoid criticism by the public and Senator McCarthy of large fees being charged by a private law firm.

In any event, Hale and Dorr accepted the pro bono status. The firm regarded the matter as important for the public, but undoubtedly did not expect the hearings to last as long as they did. Their length obviously increased the cost to the firm; it had to have been a major drag on the firm’s finances for 1954. As Reginald Heber Smith later observed, “The cost was very heavy.”  This engagement, however, subsequently added to the firm’s professional luster and undoubtedly helped in its recruitment of new lawyers and perhaps its retention by some clients.

Another reason for the firm’s pro bono role was not wanting to get sued by a McCarthy supporter in Boston over any fees it would have received if it were fee-for-service.  After all, McCarthy was an Irish Catholic, and there were many of those in Boston, including the patriarch of the Kennedy clan (Joseph Kennedy), who was a McCarthy supporter, and his son, Robert F. Kennedy, was a lawyer for the Democratic members of the McCarthy committee.

Hale and Dorr thus entered the fray as a matter of public service. Reginald Heber Smith said at the time to Welch: “This is your most important case in your professional life; it is the most important case entrusted to the firm . . . . You were exactly right to accept it without pay. . . . Your opening statement to the press was perfect. Get the facts without fear or favor,  present them in that same spirit. The American people are not frightened by mistakes because we all make them; but they are dismayed by what looks like lack of candor and double talk. You can remove this fog of miasma and doubt.  Let the fresh wind of truth come in and do not be disturbed if it blows hard. After that the sun will shine.”


[i]  From 1966 through early 1970, the author was a law clerk and associate attorney at the Cravath firm and worked with Judge Bromley. But I was unaware of the Bromley-Welch connection and thus never interviewed Bromley about his recommending Welch for this important engagement.

Gratitude I

It is so easy to credit all of your successes to your own talents and hard work. I know that I too often do that.

Lately, however, I am pausing to acknowledge the many blessings in my life.

My mother and father, Marian Frances Brown and Ward Glenn Krohnke, were directly responsible for endowing me with good genes. They also were loving and nurturing, especially in my early years, and supporting my many activities through college and beyond. Although of modest financial circumstances, my parents were able to afford many of the creature comforts of American middle class life as I was growing up. I did not have to work to provide financial support for the family although in junior and senior high school I had part-time jobs to earn spending money and saving for college. My parents and I were in good health as I grew up with no major illnesses or accidents. I am grateful.

The public schools in my small Iowa home town of Perry did not provide many of the curricular and extra-curricular activities of private schools or large, prosperous suburban school districts in the rest of the country. Yet I had many excellent teachers who did not let me coast through school. The teacher I remember most fondly for this nurturing and challenging was Emma Hepker, who taught speech and English Literature. I also participated in speech contests, football, baseball, track and concert and marching band playing the e-flat alto saxophone. I often focused on the limitations of growing up in this small town far away from where things were really happening. But I can now see that there were benefits from this protective environment. I am grateful.

Grinnell College, the next stop on my educational journey, was challenging and enriching. My major was history with a lot of political science and economics. The professors were excellent, especially Joe Wall, Alan Jones, Samuel Barron, Richard Westfall and George Drake in history, Harold Fletcher in political science and Philip Thomas and John Dawson in economics. As a student at a small college I had the opportunity to participate in many activities, including intercollegiate baseball and football and student government. I am grateful.

In the midst of my Grinnell experience, I had one semester at American University on the Washington Semester Program. The focus was seminars and meetings with politicians, government officials and others as we learned about American government in our nation’s capitol. Professor Louis Loeb was the excellent leader of our group. Each of us also did independent research for a paper. My topic was the participation of political interest groups in the U.S. Supreme Court’s consideration of contempt of Congress cases, mostly coming from the House Un-American Activities Committee, which I thought itself was un-American. I spent a lot of time in the Supreme Court Library reading briefs of the parties and of amici curiae (friends of the court), usually the American Civil Liberties Union and the American Association of University Professors, and then comparing their arguments with the Court’s decisions. This was also the first time I had lived in a major city, and I thoroughly enjoyed its many cultural attraction. I am grateful.

After Grinnell, I had the tremendous privilege and honor of being a student for two years at the University of Oxford. There I studied or, as they say, “read” Philosophy, Politics and Economics. During the three eight-week terms of the academic year, each week I read suggested readings on two topics or issues and prepared essays for two tutorials, usually by myself, but sometimes with one other student. The tutors, especially John Sargent and Roger Opie in economics and Michael Hinton in philosophy, were warm and encouraging while pressing me onward. During the terms you could also attend university-wide lectures in the subjects while over the vacations or “vacs” you were expected to continue your readings in the three fields. At the end of my two years, I had university-wide examinations or “Schools” as they were given in a building called “The Examination Schools.” There were six required examinations (two each in the three disciplines) plus two optional subjects (mine were public finance and currency and credit). Each examination was three hours long, and you had to answer four questions from a printed list of about 12 questions. Your answers were then read and graded by a university-wide committee, and your overall grade or results were posted on the Oxford bulletin boards and published in the London Times. I am grateful.

I then returned to the U.S. for three years at the University of Chicago Law School. Whereas there was great student independence at Oxford, Chicago like most law schools had large classes with daily assignments, usually with professors grilling the students with questions about the cases or statutes we were studying. At the end of the semester there was the familiar practice of the course’s professor giving the final examinations. There were great professors at Chicago: Harry Kalven, Walter Blum, Francis Allen, David Currie, Philip Kurland, Phil Neal, Bernard Meltzer, Soia Mentschikoff and Kenneth Dam to name a few. I am grateful.

In 1966 I commenced practicing law with the Wall Street firm of Cravath, Swaine & Moore, probably the preeminent law firm in New York City. In my four years there as a junior associate, I worked on many interesting cases, usually with the “grunt” work. The senior lawyers for whom I worked helped me to “learn the ropes” of practicing law. Jack Hupper and Tom Barr were the most significant in that regard. I am grateful.

In 1970 my family and I moved to Minneapolis where I commenced what turned out to be a 31-year career with the law firm of Faegre & Benson (now Faegre Baker Daniels). Here too I worked with excellent lawyers who helped me develop my legal skills. I think especially of John French, Norman Carpenter, Larry Brown and Jim Loken; Jim is now a Judge of the U. S. Court of Appeals for the Eighth Circuit. I am grateful.

After my retirement from Faegre in 2001, Professor David Weissbrodt at the University of Minnesota Law School asked me to help teach the international human rights course. I accepted the offer and did so for nine years (2002-10). I learned much more about this field of law and met many interesting students and faculty. I am grateful.

For all of these blessings, I give thanks to God and to those named and unnamed individuals who helped me along the way.

Silver Bullion and Underground Homes

Girard Henderson was an interesting client of the New York City law firm of Cravath, Swaine & Moore (CS&M), where I was an associate attorney, 1966-70.[1]

His grandfather was a Sandy Hook ship pilot who piloted ships into the City’s harbor and who managed to save a significant amount of money. Henderson’s father invested the inheritance from the grandfather in a New York City warehouse that burned to the ground, and there was a long delay in obtaining payment by an insurance company. As a result, the father went to work as a bookkeeper for the California Perfume Company (CPC) in Suffern, New York and became one of its substantial shareholders.

After Henderson’s father’s death, his mother inherited the CPC stock, and in 1935 she contributed those shares to a newly formed personal holding company, Alexander Dawson, Inc. (ADI) in exchange for all of ADI’s stock. Later, presumably after his mother’s death and after a buyout of his brother, Henderson became the sole owner of ADI.

Prior to 1955, however, he gave 27% of the ADI common stock (and some ADI preferred stock) to his then wife, Theodora Henderson, while Mr. Henderson maintained his personal control of ADI. In 1955 Girard and Theodora separated and later were divorced.

In 1967 Theodora formed her own holding company, Theodora Holding Corporation (THC), and she contributed her ADI common stock to THC in exchange for all of its stock.

In the meantime, in 1939, CPC changed its name to Avon Products, and in 1964 Avon’s stock was listed on the New York Stock Exchange and became a very successful stock with rising prices.

As of September 1968, ADI’s net worth was $150 million with Avon stock comprising 75% of its assets. The other 25%, pursuant to a diversification policy, was invested in other stocks and several small companies.

World's Fair, New York City

One such company was the Underground World Home Corporation that promoted such homes as safe places in the event of a nuclear attack by the USSR. It  had a demonstration home at the 1964 New York City’s World Fair. Henderson also had his own underground home in the Rocky Mountains near Denver; its underground swimming pool had a mural of the New York City skyline on the east wall and one of the San Francisco skyline on the opposite wall. As of September 1968, ADI also had invested $14 million in silver bullion and Swiss francs that were stored in a vault under the airport in Zurich, Switzerland.

 

Court of Chancery, Wilmington, DE

In or about September 1968 THC commenced a stockholders derivative lawsuit against ADI, Henderson and another corporate officer. The complaint alleged mismanagement regarding these non-Avon investments and corporate contributions to the Alexander Dawson, Inc. Foundation. As ADI was a Delaware corporation, the case was filed in the Court of Chancery in Wilmington.

The case went to trial in 1969. It was the first trial in which I participated. I was “second chair” to Cravath partner, Jack Hupper. I handled the exhibits and other papers and did not say one word on the record. But at least I was in court observing the trial and seeing how it was done.

In September 1969 the court issued its decision. It noted that after trial the plaintiff had withdrawn its claims regarding silver bullion and other ADI investments made at Henderson’s direction, including the Underground World Home Corporation. Instead the plaintiff after trial had limited itself to claims regarding ADI’s purchase and sale of a seat on the New York Stock Exchange (NYSE) and the ADI charitable contributions to the Foundation. The court upheld the validity of the charitable contributions, but concluded that Henderson had used corporate funds for his personal benefit with respect to the NYSE seat and, therefore, had to account to ADI for any profit on the sale of the seat and on brokerage commissions.

I do not remember any of the substantive or procedural details of the trial, but I do remember that just before trial Henderson broke a leg in a New York City taxi accident. When he testified at trial, the broken leg in a cast had to be elevated on a makeshift pedestal.

I also recall that before trial Henderson had to delay a trip from the West Coast to New York City to meet with Mr. Hupper and me because he was hosting a special dinner with Rudy Vallée, a famous crooner in the 1920s through the 1940s.

Silver bullion

Nor can I forget that Henderson and ADI kept some of their records in an informal office in a small house in a New York City suburb on the west side of the Hudson River. One day I drove there over the George Washington Bridge to find relevant documents. I was surprised to find a  bar of silver bullion at the back of one  of the file drawers.


[1] This account is based on memory and Theodora Holding Corp. v. Henderson, 257 A.2d 398 (Del Ct. Ch. 1969). See also Post: Lawyering on Wall Street (April 14, 2011).

The IBM Antitrust Litigation

In 1964 International Business Machines Corporation (IBM) introduced its System/360 mainframe computer system family, the first to cover the complete range of applications, from large to small, both commercial and scientific.[1]

One of the models in the family, System 360/91 (92?), was announced as being as fast as the then fastest machine on the market, Model 6600 from Control Data Corporation (CDC). IBM, however, was slow in producing its 360/91, but its mere announcement allegedly had adverse effects on CDC’s sales of Model 6600. As a result, in December 1968, CDC filed an antitrust lawsuit against IBM. The complaint alleged that IBM had monopolized the market for computers in violation of section 2 of the Sherman Act and that this conduct had damaged CDC’s business, entitling CDC to treble damages plus attorneys’ fees under section 4 of the Clayton Act.[2] The case was filed in Minnesota’s federal court.[3]

 

Thomas D. Barr

IBM immediately engaged its outside general counsel, Cravath, Swaine & Moore (CS&M), to defend the case. Partner Tom Barr was in charge of the CS&M team, and drafted several young associates, including Jay Gerber, David Boies and me, for the team. (As previously noted, I was an associate attorney at CS&M, 1966-1970.[4])

All of the CS&M team members soon started to learn about computers at a special school for the IBM lawyers at one of its locations in Westchester County, New York. (I do not recall what we were taught or what we learned, but this was long before the advent of personal computers and long before I had become familiar with their operation.)

Other private antitrust complaints were filed against IBM, and all of these cases were transferred to the Minnesota federal court for pretrial discovery regardless of where they initially had been filed in other federal trial courts. Minnesota’s U.S. District Judge Philip Neville was put in charge of managing all of these complicated cases. As a result, the other members of the team and I had frequent trips to Minnesota for pretrial conferences in the cases with the assistance of IBM’s local counsel, Faegre & Benson. All of the plaintiffs in these cases then embarked on a lengthy process of requesting and obtaining production of millions of IBM documents relevant to the cases.[5]

One of the companies suing IBM, however, had a different strategy. Greyhound Computer Corporation, a leasing company, filed a case under Illinois’ state antitrust law in Illinois state court (Peoria, as I recall) in order to avoid the complications of the consolidated pretrial proceedings in the Minnesota federal court. In addition, Greyhound wanted to take depositions (oral questioning of witnesses under oath) of top IBM officials as soon as possible before spending years in collecting and analyzing millions of IBM documents.

Thomas J. Watson, Jr.
Nicholas Katzenbach

One of the IBM officials to be deposed in the Greyhound case was its President, Thomas J. Watson, Jr.,[6] and I was put in charge of assisting Tom Barr in preparing Mr. Watson for his deposition. This was a daunting challenge. It meant collecting and analyzing as many IBM and public documents as possible that were potentially relevant to the Greyhound and other cases, figuring out the possible questions that might be asked of Mr. Watson by opposing counsel and then meeting with him and IBM’s General Counsel, Nicholas Katzenbach,[7]  to go over these documents and questions, all in a relatively short time period.

At the time my wife and I lived in Brooklyn Heights, across the East River from Wall Street and CS&M’s office. But Cravath had established a special office in White Plains, Westchester County, New York for the IBM litigation; this is where all the documents were stored and where the team members, including IBM employees assigned to help the lawyers, did their work. Thus, every morning I had to drive through Brooklyn and Queens, over the Throgs Neck Bridge and then through the Bronx and Westchester County to White Plains, and every evening I had to reverse this commute to my home. Traffic was heavy both ways, adding to the stress of the job. (Like many New Yorkers at the time, I did not own a car, but IBM supplied a rental car for me.)

Soon after our second son was born in December 1969, there was a bad winter storm in Westchester County, and I did not want to drive back home that night in order to get up early the next morning to return to White Plains. I, however, could not find a hotel room anywhere in the White Plains area. As a result, I had a very slow and dangerous drive home that night, and after a night of little sleep with a crying baby, I had to return to White Plains the next morning in another slow drive. I think that was the night that pushed me over the edge in deciding to leave CS&M and New York City.

Sometime in the process of preparing for this important deposition, I vividly remember Tom Barr and I flew from New York City to San Francisco one day for the sole purpose of flying back to New York City early the next morning on the IBM corporate jet with Mr. Watson because he had time on that flight to talk with us.

Soon the Watson deposition actually took place, probably in January 1970. Tom Barr and I thought it went well for IBM.[8] I then told Mr. Barr that I would be leaving CS&M in April to join Faegre & Benson in Minneapolis.

It is difficult in 2011 to understand how powerful IBM was in the late 1960’s. It did have a large percentage of the market for computers in that earlier period, and one of the major issues in those earlier antitrust cases was defining the market, geographical and product. The plaintiffs argued for definitions that produced large market shares for IBM while IBM argued for different definitions and lower market shares.

Now, however, IBM no longer is the dominant force in the U.S. and world markets for the manufacture of computers. In 2005, IBM sold its personal computer manufacturing operations to a Chinese company, Lenovo Group Limited. Now IBM is a large, multinational computer technology and IT consulting business with some computer manufacturing business.[9] IBM’s loss of a dominant position in the computer industry is another instance of what economist Joseph Schumpeter calls “creative destruction,” capitalism’s evolutionary process of revolutionizing itself from within.[10]

IBM thus survived after the scary early 1990’s when it nearly ran out of money. In June 2011 it celebrated its centennial as a company with strong profits, a robust portfolio of products and services and stock market valuation exceeding new-start Google. The central lesson of its survival and renewed success, experts believe, was an ability to identify and build upon its past success. For IBM, its key assets were strong, long-term customer relationships; deep scientific and research capabilities; and broad technical skills in computer hardware, software and services. The company was able to take these assets and recast itself as the one that can best manage and bring together diverse technologies in modern data centers.[11]


[1] Wikipedia, IBM System/360, http://en.wikipedia.org/wiki/IBM_System/360.

[2]  Id.; Wikipedia, Control Data Corporation, http://en.wikipedia.org/wiki/Control_Data_Corporation; Computers: Tackling IBM, Time, Dec. 20, 1968. Section 2 of the Sherman Act of 1890 provides that it is a felony for any “person . . . [to] monopolize or attempt to monopolize, or combine or conspire . . . to monopolize any part of the trade or commerce among the several States.” (15 U.S.C. § 2.) This crime requires proof of (a) the possession of monopoly power in the relevant market and (b) the willful acquisition or maintenance of that power (rather than the growth or development as a result of superior product, business acumen or historic accident). (U.S. v. Grinnell Corp., 384 U.S. 563 (1966).) Under section 4 of the Clayton Act of 1914, any person injured in his business or property by reason of a violation of the Sherman Act may sue for treble damages plus attorneys’ fees. (15 U.S.C. § 15(a).

[3] See Post: Minnesota’s Federal Court (June 28, 2011).

[4] See Post: Lawyering on Wall Street (April 14, 2011); Post: The Adam Clayton Powell, Jr. Litigation (May 31, 2011).

[5] In January 1969 the U.S. Department of Justice filed a civil lawsuit against IBM alleging that it had monopolized the market for general purpose computers. In 1982 the Department concluded that the case was without merit and dropped the suit. (Wikipedia, History of IBM, http://en.wikipedia.org/wiki/History_of_IBM.) I had no direct involvement in this case.

[6] Wikipedia, Thomas J. Watson, Jr., http://en.wikipedia.org/wiki/Thomas_Watson_Jr. In 1952 Watson succeeded his father, Thomas J. Watson, Sr., as IBM’s president and held that office until 1971. In 1964 President Lyndon Johnson awarded him the Presidential Medal of Freedom, and in the Carter Administration, Watson was the U.S. Ambassador to the Soviet Union (1979-81). (Id.)

[7] Mr. Katzenbach was General Counsel of IBM from 1969 through 1986. From 1961 through 1966 he was an attorney in the U.S. Department of Justice, serving as the U.S. Attorney General, 1965-66. From 1966 through 1969 Katzenbach was Under Secretary of State. (Wikipedia, Nicholas Katzenbach, http://en.wikipedia.org/wiki/Nicholas_Katzenbach.

[8] In 1972 the Greyhound case went to trial in federal court in Arizona with a directed verdict for IBM on the antitrust claims. However, in 1977 the court of appeals reversed this decision, holding there was sufficient evidence for a verdict for Greyhound, and remanded the case for retrial. (Greyhound Computer Corp. v. IBM, 559 F.2d 488 (9th Cir. 1977), cert. denied, 434 U.S. 1040 (1978).) Just before the retrial was to start in January 1981, IBM and Greyhound settled the case for $17.7 million. (IBM Antitrust Suit Records,  http://www.hagley.lib.de.us/library/collections/.) Earlier, in 1973 IBM settled the CDC case for about $80 million in cash and assets (transfer of an IBM computer service company at less than market value). (Computers: A Settlement for IBM, Time (Jan. 29, 1973).) (I had no involvement in any of these subsequent proceedings.)

[9] Wikipedia, History of IBM, http://en.wikipedia.org/wiki/History_of_IBM.

[10]  Schumpeter, Capitalism , Socialism and Democracy (1942); Wikipedia, Joseph Schumpeter, http://en.wikipedia.org/wiki/Joseph_Schumpeter.

[11] Lohr, Lessons in Longevity, From I.B.M., N.Y. Times (June 19, 2011).

The Adam Clayton Powell, Jr. Litigation

On March 1, 1967, the U.S. House of Representatives by a vote of 307 to 116 refused to seat Adam Clayton Powell, Jr., the re-elected African-American Congressman from Harlem, censured him, fined him $25,000, took away his seniority and declared his seat vacant. The grounds were that he had engaged in conduct unbecoming a Congressman: he had refused to pay a libel judgment ordered by a New York state court, had refused to return to his district except on Sunday in order to avoid service of legal process in that case, had misappropriated congressional travel funds and illegally had paid his wife a congressional staff salary for work she had not done.[1]

Soon thereafter Powell along with 13 of his constituents commenced a lawsuit in the U.S. District Court for the District of Columbia to invalidate his exclusion.  The defendants were John McCormack, who was the Speaker of the House, five other House members and three of its staff.  The complaint alleged that the exclusion violated Powell’s constitutional rights: Powell satisfied the constitutional qualifications for membership (age, citizenship and residency) and the exclusion allegedly was based upon his race and color and thereby violated his rights under the Fifth, Thirteenth and Fifteenth amendments to the Constitution.[2]

Powell’s lawyers were William Kunstler, a famous civil rights lawyer;[3] Arthur Kinoy, another prominent civil rights lawyer and Rutgers Law School Professor;[4] Herbert Reid, another civil rights lawyer and Howard Law School Professor;[5] and others.

The House decided that it did not want the Lyndon Johnson Administration’s Justice Department to defend the House’s leadership because of concern that political considerations would prevent the Department from vigorously asserting what the House believed to be its full constitutional prerogatives. Instead, the House took the recommendation of Emmanuel Celler, the Brooklyn Congressman and Chairman of the House Judiciary Committee, to hire as its attorney, Bruce Bromley, a partner in the New York City law firm of Cravath, Swaine & Moore.[6]

Bromley was a graduate of the University of Michigan and the Harvard Law School. He was a lawyer with the Cravath firm for over 50 years with one interruption. In January 1949, New York Governor Thomas E. Dewey, who had been the unsuccessful Republican presidential candidate the prior year, appointed Bromley to New York’s highest court (the Court of Appeals), but in November 1949, Bromley lost the election for a full term. Although he served on the bench for less than a year, thereafter he was always referred to as “Judge Bromley.” While at Cravath, he was the lead lawyer in successful representation of IBM, General Motors and other major corporations.[7]

For the Powell case, Bromley assembled a team of Cravath lawyers to work on the case, including yours truly. I do not recall what issues I worked on and now wish I had kept a journal about my involvement in this case to refresh my recollection. I do remember that another Cravath associate attorney and member of the team, Dorsey D. Ellis, Jr., was an amateur legal historian and was the primary draftsman of an appendix to the eventual Supreme Court brief that discussed the legislative common law of the British House of Commons and the early state legislatures regarding exclusion and expulsion of members of legislatures.[8] Another Cravath associate on the team, Jay Gerber, recently told me that he remembers the issues on which he worked.

The U.S. District Court for the District of Columbia dismissed the case for lack of subject-matter jurisdiction.[9]  The U.S. Court of Appeals for the D.C. Circuit affirmed the dismissal, but on different grounds. It held that the federal courts had subject-matter jurisdiction, but that case was not justiciable, i.e, it was not appropriate for judicial relief because of the separation of powers.[10] The case then went to the U.S. Supreme Court.

Before the Supreme Court argument, the other members of the Cravath team and I went to Washington several days ahead of time to prepare for the argument and to consult with Cravath’s Washington allies and former partners: Lloyd Cutler, who subsequently was White House Counsel for Presidents Carter and Clinton,[11] and John Pickering.[12] Cravath also brought the lawyers’ spouses to Washington on the Sunday before the oral argument in the Supreme Court so that they could watch the proceedings the next day. My wife was on a plane from New York City that Sunday with none other than Congressman Powell.

Although the House’s side had won in the lower federal courts, there were no guarantees that it would prevail in the U.S. Supreme Court. The House was asserting that its power under Article I, Section 5(1) of the Constitution to “be the Judge of the . . . Qualifications of its own members” was an implicit exception from the Article III “judicial Power of the United States [that was] vested in [the Supreme Court]” and the lower federal courts. Thus, the House argued, no federal court had the power to do anything in this case. As a result, it was anticipated that Chief Justice Earl Warren might well ask Judge Bromley in oral argument whether he was claiming that if the House or the Senate hypothetically were to exclude or expel five or six black members-elect in succession that the Supreme Court could do nothing. The answer to this hypothetical question was clearly “yes.”

At the oral argument, as I recall, the Chief Justice in fact asked that question. Bromley’s responded in essence that yes, the Court could do nothing, but that there was no reason to suspect that the House or the Senate might do such a thing and that there was a political remedy by the voters’ re-electing the same people. The Chief Justice and Bromley then got into a colloquy as to which branch of the federal government had the “final” say regarding the Constitution. Bromley said in very limited areas, each house of the Congress had the “final say:” impeachment and removal of federal officials and judging the qualifications of its members. Jay Gerber recalls that the Chief Justice almost fell out of his chair at that answer.

In June 1969, the U.S. Supreme Court, 7 to 1, reversed the dismissal of the lawsuit. The majority opinion by the Chief Justice held that the federal courts had jurisdiction over the subject matter of the case and that it was justiciable; that it did not constitute a political question that pitted one branch of government against another. Rather, it required “no more than an interpretation of the Constitution” by the Supreme Court.[13]

The majority opinion stated that while the House of Representatives was the sole judge of its members’ qualifications (U.S. Const., Art. I, § 5, cl. 1), the House did not have the power to develop qualifications other than those specified in the Constitution: election certificate, at least 25 years of age, U.S. citizen for at least seven years and an inhabitant of the state in which he or she was elected at the time of election (Art. I, § 2. Cls, 1, 2).

In addition, the Court’s majority opinion noted that while the Constitution states (Art. I, § 5, Cl. 2),”Each House [of Congress] shall be the Judge of the . . . Qualifications of its own Members,” the Constitution  immediately states that each “House may . . . with the Concurrence of two thirds, expel a Member.” The Court, therefore, held that the process leading to the expulsion of a Member, duly sworn and enrolled upon the body’s rolls, was the only constitutional method for a House to give effect to its power to determine the qualifications of its members. The House did not follow this procedure with respect to Congressman Powell. Therefore, he was entitled to a declaratory judgment that he had been unlawfully excluded from the Congress.

In the meantime, Powell had won the May 1967 special election to fill his congressional seat, but did not attempt to be seated.  He then won the next regular election in November 1968 and was seated in the House in January 1969 (approximately five months before the Supreme Court decision) subject to the $25,000 fine and loss of seniority. The next year, however, Powell lost the 1970 Democratic primary election to Charles Rangel and failed to qualify to be on the general election ballot.[14]

Powell was a member of a notable Harlem family. His father, Adam Clayton Powell, Sr., was Pastor of the Abyssinian Baptist Church in Harlem (1908-36) before being succeeded by Powell, Jr., his only son (1937-71).[15] Powell. Jr.’s older son, Adam Clayton Powell, III, was a journalist and media executive,[16] and Powell, Jr.’s younger son, Adam Clayton Powell IV, is a New York State legislator who lost the 2010 Democratic primary election for Congress to the incumbent, Charles Rangel.[17]

Powell, Jr. died in 1972 at age 62.


[1]  Powell v. McCormack, 395 U.S. 486, 489-93 (1969); Wikipedia, Powell v. McCormack, http://en.wikipedia.org/wiki/Powell_v._McCormack.

[2]  Powell v. McCormack, 266 F. Supp. 354 (D.C. DC. 1967).

[3]  Wikipedia, William Kunstler, http://en.wikipedia.org/wiki/William_Kunstler.

[4]  Wikipedia, Arthur Kinoy, http://en.wikipedia.org/wiki/Arthur_Kinoy.

[5]  Ravo, Herbert O. Reid, Sr., 75, Lawyer Who Taught Many Black Leaders, N.Y. Times (June 19, 1991).

[6]  Wikipedia, Bruce Bromley, http://en.wikipedia.org/wiki/Bruce_Bromley.

[7] Wikipedia, Bruce Bromley, http://en.wikipedia.org/wiki/Bruce_Bromley.

[8]  After Cravath, “Dan” Ellis became a member of the faculty at the University of Iowa School of Law and then Professor, Dean and eventually Dean Emeritus and William R. Orthwein Distinguished Professor of Law Emeritus at the University of Washington in St. Louis School of Law. (Washington University in St. Louis, Dorsey Ellis, http://news.wustl.edu/people/Pages/DorseyEllis.aspx.

[9]  Powell v. McCormack, 266 F. Supp. 354 (D.C. D.C. 1967).

[10]  Powell v. McCormack, 395 F.2d 577 (D.C. Cir. 1968).

[11]  Wikipedia, Lloyd Cutler, http://en.wikipedia.org/wiki/Lloyd_Cutler.

[12]  Wikipedia, John H. Pickering, http://en.wikipedia.org/wiki/John_H._Pickering.

[13]  Powell v. McCormack, 395 U.S. 486 (1969).

[14]  Wikipedia, Adam Clayton Powell, Jr., http://en.wikipedia.org/wiki/Adam_Clayton_Powell,_Jr.; Biographical Dictionary of the United States Congress, “Powell, Adam Clayton, Jr.,” http://bioguide.congress.gov/scripts/biodisplay.pl?index=p000477

[15] Wikipedia, Adam Clayton Powell, Sr., http://en.wikipedia.org/wiki/Adam_Clayton_Powell,_Sr.; Abyssinian Baptist Church, History, http://www.abyssinian.org/about-us/history/.

[16]  Wikipedia, Adam Clayton Powell III, http://en.wikipedia.org/wiki/Adam_Clayton_Powell_III.

[17]  Wikipedia, Adam Clayton Powell IV (Politician),  http://en.wikipedia.org/wiki/Adam_Clayton_Powell_IV_(politician).

The Roads Not Taken


“Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.”[1]

 

In earlier posts, I described two roads not taken–becoming a Protestant minister or a professional historian.[2] Another was not going to graduate school in economics after reading PPE (Philosophy, Politics and Economics) at Oxford. That was primarily because I had had hardly any of the necessary mathematics in college and did not want to embark on a lengthy pursuit of a Ph.D.

After four years of being a Wall Street lawyer, I already have talked about my choosing not to remain at Cravath, Swaine & Moore to compete for one of its partnerships.[3] At the same time I declined an offer to teach at the University of Iowa College of Law. That was because I had enjoyed practicing law, because practice was more lucrative than teaching, and because I did not have some brilliant legal scholarship waiting to be unleashed.

Instead I chose to continue practicing law. But instead of fully exploring various cities, including San Diego, that were on my list of possibilities for such practice, I chose Minneapolis without an exhaustive analysis of the pros and cons of one city versus another. I did so because I already had developed good  working relationships with Minneapolis attorneys at Faegre & Benson on the IBM antitrust cases, because Minneapolis was closer to my wife and my original homes in Nebraska and Iowa and because Minneapolis sounded like an interesting place to live. (This last February after spending four pleasant weeks in Carlsbad, California just north of San Diego and avoiding a very cold and snowy Minneapolis, I wondered: Did I make a mistake in not going to San Diego?)

Other paths not taken were because I was not chosen. I already mentioned not winning a White House Fellowship in the last semester of law school.[4] At the same time my applications for U.S. Supreme Court clerkships with Chief Justice Earl Warren and Justices Potter Stewart and Byron White were rejected. Such clerkships, of course, are pursued by many top law graduates because they are fascinating, challenging and prestigious jobs that open many doors for subsequent legal careers.

After registering for the military draft at age 18, I had college student deferments (Class 2-S) that covered my nine years at Grinnell, Oxford and Chicago. But in my last semester of law school, I received a notice from my draft board to report for an Armed Services physical examination and thus potential military service. As it turned out, my wife was pregnant with our first child, and I thus was entitled to a new deferment (Class 3-A) because of dependant’s hardship. As a result, I never had to serve in the military, and I did not volunteer to do so. I missed the Vietnam War, much to my relief then and now.

While I was at the Faegre & Benson law firm, I was unsuccessful in my efforts to be appointed to vacancies on the Minneapolis School Board and the U.S. District Court in Minnesota as a judge and then later as a magistrate judge.  I also was unsuccessful in seeking the Deanship of the Hamline University School of Law. These jobs all sounded interesting, challenging and rewarding. The last three also would have allowed me to escape the pressures of practicing law.

I also have mentioned my not being offered a teaching position in Ecuador after I retired.[5]

I have no regrets about these roads not taken although I will never know what would have happened had I chosen or been chosen for one of them.  But clearly the road I did take “has made all the difference” in my life. Indeed, the road you take and the many decisions you made at various forks in the road along the way constitute your life.


[1] Robert Frost, The Road Not Taken in Mountain Interval (1915).

[2] Post: Adventures of a History Detective (4/5/11); Post: Minneapolis’ Westminster Presbyterian Church (4/6/11).

[3] Post: Lawyering on Wall Street (4/14/11).

[4] Post: Questioning President Lyndon Johnson (4/17/11).

[5] Post: My First 10 Years of Retirement (4/23/11).