Sidley Austin Brown & Wood Business Information, Profile, and History

History of Sidley Austin Brown & Wood

One of the world's largest law firms, Chicago-based Sidley Austin Brown & Wood is a legal powerhouse with several branch offices in the United States, Asia, Europe, and the Middle East. The firm has a long history in traditional industries such as electrical utilities, communications, and railroads. After World War II, it began serving clients in new areas such as healthcare, environmental affairs, and high technology. Its specialties cover the full range of a modern law practice, from intellectual property and real estate to mergers and acquisitions and complex financial transactions. As more businesses expand overseas, Sidley Austin Brown & Wood plays a major role in the world's increasingly globalized economy.

Origins

In 1866 Norman Williams and John Leverett Thompson fulfilled an adolescent commitment when they started their law partnership of Williams & Thompson in Chicago. In their first few years their general practice included collecting debts, litigation, real estate work in the booming city, and writing wills. In 1867 Williams was one of the incorporators of Pullman's Palace Car Company, the Chicago company that became famous for making railroad sleeping cars.

The young partnership in 1969 began its long-term representation of Western Union Telegraph Company when it moved its central division headquarters from Cleveland to Chicago. After Walter L. Newberry died in 1868, the law firm successfully represented Mrs. Newberry in estate litigation. That allowed the Newberry family to use its wealth to build Chicago's Newberry Library, which was officially chartered in 1894.

After the Great Chicago Fire destroyed much of the city in 1871, the firm represented many insurance companies, including the Equitable Life Assurance Society of the United States, which remained a client for over a century. In 1874 the firm gained The Young Men's Christian Association (YMCA) as another long-term client.

The firm played a significant role in the young communications industry. It represented Western Electric Manufacturing Company and its successor Western Electric Company, which made equipment for Western Union and also became the nation's major manufacturer of telephone equipment in the 1880s. When Jay Gould instituted his so-called 'telegraph wars,' Williams & Thompson served Western Union as it tried to resist but eventually was taken over by Gould in 1881. In 1881 the law firm incorporated the Chicago Telephone Company, one of its major clients well into the 20th century.

The firm's utility practice included incorporating the Western Edison Light Company in 1882, shortly after Thomas Edison developed the first useful light bulb. In 1887 the firm incorporated Chicago Edison Company, which acquired the franchise of the earlier company. The firm also represented the Chicago Arc Light and Power Company in the late 1800s. Building on this experience, the firm continued to have a strong utility practice as it entered the next century.

Meanwhile, the firm helped railroads to expand. It helped the Atchison, Topeka and Santa Fe Railroad lay the legal foundations for its extension from Kansas City to Chicago in the 1880s. For example, it set up land purchases or leases for the railroad, and continued to represent it until 1893.

Shortly after the firm moved to the Tacoma Building in 1889, William P. Sidley joined the firm. He graduated from Williams College, earned his LL.B. from the Union College of Law, and also earned an M.A. from the Harvard Law School. Sidley later became the lead name partner and guided the firm through much of the 20th century.

Following the 1893 World's Columbian Exposition, the law firm helped found the Columbian Museum of Chicago as a permanent home for the exposition's numerous mineral, plant, animal, and anthropological items.

In the 1890s the Chicago firm represented the Illinois Steel Company until it was acquired by J. Pierpont Morgan's Federal Steel Company. Morgan in 1901 combined Federal Steel along with Andrew Carnegie's steel company to create U.S. Steel, the nation's first billion-dollar corporation.

The Partnership from 1900 to 1945

The law firm's growing corporate practice included a variety of services. In addition to helping companies become incorporated, buy and sell land, and deal with litigation, it also became involved in large scale financings. For example, in 1908 it represented the Chicago Telephone Company when it increased its capital stock from $20 million to $30 million, mortgaged its property to the First Trust and Savings Bank, and gained approval for $50 million in bonds. In 1910 the law firm represented Western Electric when it issued $15 million in bonds. Those two deals 'marked the firm's initial experience in large-scale public financing,' according to the firm's history book.

In the early 20th century, the law firm's corporate practice grew with the addition of the American Bicycle Company, American Linseed Company, and American Piano Company as new clients. With the 1890 Sherman Antitrust Act and other antitrust laws being enforced, the Chicago law firm defended its corporate clients against charges filed by the federal government.

In 1915 the firm gained a new full-time clerk or associate named Edwin C. Austin. Born in 1892, Austin graduated from the University of Wisconsin in 1912 and then in 1915 graduated as the top student from the Northwestern University Law School. Later chosen as a name partner, Austin remained a key figure in the firm for over 60 years.

When the firm then known as Holt, Cutting & Sidley celebrated its 50th anniversary in 1916, it had four partners, four clerks or associates, and ten staff employees. Half of its annual gross income of slightly under $100,000 came from two main clients: Western Electric Company and Chicago Telephone Company. Although still a small firm, its solid reputation was acknowledged by Charles S. Cutting, a former probate judge, serving two terms as the Chicago Bar Association's president.

Under Cutting's leadership, the firm represented numerous prominent Chicago citizens in wills and estate matters. After Richard W. Sears, cofounder of Sears, Roebuck & Company, died in 1914, the firm worked until 1931 to resolve Sears's estate matters. In 1923 the partnership assisted Edith Rockefeller McCormick, the daughter of John D. Rockefeller, when she established the Edith Rockefeller McCormick Trust. After she died in 1931, the firm spent 20 years resolving disputes concerning her estate. In 1932 the law firm handled the estate of William Wrigley, Jr., who had started his chewing gum business back in 1892 in Chicago.

In the 1920s, the law firm prospered as the city grew during America's business expansion. In 1920 it moved to offices in the newly constructed Roanoke Building on LaSalle Street, popularly known as Chicago's 'street of lawyers.' Chicago grew from 2.7 million to 3.4 million people during the 1920s.

In 1920 the firm assisted its long-term client Chicago Telephone Company to acquire the Central Union Telephone Company and then three weeks later change its name to the Illinois Bell Telephone Company. In the late 1920s it helped the Central Public Service Corporation acquire other companies and thus operate in 24 states and seven foreign countries. However, that client went bankrupt in the early years of the Great Depression.

After graduating from Northwestern University Law School, in 1926 Adlai E. Stevenson became the newest lawyer at the firm. Even as a young lawyer, Stevenson showed a strong interest in government service and foreign affairs. For example, he served in 1933 as the president of the Chicago Council on Foreign Relations, whose national organization often was headed by top partners at elite corporate law firms. In 1933 Stevenson left to work for President Franklin D. Roosevelt. In the years ahead he would work periodically for the law firm and in government service, eventually running unsuccessfully for president, thus becoming one of the law firm's most prominent lawyers.

After reaching its peak income in 1931, the firm's income by 1935 had decreased 40 percent. From the 1930s into the 1950s, it helped several railroads deal with bankruptcy and reorganization, including the Chicago and North Western Railway Company, Denver & Rio Grande Western, and the Wisconsin Central.

New Deal legislation of the 1930s led to more work for corporate law firms. After the government passed the Federal Securities Act of 1933, the law firm represented Halsey, Stuart & Company, its first underwriter under the new securities act.

The firm in the 1940s began its long-term representation of the A.C. Nielsen Company, which became most famous for its Nielsen Television Index Service made possible by using its 'Audimeter' device in selected representative homes. In 1941 the law firm included ten partners and 21 associates. During World War II, the firm like many others hired its first female lawyers to compensate for the men who had left to enter military or government service.

The Practice After World War II

The firm grew gradually in the postwar years, from 32 lawyers in 1966 to 48 in 1972. Starting in 1969 with its first branch office in Washington, D.C., the firm added several other offices both in the United States and other nations.

In 1972 Sidley & Austin's 100 lawyers merged with the 53 lawyers of Leibman, Williams, Bennett, Baird & Minow. The smaller firm had originated in 1945 when Robert F. Carney, G. Kenneth Crowell, and Morris I. Leibman formed the partnership of Carney, Crowell and Leibman.

New clients in the 1970s included the American Bar Association and also the American Medical Association as it fought against the Federal Trade Commission having regulatory power over it. In that decade the law firm also represented subsidiaries of the American Natural Resources Company as it developed the Great Plains Coal Gasification Project, the United States' first commercial plant that turned lignite coal into natural gas. Meanwhile, the firm increased its mergers and acquisitions practice when it helped International Minerals & Chemical Corporation acquire coal mines and other resources. One of its long-term nonprofit clients was Chicago's Northwestern University.

For decades law firms seldom let the outside world know about their internal affairs. Outsiders had available a list of partners and associates in the Martindale-Hubbell annual reference work, but little was available on their management, finances, and clients. Professional societies discouraged advertising or even cooperating with journalists or historians. For example, when Steven Brill in the late 1970s tried to find out Sidley & Austin's gross annual revenues, it was very difficult. His reporter for the American Lawyer had to call most of the Chicago law firm's 175 partners before one finally shared that information.

Brill's magazine and the National Law Journal pioneered modern legal journalism by shedding light on what had been more or less secret societies. With more comparative information about large law firms available, lawyers then increased their lateral career moves to firms that offered more financial opportunities. In addition, increased competition for the best lawyers resulted from growing corporations and a multitude of new government laws and regulations. Thus most large law firms grew even faster in the late 1970s and especially the 1980s.

Sidley & Austin's rapid growth paralleled the expansion of the Chicago Bar Association. By 1983 the firm had about 400 lawyers. Meanwhile, the CBA went from about 10,000 members in the mid-1970s to 17,638 in 1983. According to Terence C. Halliday, the CBA in 1983 with 'its budget of $4.4 million made it the richest and biggest of all metropolitan associations in the United States. In fact, the CBA budget in 1983 exceeded all but four of the fifty-six state bar associations.'

In 1983 former U.S. Solicitor General Rex Lee and Carter Phillips began to build Sidley & Austin's U.S. Supreme Court specialty. In the October 1998 ABA Journal, Phillips claimed that only the Chicago firm in 1983 was 'consciously and systematically pursuing those cases.' That was an important step, for by the late 1990s the Court had reduced the number of cases it reviewed and heard more cases handled by Supreme Court specialists.

When AT & T endured antitrust lawsuits that eventually broke up its monopoly of long-distance phone services, its general counsel was Sidley & Austin's Howard Trienens. Sol Linowitz reported that Trienens remained a Sidley & Austin partner, while preferring not to serve on AT & T's board of directors.

Due to charges of legal malpractice from representing Lincoln Savings, one of the many savings and loan institutions that failed in the 1980s, Sidley & Austin paid $7.5 million to settle those claims made by the federal government. At least five other corporate law firms also paid large amounts to settle other legal liability charges from their work in the S & L crisis, which received extensive media coverage. None of the law firms admitted any wrongdoing, according to Ralph Nader and Wesley J. Smith in their book No Contest: Corporate Lawyers and the Perversion of Justice in America.

The Firm in the 1990s and Beyond

When Commonwealth Edison's exclusive energy contract with Chicago was up for renewal in 1990, the utility represented by Sidley & Austin attorneys demanded and received a secrecy agreement that prevented the people of Chicago from seeing any records the utility deemed confidential, although city government officials could look at them. After considerable political criticism, Commonwealth Edison allowed public and media access to most documents it had marked confidential. That led to the city renewing the utility's contract. Ralph Nader and Wesley J. Smith cited Sidley & Austin's behavior in this case as an example of how big law firms help corporations at the expense of average citizens. They argued in their 1996 book that the 'imbalances between real people and artificial persons called corporations are growing fast.'

In 1994 Sidley & Austin lawyer Scott Bass helped write the Dietary Supplement Health and Education Act. Since that law did not cover foods, later in the decade some companies were adding herbs and other supplements to what were called functional foods. However, Bass said in a 1999 New York Times article that, 'It's not valid to have a box of cereal that says `Dietary Supplement.'

Other clients in the 1990s and after the turn of the century included Health Alliance, Amoco, and Citicorp. It also helped Microsoft's main outside law firm Sullivan & Cromwell when the software giant was accused of antitrust violations.

In November 1998 the American Lawyer, assisted by London's Legal Business, published its first rankings of the world's major law firms. Based on its 811 lawyers, Sidley & Austin ranked number 12. Only 5 percent of its lawyers were outside the United States, unlike Baker & McKenzie, the most internationalized firm, with 80 percent outside of its home country. Based on 1997 gross revenue of $360 million, Sidley & Austin received a number 11 ranking.

With Baker & McKenzie having over 2,000 lawyers and London's Clifford Chance having about 3,000 lawyers, Sidley & Austin in early 2001 faced challenges from other big law firms competing for the best lawyers and clients. Thus, as part of a consolidating trend, in 2001 Sidley & Austin combined its 900 lawyers with Brown & Wood's 400 lawyers who worked out of offices in New York, Los Angeles, San Francisco, Beijing, Hong Kong, and London.

Principal Competitors: Baker & McKenzie; Mayer, Brown & Platt; Skadden, Arps, Slate, Meagher & Flom.

Chronology

• Key Dates:

• 1866: Partnership of Williams & Thompson is founded in Chicago.
• 1889: Partnership changes its name to Williams, Holt & Wheeler.
• 1900: Firm becomes known as Holt, Wheeler & Sidley.
• 1913: Holt, Cutting & Sidley is the firm's new name.
• 1919: Partnership name becomes Cutting, Moore & Sidley.
• 1937: Sidley, McPherson, Austin & Burgess becomes the partnership's new name.
• 1944: Firm adopts the name of Sidley, Austin, Burgess & Harper.
• 1950: Sidley, Austin, Burgess & Smith is the firm's new name.
• 1967: Firm chooses Sidley & Austin as its name
• 1969: Firm establishes a branch office in Washington, D.C.
• 1972: Firm merges with Leibman, Williams, Bennett, Baird & Minow.
• 1974: Firm opens its London office.
• 1980: Los Angeles office opens through a merger with the 11-lawyer firm of Shutan & Trost.
• 1982: Singapore and New York offices are opened.
• 1990: Partnership opens its Tokyo office.
• 1996: Dallas office is opened.
• 1998: Seattle office is started.
• 2001: Sidley & Austin merges with the 400-lawyer firm of Brown & Wood.