The lion in winter: Joe Flom at 75.

• Author: Kaback, Hoffer
• Position: Includes related article on Flom's views on mergers and acquisitions in the 1980s - Interview with senior partner of top law firm Skadden, Arps, Slate, Meagher & Flom

As the preeminent legal player in the postwar takeover world, Joseph Flom helped shape the face of American business.

Ask seasoned takeover players to fill in this blank: Mr. Television is to Milton Berle as Mr. Takeover Lawyer is to ________. The answer should be "Joe Flom."

Joseph H. Flom, age 75, is the senior partner of Skadden, Arps, Slate, Meagher & Flom. Skadden Arps has been the principal legal force in the takeover and proxy contest world for 40 years. For a significant portion of that time, and until younger M&A partners at Skadden came into their own, Skadden Arps was Joe Flom, and Joe Flom was Skadden.

Nowadays, several law firms possess both experience and expertise in contested takeovers (a far different animal from consensual deals). Partners at Skadden - and at its principal rival, Wachtell, Lipton, Rosen & Katz - will always believe that their own firm is la creme de la creme of the takeover business. They are far from alone in that view. Nevertheless, other law firms do get hired, with some regularity, by companies on or under attack. Indeed, according to a May 1995 Wall Street Journal story (citing statistics compiled by Corporate Control Alert), Skadden's share of M&A legal business went from 35% in 1986 to 22% in 1994.

It was not always thus. For a significant part of the 1970s and 1980s, Skadden and Wachtell were the two main - and the only really major - players. They enjoyed quasi-monopolistic status in the market for legal representation in hostile deals. What companies that hired Skadden or Wachtell Lipton got for their money was the highest quality, cutting-edge legal talent available in that area.

Wachtell Lipton is about one-tenth the size of Skadden. Pound for pound, it is undoubtedly one of the best law firms in the world. Martin Lipton, Herbert Wachtell, and their partners have been on the opposite side of the table from Flom and Skadden many, many times. (Imagine 20 years of Sugar Ray Robinson versus Carmen Basilio.) And it was Wachtell Lipton that developed the poison pill - a potent defensive device that materially altered the takeover tactics landscape. Still, even Wachtell Lipton came a bit later to the takeover party than did Skadden and Flora. (Marty Lipton is younger than Flom.)

It is the first champion in the arena who deserves recognition for that fact. In the postwar takeover world, that means Joe Flom.

Flom's skill induced admiration in his clients and fear in his clients' targets - and in potential targets of his potential clients. Nothing illustrates this better than the existence some years ago of Skadden's "retainer" program, under which numerous companies paid Skadden a yearly retainer fee even though little (or no) legal work was requested by them from Skadden in return. The point: These Skadden-client relationships were intended to ensure that a hostile bidder targeting the Skadden retainer-client would be precluded from hiring Skadden (i.e., from hiring Flom) for that purpose.

Limiting Flom in this way made sense. Not doing so - and running the risk of waking up one day to find out he was working for a hostile bidder going after your company - did not. So, hard cash was paid out to prevent hypothetical others from gaining access to a particular firm's (and a particular individual's) legal talent and brain power. It follows that that individual was perceived as a personage of pith and moment. A key player. The key player.

Joe Flom lacks a college degree. His undergraduate studies were interrupted by World War II; when the war ended, he was able, as a veteran, to enroll directly at Harvard Law School. In 1948, he became the first associate at Skadden Arps & Slate, a firm of three lawyers who each had previously worked at an established,"white-shoe" law firm. Flom's salary as an associate exceeded the earnings of the fledgling firm's partners. In the '50s and '60s, Flom developed and refined his expertise in "change of control" corporate transactions.

A watershed in the takeover world was International Nickel's hostile bid for ESB in 1974. Here was a blue-chip firm, represented by a blue-chip investment banking house (Morgan Stanley), making a hostile tender offer. The Inco tender showed that Corporate America recognized the hostile tender as a legitimate business tool. Other hostile approaches by blue-chip companies for blue-chip companies followed. (For example, American Express's attempt to buy McGraw-Hill in 1979.) Flom was correspondingly well-positioned to reap the advantages of this development.

Of course, excesses occurred. With the three-ring circus of Martin Marietta-Bendix-Allied in the early 1980s, the takeover community came perilously close to - indeed, it descended into - madness. Cries for reform followed. Some technical changes were made. The takeover community adjusted. Life went on.

At Skadden, during the '80s several younger partners emerged as takeover advisers in their own right; Flom, then in his 60s, began to ease the mantle from his own shoulders. He now spends a significant portion of his time on philanthropic endeavors. A principal involvement is his chairmanship of the Woodrow Wilson International Center for Scholars. Its purpose is to "bring together the world of learning and the world of public affairs." Flom describes its magazine, The Wilson Quarterly, as "the best intellectual quarterly published," and its research (in such areas as the history of the Cold War and ethnic conflict) as providing "a platform from which the think tanks can draw whatever conclusions they want." (An additional wrinkle: The literary editor of The Wilson Quarterly, Stephen Bates, was hired by Kenneth Starr to help write his report to Congress.)

Flom is particularly proud of the Skadden Fellows program, under which Skadden Arps provides selected law school graduates with two-year fellowships (at a cost to the firm of about $2 million annually) enabling them to pursue public-interest projects. He considers the Fellows program "one of the great accomplishments of my firm."

I spent part of the afternoon of August 18, 1998, talking with Flom in his huge corner office. A condensed version of our conversation is presented below.

Although Flom says his goal at Skadden was "to build an institution where my passing might be noticed but not important," it has been his presence for the last 40 years that has been "noticed." As Steven Brill (of American Lawyer fame and a longtime Skadden watcher) observed in New York magazine more than 20 years ago: Often the first question asked in a hostile tender was "Which side is Flom on?"

At least as much as any other single individual, Joe Flom has directly influenced the outcomes of hundreds of corporate takeovers. In so doing, he has helped shape the face of American business.

Joe, you must be one of the few lawyers in the United States without a college degree.

That's probably true. At the end of the war, in a burst of patriotism, Harvard, Yale, and Columbia all said that they would make exceptions for people who had been in the Army. My college record was two years at CCNY at night, one year at Rutgers (I was in the Army when I did Rutgers), one year at New Mexico A&M in the Army. You put them all together, I had a lot of points - but I didn't have a degree. So I wandered over to Yale and Columbia because they were closer and they said, "Yeah, we said that but there are so many people with degrees, why do we have to bother?"

I was at Fort Monmouth. We were playing bridge and I was the dummy. I sat down and wrote a letter to Harvard [saying] why they should accept me, and I filed an application. I got back a letter saying "Come up and meet with [well-known professor] Warren Seavey." I did and apparently we got along. Then I got word that they didn't accept me but if I wanted to leave my application on file things could conceivably change. I didn't know that meant you were on the reserve list. It was a $50 deposit. I took a chance.

I was away with my parents at a hotel in Lakeside, N.J. For some reason, I came back early on a Sunday night. There was a telegram from Harvard saying "If you want to come, be here tomorrow morning." I took the overnight train. My parents came back; I was gone. I hadn't unpacked my bags. That's the story. I have since gotten honorary degrees so maybe that makes me honest.

Building Skadden Arps

Twenty five years ago, in '72, Skadden was no more than 60 lawyers or so - certainly way fewer than 100.

That's high. It was probably closer to 30.

Now you have well over 1,000 lawyers and offices all over the world, including Berlin, Sydney, and Beijing.

Twenty-seven places.

Why did you choose to expand the firm in this way?

We always decided, right from the beginning, we wanted to be a full-service law firm. We could have made a lot more money by just sticking to the narrow merger and acquisition area but that's not where we had our heads at.

You've got to remember that in '69 the merger and acquisition business fell off a cliff. From '69-'72 there was relatively little business. Almost nonexistent. Prior to that, we had decided to be a full-service law firm and we didn't go down in our income. We didn't go up during that period, but it showed the power of being in the first area.

In '72, merger and acquisition activity started to take off with the advent of large banking firms getting involved, white-shoe firms, and with large corporations getting involved. It was an entirely different thing; it had its own dynamic.

If we were going to be a full service law firm, where were the bodies going to be used? We decided that, number one, the growth of in-house counsel would continue. That meant you had to analyze: Why would in-house counsel go out-of-house? First, it would be where there was massive capability needed. You can...