"MARY GOT A QUARTER."

1.

Joe Flom is the last living "named" partner of the law firm Skadden, Arps, Slate, Meagher and Flom. He has a corner office high atop the Conde Nast tower in Manhattan. He is short and slightly hunched. His head is large, framed by long prominent ears, and his narrow blue eyes are hidden by oversize aviator-style glasses. He is slender now, but during his heyday, Flom was extremely overweight. He waddles when he walks. He doodles when he thinks. He mumbles when he talks, and when he makes his way down the halls of Skadden, Arps, conversations drop to a hush.

Flom grew up in the Depression in Brooklyn's Borough Park neighborhood. His parents were Jewish immigrants from Eastern Europe. His father, Isadore, was a union organizer in the garment industry who later went to work sewing shoulder pads for ladies' dresses. His mother worked at what was called piecework-doing applique at home. They were desperately poor. His family moved nearly every year when he was growing up because the custom in those days was for landlords to give new tenants a month's free rent, and without that, his family could not get by.

In junior high school, Flom took the entrance exam for the elite Townsend Harris public high school on Lexington Avenue in Manhattan, a school that in just forty years of existence produced three Nobel Prize winners, six Pulitzer Prize winners, and one Supreme Court Justice, not to mention George Gershwin and Jonas Salk, the inventor of the polio vaccine. He got in. His mother would give him a dime in the morning for breakfast-three donuts, orange juice, and coffee at Nedick's. After school, he pushed a hand truck in the garment district. He did two years of night school at City College in upper Manhattan-working during the days to make ends meet-signed up for the army, served his time, and applied to Harvard Law School.

"I wanted to get into the law since I was six years old," Flom says. He didn't have a degree from college. Harvard took him anyway. "Why? I wrote them a letter on why I was the answer to sliced bread," is how Flom explains it, with characteristic brevity. At Harvard, in the late 1940s, he never took notes. "All of us were going through this first year idiocy of writing notes carefully in the classroom and doing an outline of that, then a condensation of that, and then doing it again on onionskin paper, on top of other paper," remembers Charles Haar, who was a classmate of Flom's. "It was a routinized way of trying to learn the cases. Not Joe. He wouldn't have any of that. But he had that quality which we always vaguely subsumed under 'thinking like a lawyer.' He had the great capacity for judgment."

Flom was named to the Law Review-an honor reserved for the very top students in the class. During "hiring season," the Christmas break of his second year, he went down to New York to interview with the big corporate law firms of the day. "I was ungainly, awkward, a fat kid. I didn't feel comfortable," Flom remembers. "I was one of two kids in my class at the end of hiring season who didn't have a job. Then one day, one of my professors said that there are these guys starting a firm. I had a visit with them, and the entire time I met with them, they were telling me what the risks were of going with a firm that didn't have a client. The more they talked, the more I liked them. So I said, What the hell, I'll take a chance. They had to scrape together the thirty-six hundred a year, which was the starting salary." In the beginning, it was just Marshall Skadden, Leslie Arps-both of whom had just been turned down for partner at a major Wall Street law firm-and John Slate, who had worked for Pan Am airlines. Flom was their associate. They had a tiny suite of offices on the top floor of the Lehman Brothers Building on Wall Street. "What kind of law did we do?" Flom says, laughing. "Whatever came in the door!"

In 1954, Flom took over as Skadden's managing partner, and the firm began to grow by leaps and bounds. Soon it had one hundred lawyers. Then two hundred. When it hit three hundred, one of Flom's partners-Morris Kramer-came to him and said that he felt guilty about bringing in young law school graduates. Skadden was so big, Kramer said, that it was hard to imagine the firm growing beyond that and being able to promote any of those hires. Flom told him, "Ahhh, we'll go to one thousand." Flom never lacked for ambition.

Today Skadden, Arps has nearly two thousand attorneys in twenty-three offices around the world and earns well over $1 billion a year, making it one of the largest and most powerful law firms in the world. In his office, Flom has pictures of himself with George Bush Sr. and Bill Clinton. He lives in a sprawling apartment in a luxurious building on Manhattan's Upper East Side. For a period of almost thirty years, if you were a Fortune 500 company about to be taken over or trying to take over someone else, or merely a big shot in some kind of fix, Joseph Flom has been your attorney and Skadden, Arps has been your law firm-and if they weren't, you probably wished they were.

2.

I hope by now that you are skeptical of this kind of story. Brilliant immigrant kid overcomes poverty and the Depression, can't get a job at the stuffy downtown law firms, makes it on his own through sheer hustle and ability. It's a rags-to-riches story, and everything we've learned so far from hockey players and software billionaires and the Termites suggests that success doesn't happen that way. Successful people don't do it alone. Where they come from matters. They're products of particular places and environments.

Just as we did, then, with Bill Joy and Chris Langan, let's start over with Joseph Flom, this time putting to use everything we've learned from the first four chapters of this book. No more talk of Joe Flom's intelligence, or personality, or ambition, though he obviously has these three things in abundance. No glowing quotations from his clients, testifying to his genius. No more colorful tales from the meteoric rise of Skadden, Arps, Slate, Meagher and Flom.

Instead, I'm going to tell a series of stories from the New York immigrant world that Joe Flom grew up in-of a fellow law student, a father and son named Maurice and Mort Janklow, and an extraordinary couple by the name of Louis and Regina Borgenicht-in the hopes of answering a critical question. What were Joe Flom's opportunities? Since we know that outliers always have help along the way, can we sort through the ecology of Joe Flom and identify the conditions that helped create him?

We tell rags-to-riches stories because we find something captivating in the idea of a lone hero battling overwhelming odds. But the true story of Joe Flom's life turns out to be much more intriguing than the mythological version because all the things in his life that seem to have been disadvantages-that he was a poor child of garment workers; that he was Jewish at a time when Jews were heavily discriminated against; that he grew up in the Depression-turn out, unexpectedly, to have been advantages. Joe Flom is an outlier. But he's not an outlier for the reasons you might think, and the story of his rise provides a blueprint for understanding success in his profession. By the end of the chapter, in fact, we'll see that it is possible to take the lessons of Joe Flom, apply them to the legal world of New York City, and predict the family background, age, and origin of the city's most powerful attorneys, without knowing a single additional fact about them. But we're getting ahead of ourselves.

Lesson Number One: The Importance of Being Jewish

3.

One of Joe Flom's classmates at Harvard Law School was a man named Alexander Bickel. Like Flom, Bickel was the son of Eastern European Jewish immigrants who lived in the Bronx. Like Flom, Bickel had gone to public school in New York and then to City College. Like Flom, Bickel was a star in his law school class. In fact, before his career was cut short by cancer, Bickel would become perhaps the finest constitutional scholar of his generation. And like Flom and the rest of their law school classmates, Bickel went to Manhattan during "hiring season" over Christmas of 1947 to find himself a job.

His first stop was at Mudge Rose, down on Wall Street, as traditional and stuffy as any firm of that era. Mudge Rose was founded in 1869. It was where Richard Nixon practiced in the years before he won the presidency in 1968. "We're like the lady who only wants her name in the newspaper twice-when she's born and when she dies," one of the senior partners famously said. Bickel was taken around the firm and interviewed by one partner after another, until he was led into the library to meet with the firm's senior partner. You can imagine the scene: a dark-paneled room, an artfully frayed Persian carpet, row upon row of leather-bound legal volumes, oil paintings of Mr. Mudge and Mr. Rose on the wall.

"After they put me through the whole interview and everything," Bickel said many years later, "I was brought to [the senior partner], who took it upon himself to tell me that for a boy of my antecedents"-and you can imagine how Bickel must have paused before repeating that euphemism for his immigrant background-"I certainly had come far. But I ought to understand how limited the possibilities of a firm like his were to hire a boy of my antecedents. And while he congratulated me on my progress, I should understand he certainly couldn't offer me a job. But they all enjoyed seeing me and all that."

It is clear from the transcript of Bickel's reminiscences that his interviewer does not quite know what to do with that information. Bickel was by the time of the interview at the height of his reputation. He had argued a case before the Supreme Court. He had written brilliant books. Mudge Rose saying no to Bickel because of his "antecedents" was like the Chicago Bulls turning down Michael Jordan because they were uncomfortable with black kids from North Carolina. It didn't make any sense.

"But for stars?" the interviewer asked, meaning, Wouldn't they have made an exception for you?

Bickel: "Stars, schmars..."

In the 1940s and 1950s, the old-line law firms of New York operated like a private club. They were all headquartered in downtown Manhattan, in and around Wall Street, in somber, granite-faced buildings. The partners at the top firms graduated from the same Ivy League schools, attended the same churches, and summered in the same oceanside towns on Long Island. They wore conservative gray suits. Their partnerships were known as "white-shoe" firms-in apparent reference to the white bucks favored at the country club or a cocktail party, and they were very particular in whom they hired. As Erwin Smigel wrote in The Wall Street Lawyer, his study of the New York legal establishment of that era, they were looking for:

lawyers who are Nordic, have pleasing personalities and "clean-cut" appearances, are graduates of the "right schools," have the "right" social background and experience in the affairs of the world, and are endowed with tremendous stamina. A former law school dean, in discussing the qualities students need to obtain a job, offers a somewhat more realistic picture: "To get a job [students] should be long enough on family connections, long enough on ability or long enough on personality, or a combination of these. Something called acceptability is made up of the sum of its parts. If a man has any of these things, he could get a job. If he has two of them, he can have a choice of jobs; if he has three, he could go anywhere."

Bickel's hair was not fair. His eyes were not blue. He spoke with an accent, and his family connections consisted, principally, of being the son of Solomon and Yetta Bickel of Bucharest, Romania, by way, most recently, of Brooklyn. Flom's credentials were no better. He says he felt "uncomfortable" when he went for his interviews downtown, and of course he did: he was short and ungainly and Jewish and talked with the flat, nasal tones of his native Brooklyn, and you can imagine how he would have been perceived by some silver-haired patrician in the library. If you were not of the right background and religion and social class and you came out of law school in that era, you joined some smaller, second-rate, upstart law firm on a rung below the big names downtown, or you simply went into business for yourself and took "whatever came in the door"-that is, whatever legal work the big downtown firms did not want for themselves. That seems horribly unfair, and it was. But as is so often the case with outliers, buried in that setback was a golden opportunity.

4.

The old-line Wall Street law firms had a very specific idea about what it was that they did. They were corporate lawyers. They represented the country's largest and most prestigious companies, and "represented" meant they handled the taxes and the legal work behind the issuing of stocks and bonds and made sure their clients did not run afoul of federal regulators. They did not do litigation; that is, very few of them had a division dedicated to defending and filing lawsuits. As Paul Cravath, one of the founders of Cravath, Swaine and Moore, the very whitest of the white-shoe firms, once put it, the lawyer's job was to settle disputes in the conference room, not in the courtroom. "Among my classmates at Harvard, the thing that bright young guys did was securities work or tax," another white-shoe partner remembers. "Those were the distinguished fields. Litigation was for hams, not for serious people. Corporations just didn't sue each other in those days."

What the old-line firms also did not do was involve themselves in hostile corporate takeovers. It's hard to imagine today, when corporate raiders and private-equity firms are constantly swallowing up one company after another, but until the 1970s, it was considered scandalous for one company to buy another company without the target agreeing to be bought. Places like Mudge Rose and the other establishment firms on Wall Street would not touch those kinds of deals.

"The problem with hostile takeovers is that they were hostile," says Steven Brill, who founded the trade magazine American Lawyer. "It wasn't gentlemanly. If your best buddy from Princeton is the CEO of Company X, and he's been coasting for a long time, and some corporate raider shows up and says this company sucks, it makes you uncomfortable. You think, If he goes, then maybe I go too. It's this whole notion of not upsetting the basic calm and stable order of things."*

The work that "came in the door" to the generation of Jewish lawyers from the Bronx and Brooklyn in the 1950s and 1960s, then, was the work the white-shoe firms disdained: litigation and, more important, "proxy fights," which were the legal maneuvers at the center of any hostile-takeover bid. An investor would take an interest in a company; he would denounce the management as incompetent and send letters to shareholders, trying to get them to give him their "proxy" so he could vote out the firm's executives. And to run the proxy fight, the only lawyer the investor could get was someone like Joe Flom.

In Skadden, the legal historian Lincoln Caplan describes that early world of takeovers:

The winner of a proxy contest was determined in the snake pit. (Officially, it was called the counting room.) Lawyers for each side met with inspectors of elections, whose job it was to approve or eliminate questionable proxies. The event was often informal, contentious and unruly. Adversaries were sometimes in T-shirts, eating watermelon or sharing a bottle of scotch. In rare cases, the results of the snake pit could swing the outcome of a contest and turn on a single ballot.

Lawyers occasionally tried to fix an election by engineering the appointment of inspectors who were beholden to them; inspectors commonly smoked cigars provided by each side. Management's lawyer would contest the proxies of the insurgents ("I challenge this!") and vice versa.... Lawyers who prevailed in the snake pit excelled at winging it. There were lawyers who knew more about the rules of proxy contests, but no one was better in a fight than Joe Flom...

Flom was fat (a hundred pounds overweight then, one lawyer said... ), physically unattractive (to a partner, he resembled a frog), and indifferent to social niceties (he would fart in public or jab a cigar close to the face of someone he was talking to, without apology). But in the judgment of colleagues and of some adversaries, his will to win was unsurpassed and he was often masterful.

The white-shoe law firms would call in Flom as well whenever some corporate raider made a run at one of their establishment clients. They wouldn't touch the case. But they were happy to outsource it to Skadden, Arps. "Flom's early specialty was proxy fights, and that was not what we did, just like we don't do matrimonial work," said Robert Rifkind, a longtime partner at Cravath, Swaine and Moore. "And therefore we purported not to know about it. I remember once we had an issue involving a proxy fight, and one of my senior corporate partners said, Well, let's get Joe in. And he came to a conference room, and we all sat around and described the problem and he told us what to do and he left. And I said, 'We can do that too, you know.' And the partner said, 'No, no, no, you can't. We're not going to do that.' It was just that we didn't do it."

Then came the 1970s. The old aversion to lawsuits fell by the wayside. It became easier to borrow money. Federal regulations were relaxed. Markets became internationalized. Investors became more aggressive, and the result was a boom in the number and size of corporate takeovers. "In nineteen eighty, if you went to the Business Roundtable [the association of major American corporate executives] and took surveys about whether hostile takeovers should be allowed, two-thirds would have said no," Flom said. "Now, the vote would be almost unanimously yes." Companies needed to be defended against lawsuits from rivals. Hostile suitors needed to be beaten back. Investors who wanted to devour unwilling targets needed help with their legal strategy, and shareholders needed formal representation. The dollar figures involved were enormous. From the mid-1970s to the end of the 1980s, the amount of money involved in mergers and acquisitions every year on Wall Street increased 2,000 percent, peaking at almost a quarter of a trillion dollars.

All of a sudden the things that the old-line law firms didn't want to do-hostile takeovers and litigation-were the things that every law firm wanted to do. And who was the expert in these two suddenly critical areas of law? The once marginal, second-tier law firms started by the people who couldn't get jobs at the downtown firms ten and fifteen years earlier.