When the partners at Milbank, Tweed, Hadley & McCloy gather with their spouses and significant others next week for their scheduled resort retreat, they will hear the annual state of the firm speech delivered by a new firm chair for the first time since 1996. Scott Edelman, 49, a litigator and the newly elected chair, will address his partners, replacing Mel Immergut, 66, the longest-serving head of any Am Law 100 firm in New York.
The transition, carefully planned and set in motion four years ago when Edelman was installed as vice-chairman, and Immergut declared him his designated successor, is meant to be seamless. “My hope is that I will walk out of the building and no one will notice that anything has changed,” says Immergut. But the handover marks the end of a remarkable run for one of the oldest firms in the city, a firm whose future was not guaranteed when Immergut, then a mid-career corporate lawyer with a business school education and a gift for client development, took the reins.
In 1996 Milbank was in the throes of a thorny and public transition that had dragged on for a decade. It was suffering from retirements, lateral departures, and, most serious of all, a troubling dependence on what was then the Chase Manhattan Bank. Chase and other Rockefeller family interests accounted for 10 percent of the firm’s billings, down from a high of 40 percent a decade earlier. Shortly after Immergut took over, The American Lawyer put him on its cover quoting an anonymous rival who sniffed that Milbank was “the firm that time forgot.”
Sniff no more. During Immergut’s tenure, Milbank reestablished itself as an elite player in the high-end legal market by attracting business-bearing laterals, developing new practices, and opening focused outposts in Europe, Asia, and Latin America. The numbers tell the story. ALM’s research arm, ALM Legal Intelligence, ran a comparison of Milbank’s record between 1996 and 2011 and those of seven peer firms in New York: Cravath, Swaine & Moore; Davis Polk & Wardwell; Debevoise & Plimpton; Paul, Weiss, Rifkind, Wharton & Garrison; Simpson Thacher & Bartlett; Sullivan & Cromwell; and Willkie Farr & Gallagher. By each of ALI’s measures, Milbank beat the averages of the others. Gross revenue increased 243 percent (average: 202 percent); profits up 250 percent (average 138 percent) revenue per lawyer up 84 percent (average 64 percent). “Part of the fun for me has been making the firm more profitable,” says Immergut. In 2011, the last year for which there is full data available, Milbank’s profits per partner were $2.57 million.
In Immergut’s view, “the firm is beyond-belief different,” from when he took over. Part of the difference is personnel. Of the small circle of elite New York firms ALI compared to Milbank, it has been the most aggressive recruiter of lateral talent. Three of the five executive committee members transferred from other firms—including Edelman, who had stints at Wachtell, Lipton, Rosen & Katz and the U.S. attorney’s office in Manhattan before joining Milbank. Part of the difference is reach: 20 percent of the firm’s lawyers are now based overseas, and Immergut says that “fifty cents of every dollar” in revenue has an international aspect. And part is the firm’s practice mix, particularly the reinvigoration of its longtime creditor-side bankruptcy practice (led by lateral Dennis Dunne, who joined from Kirkland & Ellis) and litigation (led by James Benedict from Clifford Chance, who arrived with a significant mutual funds practice.) According to Immergut, the bankruptcy and litigation groups now account for one-third of Milbank’s revenues. “We’re much better balanced now,” says Immergut, “Once we didn’t have much of a litigation practice. Now we have 30 litigation and 13 restructuring partners.” The firm has also weaned itself from its Chase dependency. Though still a major client, the bank now accounts for a little more than 3 percent of revenue. Last year’s biggest client, at 5 percent of revenue, was Goldman Sachs, according to Immergut.
During Immergut’s tenure, Milbank also improved its pro bono efforts markedly. “Mel has been very supportive of the program,” says Joseph Genova, a litigation partner who runs the firm’s pro bono effort. “He was at the helm when we went from having a shabby program to a first-rate one.” According to statistics compiled by The American Lawyer and ALM Legal Intelligence, Milbank had the worst pro bono record of its eight-firm peer group in 1996. By 2011, it was first in that group and fifth overall. The firm has a 20-hour-per-year requirement for all lawyers, and in 2011 those lawyers averaged 114 hours. The firm is notable for continuing to take large cases, including death penalty matters, as well as sponsoring externships for associates to work at public interest organizations. “Mel helped push the whole firm’s culture on pro bono,” says Genova. “It’s now part of our fabric.” When asked if he intended to maintain the firm’s program, Edelman answered in one word: “Yes.”
For all the success, there have been rough spots. The most embarrassing was the prosecution of former partner John Gellene for failing to disclose conflicts in a bankruptcy proceeding. Gellene, who was convicted on three counts and given a 15-month prison sentence in 1998, had been a problem for Milbank before these charges. According to a Wall Street Journal report, he had practiced at Milbank for nine years in the 1980s without finishing his licensing process. He passed the New York State Bar exam, but failed to complete the required paperwork. He briefly left the firm in 1990, obtained his license, then rejoined as a partner. (The Gellene case is fully examined in an important book by Georgetown Law professor Milton Regan called Eat What You Kill: The Fall of a Wall Street Lawyer.)
There have also been lateral losses. Ted Burke and three other partners decamped for Freshfields in 1998. Burke, whose loss Immergut still regrets, is now the global managing partner for the London-headquartered global giant. Two years ago, Milbank lost Michael Fitzgerald and a small group of Latin America–focused corporate partners to Dewey & LeBouef. (Fitzgerald—who is now a partner at Paul Hastings— alleged in a recent bankruptcy court filing that Dewey owed him nearly $38 million in compensation and retirement guarantees. He subsequently settled with the now-defunct firm’s estate.)
Burke remains a friend and fan of Immergut’s. “Milbank had to reinvent itself,” he says. “Looking back from the outside, the firm has had continuous success for fifteen years on the client side and the people side. The firm has been very well run and that starts at the top.”
Immergut likes to emphasize that he runs a professionally managed firm and part of that was planning for a transition. When he took over in 1996 he said there was no transition plan for him other than his one year as an elected member of the firm’s executive committee. He thought this time Milbank deserved the “luxury” of a planned process, one that began four years ago with Edelman’s selection as vice-chairman. Since then, Edelman has been directly involved in running the firm, recruiting laterals and planning for the future. Over the four years, the partners took two votes to confirm Edelman’s ascension, the latest last week. “This has worked exactly as we planned,” Immergut says.
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At 49, Edelman is the same age Immergut was when he became chair. In a meeting in Milbank’s midtown annex, high above the Four Seasons Pool Room in the Seagram Building, he reviewed his path to the firm’s head table. He was an assistant U.S attorney who’d tried criminal cases against a litany of big-reputation defense counsel when he got a call from Larry Lederman at Milbank. Lederman was a rarity—a business-generating partner at Wachtell who left after an internal struggle. Lederman asked Edelman to join him at Milbank, which at that point had a tiny litigation department. As Edelman recalls, the pitch boiled down to: “If you come, you will be the litigator on my matters here.” Lederman kept his word. “Clients used to say, ‘Who’s this kid?’ ” Edelman recalls. “And he’d say: ‘He’s your lawyer.’ So I was.”
The first matter Edelman took on at Milbank was a takeover battle that involved Tyson Foods. Lederman led the team; Tyson was Immergut’s client. “I worked with Larry and Mel, and it was fun,” he says. Edelman noticed a change in the firm when Immergut took over two years after he joined. “We had a bunch of high-energy people who were focused on business development,” he says. “That only increased with time.”
As his practice expanded into white-collar and commercial matters, Edelman says his interest in firm management was building too. In 1999 he ran for Milbank’s executive committee and lost. He tried again three years later and this time was elected. As his first three-year term was ending he said Immergut urged him to run again. And they began talking about the future. Milbank’s executive committee has a two-term limit. To keep Edelman in management, the firm created a vice-chairman role for him in 2009. “I wanted an active role in shaping the firm,” Edelman says. “Over a four-year transition I wanted to become more and more involved in the running of the firm.”
He says he was “extremely active” with laterals. Milbank attracted a four-partner leveraged finance practice group from Latham & Watkins and three high-yield debt partners from Weil, Gotshal & Manges and two corporate partners from Linklaters in London. He says he and Immergut also supported a special education program for associates at Harvard that was the brainchild of Norbert Rieger, a corporate transactions partner in Munich who had joined from Freshfields. The program, now called Milbank@Harvard, sends fourth- through seventh-year associates to Harvard Law School for a week at a time to take classes from business and law school professors.
Edelman faces some obvious challenges. He wants to keep practicing. “Part of my DNA is being a lawyer,” he says. “I think I’ll be more effective with clients and partners that way.” Immergut was a full-time chairman. “Mel was more of a businessman,” he says. “I’m different.”
Edelman wants the firm to get bigger. Like Immergut, he wants Milbank to remain a “small big firm.” But at roughly 600 lawyers, he sees gaps and opportunities in antitrust, corporate, and real estate among other areas and wants to fill them.
He wants the firm to maintain its financial position. “Like other top firms in New York, our rates are set at the top of the market,” he says. “We’ve tried to maintain our prices as much as possible. But all firms are dealing with this issue now.” Milbank’s rates are high. According to fee requests in bankruptcy filings, senior partners pegged their hourly rates $825–$850 in 2006. In applications last year, those rates had risen to $1,125–$1,140—roughly a 35 percent increase.
Milbank, Edelman says, isn’t a firm for every client to turn to for every job. “Clients come to us because they want us for the particular work. They come here with high-impact matters, looking for value-added performance and fair pricing. We have to provide it. That was Mel’s strategy, and I certainly endorse it.”
Dennis Dunne runs Milbank’s bankruptcy and restructuring practice. Over the last decade his group has represented the creditor committees in both the massive Enron bankruptcy and then the Lehman collapse. Through most of that period, those matters led Milbank’s annual billings list. Dunne equates that work to clients wheeled into an emergency room: no one talks about expense budgets while they’re bleeding. But he say it’s an open question whether the clients who financed the great law firm financial surge from 1992 to 2008 will be as active or as prized in the future. “The firms who get the first call will do just fine,” he says. “If you’re the third call, that’s much less clear.”
There’s complexity on all sides of that formulation. “I’ve seen a number of situations where a client is trying to drive to a particular rate. And they threaten not to use a firm if it doesn’t agree,” says Dunne. “But then there are the client’s financial people, the ones who are actually doing the deal. They want to use one or two firms they’re comfortable with. So there’s internal tension on the client side as well.”
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Immergut says he’s ready to go. His immaculate office reflects his varied passions: There’s a muted television monitor tuned to a news channel; a set of photos from trips he’s taken on U.S. Navy craft to exotic locales, and above his couch, a stunning, mounted 104-pound silver Wahoo he caught in February 2000 off San Salvador in the eastern Bahamas.
He’s part of a generation of law firm leaders retiring in the next few years, and he’s as clear as any about his next steps. He’ll teach a course in law firm management at Columbia. He’ll continue to serve on the 21-member Defense Business Board, a group that advises the U.S. secretary of Defense, and on the board of the Legal Aid Society of New York. He’s mulling some corporate and private equity board opportunities. “I’m a little worried that I’m going to get overcommitted,” he says.
The only opportunity he doesn’t have is the one wanted the most—accepting a high-level job in a Mitt Romney administration. Immergut, a big-ticket fund-raiser for the failed presidential candidate, was in Park City, Utah, last June for the top Romney donor gathering that featured briefings by Karl Rove and Condoleezza Rice. And he was in Boston for the election night celebration that wasn’t. “This was the biggest disappointment of my life,” he says with a sigh.
He’s bounced back and moved on. As his friend and one time protégé Ted Burke puts it, “Mel’s a very secure person, and a very good-natured man. He knows who he is. He’s positive and durable.”
He has one more speech to give to the partners at the close of the partner retreat next week at the St. Regis in Bal Harbour. For one more time at Milbank, Mel Immergut will have the last word.