Davis Polk & Wardwell Business Information, Profile, and History

Company Perspectives:

Davis Polk & Wardwell serves U.S. and non-U.S. clients who look to us for advice, representation, and transactional assistance in a broad range of practices. We regularly work on matters that, because of their intricacy and magnitude, raise novel questions of law and practice. Davis Polk lawyers are known for their ability both to create practical, innovative solutions to intractable problems and to manage the many facets of complex transactions and cases.

History of Davis Polk & Wardwell

Davis Polk & Wardwell is one of the largest U.S. law firms, ranked by its annual gross revenues. It represents some of the world's largest corporations, including J.P. Morgan and Morgan Stanley Dean Witter, the modern companies founded by J. Pierpont Morgan, who first became a Davis Polk client in the late 1800s. The law firm's other clients are found all over the world, including EMI Group in the United Kingdom, Telefonica in Spain, and Korea Electric Power. It consistently ranks as one of the top law firms involved in corporate and financial transactions, with expertise in securities, banking, taxation, antitrust, government regulation, and most areas of modern business law. Its litigation practice includes defending RJR Nabisco in much publicized lawsuits filed by smokers. In addition to its New York City headquarters, the firm maintains offices in Menlo Park, California, to serve Silicon Valley clients; offices in Washington, D.C., to help clients deal with government laws and regulations; and five overseas offices (London, Paris, Frankfurt, Hong Kong, and Tokyo) in response to the increasingly globalized economy. The firm's legacy includes participation in major American court cases, probably the most famous being the 1954 case of Brown v. the Board of Education of Topeka, Kansas. That was also the last of 140 U.S. Supreme Court cases argued by John W. Davis, the most of any 20th-century lawyer at that time.

Origins and Expansion in the Early 20th Century

Davis Polk & Wardwell's roots began in 1849 when Francis N. Bangs started a law practice in the days when relatively few businesses incorporated. Francis L. Stetson graduated from Columbia, fought against the corruption of New York City's Democratic Party Boss Tweed, and then served New York City as its assistant corporation counsel before he joined Bangs as a partner in 1880.

Stetson brought the young partnership some of its most important early clients, most notably J.P. Morgan & Company, named for J. Pierpont Morgan, the famous banker and big businessman. In 1895, for example, Stetson went with Morgan to the White House to buy $65 million worth of bonds to help the federal government survive the depression that had started in 1893. In 1901 he helped Morgan create the United States Steel Corporation, the nation's first billion-dollar corporation, which survived in the late 20th century as USX. Stetson in 1901 also served Morgan when he set up the Northern Securities Company, a railroad trust that later was split up because it violated the 1890 Sherman Antitrust Act. Stetson helped J.P. Morgan & Company on various mergers.

In addition, Stetson after 1900 reorganized the United States Rubber Company and helped establish the International Harvester Company. Thus 'Stetson became one of the most prominent corporation lawyers in the nation,' reported author William H. Harbaugh. 'He pioneered in transforming the corporate mortgage from a simple real estate lien into a complex agreement running to as many as 200 pages, and he eventually became the country's foremost specialist in corporate reorganization.'

Although Stetson had partners and associates at his firm, called Stetson, Jennings & Russell, he was not interested in expanding his partnership. The firm from 1896 to the start of World War I in 1914 had no more than seven partners. Its average annual income between 1911 and 1914 was just $287,197.

Younger attorneys became frustrated since they did the bulk of the routine legal work without receiving adequate compensation. The time was ripe for a major change, which happened in 1919, after Stetson had become senile and Jennings and Russell partially retired. The younger generation created the first 'true partnership,' according to Harbaugh, under such leaders as Allen Wardwell, who had joined the firm as a clerk after graduating from Harvard Law School in 1898.

Acting as the de facto head of the law firm, Wardwell recruited two key men in 1920. First he negotiated with Frank Polk, who in turn wrote to his friend John W. Davis about the advantages of joining the New York law firm. Davis was in the process of leaving public service as the U.S. ambassador to Great Britain. Polk told Davis that the Stetson law firm represented Morgan and was general counsel to New York's Guaranty Trust Company. It also represented the Associated Press, the International Paper Company, the Erie Railroad, and various others in trial and estates work. Admiralty and patent law were the only two areas it ignored.

John W. Davis, the law firm's most prominent attorney for several decades, was born in 1873 in West Virginia. When he became the head of the firm in 1921, it was renamed Davis Polk Wardwell Gardiner & Reed, the last two name partners being George H. Gardiner and Lansing P. Reed. According to the 1932 Martindale-Hubbell Law Directory, the partnership at 15 Broad Street in New York City had 17 partners and one 'of counsel' member. It consistently received an 'av' rating, the highest available from the directory.

During the Great Depression, John Davis represented name partner Louis Levy of the New York City law firm of Chadbourne, Stanchfield & Levy, later named Chadbourne & Parke. In spite of Davis's vigorous defense, Levy was disbarred after helping get Judge Martin Manton a $250,000 loan, which was never repaid, from American Tobacco's ad agency at the same time American Tobacco faced a lawsuit before Judge Manton.

In a 1939 article, Ferdinand Lundberg described Davis Polk as one of the nation's top 'law factories,' meaning it was 'organized on factory principles and [grinded] out standardized legal advice, documents, and services ...' Lundberg mentioned how the nation's top corporations tended to rely on the major law firms, thus concentrating wealth in just a few institutions. With 20 partners in 1939, Davis Polk Wardwell Gardiner & Reed for years had represented J.P. Morgan & Company and the Guaranty Trust Company. The law firm's attorneys also served as 22 corporate directors.

Post-World War II Law Practice

After being delayed by World War II, the federal government finally brought a major antitrust lawsuit against the nation's major investment banks, including Morgan Stanley and Harriman Ripley, who were represented by Davis Polk. The government accused the banks of price fixing, stifling competition from smaller investment banks, and several related charges. Whereas most banks and their lawyers wanted to settle the case, the New York law firm of Sullivan & Cromwell took the lead in fighting the government. The trial ran from 1950 to 1953, when the judge accepted the defense motion to dismiss United States of America v. Henry S. Morgan, Harold Stanley, et al. doing business as Morgan Stanley & Co., et al., described by authors Nancy Lisagor and Frank Lipsius as 'the granddaddy of modern antitrust cases.'

During the Korean War, President Harry Truman in April 1952 announced that he had seized control of the nation's steel industry to prevent a threatened work slowdown or complete shutdown because of an industry-union dispute. John Davis represented Republic Steel in the steel industry's fight to reverse the seizure. After many calls for President Truman's impeachment, the U.S. Supreme Court in 1952 heard arguments from Davis and others before ruling in a 6--3 decision that Truman had no constitutional or congressional authority to take control of the steel industry.

Although John Davis won in the steel case, he lost just two years later in one of the nation's most famous court rulings, Brown v. Board of Education of Topeka, Kansas. Davis represented South Carolina in Briggs v. Elliott, which along with others was lumped together with the Brown case. Davis and other attorneys argued that the 1896 Plessey v. Ferguson ruling in favor of separate but equal schools should be upheld. Led by attorneys such as Thurgood Marshall, the NAACP won this court battle that led to school desegregation and was a major development in the postwar civil rights movement.

That was the last time John Davis argued a case before the U.S. Supreme Court. Starting in 1913, Davis made oral arguments before the nation's highest tribunal in 140 cases, the most of any 20th-century lawyer. Only two 19th-century lawyers exceeded that number: Walter Jones with 317 cases and Daniel Webster with at least 185 cases. Davis's distinguished career brought him many honors before he died in 1955, including the United Kingdom's highest award for a non-British citizen.

In 1954 the law firm included 26 members or partners, according to the Martindale-Hubbell Directory. It then was called Davis Polk Wardwell Sunderland & Kiendl. The last two name partners were Edwin Sunderland and Theodore Kiendl.

Four years later the firm had 30 partners and 67 associates when Spencer Klaw published his Fortune article on the large Wall Street law firms. Klaw mentioned that Davis Polk, 'sometimes known as the Tiffany of law firms,' was one of the so-called 'white-shoe' law firms where its lawyers wore 'buckskin shoes that used to be part of the accepted uniform at certain eastern prep schools and colleges.' Part of that law firm tradition involved hiring mostly prominent young associates listed in the Social Register.

By 1964 the law firm of 37 partners had added a Paris office and moved to its new headquarters at One Chase Manhattan Plaza in New York City. The firm, renamed Davis Polk & Wardwell, had overseas branches in both Paris and London in 1974 and included 43 partners and nine 'of counsel' lawyers.

In the 1970s some of Davis Polk's major clients included Morgan Stanley & Company, Morgan Guaranty Trust Company, International Telephone & Telegraph, International Paper, Johns-Manville, LTV Corporation, R.J. Reynolds, and McDermott, Inc.

During the Carter Administration, the United States suffered from its seeming inability to resolve the Iranian hostage crisis after Moslem fundamentalists captured Americans in Tehran. Carter froze Iranian assets in American banks, while millions in U.S. money was loaned to various Iranian institutions. The crisis finally was resolved in early 1981 when a group of lawyers from New York law firms representing the nation's largest banks negotiated with attorneys representing Iranian interests. Davis Polk & Wardwell, on behalf of its historic client Morgan Guaranty, thus helped end one of the nation's more humiliating episodes during the Cold War. Unfortunately, few history books mentioned such behind-the-scenes roles of law firms.

Practice in the Late 20th Century

Starting in the late 1970s and early 1980s the nation's largest law firms began a major transformation. Part of the change came from a 1977 U.S. Supreme Court ruling that said restrictions on professional advertising violated the First Amendment's guarantee of free speech. At about the same time two new periodicals, the National Law Journal and the American Lawyer, began publishing articles on law firm management and finances. From that point on, law firms began to be more open about their operations, ending much of the secrecy of the past. In addition, lawyers gained competitive data about law firm profits, thus fueling more lateral hiring of experienced lawyers. The bottom line was that most big law firms became much larger in the 1980s, a time of rapid expansion in the American economy. They became more business-oriented as well, adding public relations personnel and hiring consultants for advice on better management practices.

As attorney salaries increased rapidly, law firms competed not only with each other for the top talents but also with corporations, including some of their clients. That happened relatively rarely in the 1980s, but by the mid-1990s more senior partners left for top corporate positions. Ellen Joan Pollock, in the September 11, 1996 Wall Street Journal, wrote, 'What makes this recent spate of legal defectors noteworthy is the sheer number making the switch, and that they are moving into top corporate posts.'

A good example was Steven Goldstone, a senior partner at Davis Polk & Wardwell. In 1994 he earned about $1 million at the law firm. He had represented RJR Nabisco for several years, including a 1994 tobacco lawsuit. As the company's outside general counsel, Goldstone said he spent more than half his time on business strategy, not legal issues per se. Then in late 1995 Goldstone accepted an offer to become the CEO of RJR Nabisco Holdings Inc.

In the so-called New Economy, high-technology firms required all kinds of legal support, so the nation's largest law firms opened new offices to meet the demands of their clients. For example, in 1999 Davis Polk & Wardwell, along with two other New York firms, Shearman & Sterling and Simpson Thacher & Bartlett, started branch offices in Silicon Valley. Davis Polk's high-tech clients included ComCast, Compaq Computer, and Texas Instruments.

In March 2000 Davis Polk & Wardwell represented its long-term client Morgan Stanley & Company Incorporated and other underwriters of Crayfish Company, Ltd. in its initial public offering (IPO). Crayfish was a 'Japanese e-mail hosting services provider,' according to the Davis Polk web site.

Although Davis Polk & Wardwell continued to serve both Morgan Stanley and J.P. Morgan, the two firms formerly united as the House of Morgan, their relationships had changed. For decades Wall Street law firms had very close institutional ties to investment banks. 'When I started 30 years ago, [these relationships] were virtually monogamous,' said Francis J. Morison, Davis Polk's managing partner in the Investment Dealers' Digest of November 3, 1997. But as laws became more complex and law firms specialized, such long-term ties dwindled as clients turned to the firms that possessed the expertise they needed for specific situations.

In the 1990s Davis Polk & Wardwell advised clients in more than 700 mergers, acquisitions, and joint ventures valued at more than $1 trillion. Some of its corporate clients in 2000 were Banco Santander Central Hispano; Comcast Corporation; Network Solutions, Inc.; ImClone Systems Incorporated; Quintus Corporation; Bass PLC; Mission Critical Software Inc.; Emerson Electric Company; Salomon Smith Barney; Merrill Lynch International; Warburg Dillon Read; Credit Suisse First Boston; Canadian National Railway; and Pharmacia & Upjohn.

Davis Polk & Wardwell continued to be one of the major law firms in the late 1990s. The American Lawyer in July/August 1998 ranked Davis Polk as the United States' sixth largest law firm, based on its 1997 gross revenue of $390 million. At that point it had 447 lawyers.

In November 1998 the same magazine, in cooperation with London's Legal Business, published its first ranking of the world's largest law firms. Davis Polk ranked number eight based on its 1997 gross revenue, but it did not rank in the top 50 based on the number of lawyers. Its revenue per lawyer of $870,000 was the third highest in the world.

Based on its 1998 gross revenues of $435 million, Davis Polk & Wardwell ranked number five in the United States, according to the American Lawyer in July 1999. In 1999 the firm slipped to number eight based on its gross revenues of $460 million. Its profits per partner in 1999 were $1.61 million, a 63 percent increase since 1990 that made Davis Polk one of the ten most successful American law firms in the 1990s.

At the dawn of the new millennium, Davis Polk & Wardwell faced numerous challenges. Law firms were getting larger and larger, whether from mergers or internal recruiting, thus making management issues more crucial. Law firms faced competition from accounting firms that hired many lawyers, raising the possibility of the American bar allowing multidisciplinary practices involving lawyers, accountants, and other professionals. Rapid technological change, involving such issues as intellectual property conflicts and computer security for Internet transactions, also gave Davis Polk & Wardwell and other large law firms plenty to deal with in the Information Age.

Principal Operating Units: Corporate; Tax; Litigation; Trusts Real Estate.

Principal Competitors: Baker & McKenzie; Skadden, Arps, Slate, Meagher & Flom; Debevoise & Plimpton.

Chronology

• Key Dates:

• 1849: Francis N. Bangs starts his law practice.
• 1880: Francis L. Stetson joins firm and becomes its main partner in the late 1800s.
• 1921: John W. Davis becomes head of firm renamed Davis, Polk, Wardwell, Gardiner & Reed.
• 1962: The Paris office is started.
• 1973: Firm opens its London office.
• 1987: Firm opens its new Tokyo office.
• 1991: The Frankfurt office is opened.
• 1993: The Hong Kong office is established.
• 1999: Davis Polk ranks as eighth largest U.S. law firm, based on revenues.