Orrick, Herrington and Sutcliffe LLP

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Orrick, Herrington and Sutcliffe LLP

405 Howard Street
San Francisco, California 94105-2625
U.S.A.
Telephone: (415) 773-5700
Fax: (415) 773.5759
Web site: http://www.orrick.com

Private Company
Founded: 1885 as Jarboe, Harrison & Goodfellow
Employees: 800
Sales: $448 million (2003)
NAIC: 541110 Offices of Lawyers

A long-time San Francisco law firm known for its work in municipal bonds, Orrick, Herrington and Sutcliffe LLP has grown aggressively since the early 1990s, adding a variety of practices and opening offices around the world. The firm employs some 750 lawyers in 13 practice areas. Transactional practices include Bankruptcy and Debt Restructuring, Compensation and Benefits, Corporate Global Finance, Mergers and Acquisitions, Public Finance, Structured Finance, Real Estate, and Tax. Litigation practices include Litigation, Intellectual Property, Employment Law, and Securities Litigation. Clients include the likes of Salomon Smith Barney, Charles Schwab, and IBM. In addition to its San Francisco headquarters, Orrick maintains domestic offices in New York (largest in size), Los Angeles, Orange County, Sacramento, Silicon Valley, the Pacific Northwest, and Washington, D.C. International offices are located in London, Paris, Milan, Rome, Moscow Hong Kong, Taipei, and Tokyo. The driving force behind the firm's expansion is chief executive officer Ralph H. Baxter, Jr., who took the helm in 1990.

Firm Origins Date to 1860s

Orrick traces its lineage to attorney John R. Jarboe, Jr. He was born in 1836 in Maryland of French descent (his family had accompanied Lord Baltimore when he founded the city that bore his name) and spoke French as his native tongue. Injured as a child, he was confined to bed for three years and became quite studious. Although the youngest member of his class at Yale University, he graduated near the top in 1855. A year later he moved to California and taught briefly before deciding to study law in the San Francisco office of Jesse B. Hart, at a time when there were no law schools and attorneys "read" with those already established in the profession. In 1858 he became a clerk at Shattuck, Spencer & Reichert and in that same year was admitted to the bar and soon became a practicing attorney. According to company lore his examiners were so impressed by his knowledge of the law they dropped the subject and asked if the young man knew how to make a brandy punch. He replied that he did not, but confided that he had discovered an excellent one was served at a saloon across the street, adding, "And I would be pleased if the learned committee would join me in testing one." The attorneys quickly agreed upon a change of venue.

Upon Reichert's death, the firm became Spencer & Jarboe, and following Spencer's death Jarboe practiced on his own for about eight months, his specialty real estate, before taking on partners. He became partners with Ralph C. Harrison in 1867, and they worked together until Harrison was elected to the Supreme Bench of the State. W.S. Goodfellow would join them, and in 1885 they founded Jarboe, Harrison & Goodfellow, the firm that Orrick considered its forefather. In 1891 Harrison was elected a justice to the California Supreme Court, and the partnership was dissolved. Two years later, Jarboe, always of poor health, died at the age of 57.

William Orrick Joins Firm in Early 1900s

Goodfellow carried on the firm's tradition, and in 1901 formed a new partnership with Charles Eells, who would play an important role following the 1906 earthquake that leveled San Francisco. Eells helped to save Fireman's Fund Insurance Company by implementing a reorganization plan that allowed the insurer to pay off some of its claims with company stock. The behind the Orrick name, William H. Orrick, joined the firm in 1910, the beginning of a 50-year tenure that would last until he was well into his 80s. Another attorney, Stanley Moore, joined the firm in 1914, and in that year the partnership changed its name to Goodfellow, Eells, Moore & Orrick.

The Herrington in Orrick, Herrington and Sutcliffe LLP was George Herrington who became a partner in 1927 and joined the firm under unusual circumstance. Orrick was well known for his insistence on thoroughly researching his subjects, notorious for the prodigious assignments he gave to associates, but he also demanded as much effort from himself. While Herrington studied law at the University of California, Berkeley's School of Law—Boalt Hall, he worked part-time at the library, charged with opening it on Sunday mornings. One more than one occasion he found Orrick sitting on the steps waiting to get in. Years later Orrick would quip that he only hired Herrington to make sure he showed up to work on time.

Five years after Herrington, Eric Sutcliffe joined the firm in 1932. During this period the firm became involved in one of the most high profile bond issues in its history: the building of the Golden Gate Bridge. While Sutcliffe contributed to the effort by providing research, Herrington played a key part in making sure the bridge was built. The Golden Gate Ferry Company, backed by the deep pockets of its corporate parent, the Southern Pacific Railroad, fought against the bridge project which threatened to undercut its business and challenged the bond issue. When it ultimately passed, Herrington's reputation was established and the firm became a major West Coast law firm.

Sutcliffe would play a more prominent role in the future, however. In 1947 he became the firm's managing partner, the start of a 30-year tenure at the top. The modern era of the firm, which after a regular shuffle of partners settled on its present name in 1980, began after Sutcliffe's retirement. At the time, Orrick was a quiet, conservative law firm, content to stick to its knitting in San Francisco.

Orrick did not open its second office until 1983 when it set up shop in Sacramento. A new chairman, William McKee, appointed a year later had more ambitious goals. He had been with the firm since 1950 and was responsible for launching Orrick's tax practice. During his term as chairman from 1984 to 1986, McKee oversaw the upgrading of the firm's time-keeping methods and merit-based compensation, and modernized the business practices. He also opened the firm's first non-California office, establishing an important beachhead in New York City. Taking advantage of its reputation in California municipal bonds, Orrick was able to recruit half-a-dozen lawyers from a major New York law firm, Brown & Wood. While Orrick looked to make inroads with New York financial companies, other major San Francisco law firms were building up their Silicon Valley offices to attract more business from the high-technology sector. Orrick opted to stay out of Silicon Valley, a questionable move at the time, and instead opened an office in Los Angeles in 1985.

Orrick's prospects in the New York market appeared dim after the passage of the 1986 Tax Reform Act, which curtailed the number of tax-exempt bonds and set limits on legal fees on bonds issued for private development projects. Business in this area was also adversely impacted by uncertain interest rates that scared off many insurance companies. Small firms exited the bond business, larger firms cut back, and Orrick was close to shuttering its New York office. Instead, it decided to expand, diversify the practice and also beef up its public finance practice. A key move came in July 1987 when Orrick lured away nine bond specialists from Hawkins Delafield, bringing with them some major clients, including New York City's Municipal Assistance Corp. and the Port Authority of New York and New Jersey. As a result, business surged and in 1988 Orrick was involved in more bond business than any law firm in the country, according to trade newspaper The Bond Buyer, after ranking fourth the year before. The momentum stalled for the New York office by the end of the decade, and the firm was at a crossroads. It experienced some lackluster years, the average per partner profits dropped well below other leading San Francisco law firms, and some key lawyers defected.

New Chairman Leads Firm Into the 1990s

In 1990 the Orrick partners elected Ralph H. Baxter, Jr., a labor litigator, as their new chairman. He quickly took steps to improve the firm's balance sheet and grow partner profits to a much high level. He cut staff and eased out partners who were not producing enough work, and he also embraced a strategy of geographic expansion and placed less emphasis on the San Francisco market. At the time Los Angeles had 30 lawyers, New York 50, and San Francisco 175. Baxter's goal was to build the Los Angeles and New York offices to the same size as San Francisco. Because the California economy soon slowed, Baxter had to adjust his plans, cutting back on his Los Angeles aspiration. In 1983 Orrick opened a Washington, D.C., office, but New York remained the key to the firm's future. According to Krysten Crawford, wiring for The American Lawyer in a 1998 profile on Baxter, "As the financial center of the world, New York is where the deals get done—the mergers, the project financings, the securitizations. New York is also the link to other markets such as London, Hong Kong, and Latin American. In Baxter's mind, a firm that seeks to be a global player—a truly exceptional law firm—must first make a stand in New York."

Orrick used its ties to investment banks to build up existing practices and add others in New York. The first target was securitization (turning loans, mortgages, and the like into tradable securities), followed by project finance. The firm's success in New York in these areas then served to reinforce Orrick's position on the West Coast in securitization work. The size of the New York office grew steadily in the 1990s, reaching 165 lawyers by 1998 to become larger than the San Francisco office, which now employed 155 lawyers.

Company Perspectives:

The firm exists to help our clients achieve their goals and solve their problems by performing effective, challenging and innovative legal work on their behalf, with financial results that will permit the firm to advance and flourish.

The 1990s also saw Orrick make a belated entry into the Silicon Valley. By this point its rivals had long since carved up the best corporate work, so in 1995 Orrick's new Palo Alto office focused on intellectual property litigation. To jumpstart the practice, the firm lured a high-profile litigation lawyer, Terrence McMahon, from a chief rival. McMahon, nicknamed "Mad Dog," was an impressive calling card for the office. "We don't intend to be a quiet, insignificant member of Silicon Valley," Baxter told San Francisco Business Times. "And Terry is far from quiet and insignificant."

One area sorely lacking in the late 1990s was Orrick's litigation capability. To address that need, Orrick entered into talks in 1987 to merge with an old-line New York law firm Donovan, Leisure, Newton & Irvine, which had been struggling since a decline in antitrust work in the 1980s and was now considered too small by many potential clients. It appeared to be a good fit for both firms, and Donovan, Leisure's partner voted to approve the merger, but talks faltered in early 1998, due in large part, according to press accounts, to a legal conflict: Donovan, Leisure was being sued by a mutual client. In the end, about 40 of Donovan, Leisure's 60 lawyers were hired by Orrick, which essentially took the ones it wanted, and Donovan, Leisure was dissolved. As a result, Baxter told the press, "We will now have one of the most complete law practices in New York City." While Orrick was acquiring a litigation practice, it was also taking steps to become an international law firm. A Tokyo office was opened in 1997, followed by a London office in 1998.

Orrick continued its aggressive expansion with the start of the 2000s, looking to grow both domestically and overseas. The firm opened an office in Seattle in 2000 to mainly seek work from clients involved in the Internet and telecommunications industries. To beef up its Pacific Northwest presence, Orrick looked to add to its roster of lawyers. It soon identified a group of lawyers employed in Portland, Oregon-based Ater Wynne LLP, who were hired away in March 2003. Most of the lawyers worked in Ater Wynne's finance group, but what made them especially attractive was their involvement in the fast growing practice of Indian tribal deals, an area Orrick had begun to purse. In one stroke, the firm became a leader in the practice area. Also in the United States during this period, Orrick opened an office in Orange County, California, by acquiring intellectual property lawyers from the firm Lyon & Lyon.

Orrick was even more aggressive on the international front in the early 2000s. In 2002 it established an office in Paris by acquiring the 42-lawyer operation of Watson, Farley & Williams. It would focus on cross border and domestic transactions involving structured finance, leasing, and asset financing. A year later, Orrick hired 23 lawyers from Ernst & Young legal affiliate Studio Legale Tributario and opened an office in Milan, Italy, to help the firm in its cross-border business in Europe and Asia. In 2004 a Rome office was added through the hiring of the 16-lawyer firm Studio Legale e Tributario, which focused on banking and finance and administrative law. In that same year, the Tokyo office expanded, hiring a number of lawyers, including its first partner to deal with South Korea. Orrick opened an office in Moscow in 2005, and supplemented it with the launch of a Russian practice in London and Washington, D.C. By acquiring a 25 lawyer group from Coudert Brothers in 2005, Orrick also opened an office in Hong Kong, which gave it entry to the potentially lucrative market of the People's Republic of China.