Pillsbury Madison & Sutro LLP

235 Montgomery Street
San Francisco, California 94104
U.S.A.
(415) 983-1000
Fax: (415) 983-1200
Web site: http://www.pillsburylaw.com

Private Partnership
Founded: 1874
Employees: 1,300 (est.)
Sales: $215.5 million (1997)
NAIC: 54111 Offices of Lawyers

Pillsbury Madison & Sutro LLP ranks as the nation’s 33rd largest law firm, according to the June 1999 Corporate Legal Times, and in 1999 became the nation’s first large law firm to be headed by a woman. In addition to several offices in California, the firm also operates offices in Hong Kong, Tokyo, New York City, and Washington, D.C. Its attorneys work in 14 practice areas: creditor’s rights and bankruptcy; commerce and technology; corporate securities, banking, and emerging companies; environmental and land use; tax; real estate and construction; executive compensation; estate and probate; intellectual property; international transactions and project finance; labor and employment; life sciences and biotechnology; political law; and class actions and complex litigation. About half of the firm’s attorneys are litigators, and Chevron Corporation, the firm’s major client, provides about ten percent of its annual billings. The firm still represents such traditional clients as oil firms and banks but in the late 20th century began dealing in high-tech fields such as software and biotechnology. Pillsbury Madison & Sutro also represents Internet companies and maintains an award-winning Web site of its own.

Late 19th-century Origins

The history of Pillsbury Madison & Sutro can be traced to the legal practice of Evans S. Pillsbury, already a well-established attorney when he opened an office in San Francisco in 1874. The following year, Pillsbury took on a partner, William E. Green, and the practice became known as Pillsbury & Green. A subsequent partner, David Titus, replaced Green around 1879, and the firm changed names again, to Pillsbury & Titus. Notable among Pillsbury’s early clients was the San Francisco-based banking and express company Wells Fargo.

In 1883 Pillsbury resigned his partnership with Titus to join two other San Francisco lawyers in the formation of the firm Wallace, Pillsbury & Blanding. Blanding was a prominent attorney who had helped incorporate Los Angeles-based Pacific Coast Oil Company, which would later become known as Chevron. This marked the beginning of the firm’s involvement in the nation’s oil industry, an association that would continue into the late 20th century.

By the mid-1890s, Blanding had retired, and Wallace had left to serve on the Superior Court of San Francisco. In 1895 Pillsbury’s practice was joined by associates Alfred Sutro and Frank D. Madison; three years later Horace D. Pillsbury, the founder’s son, also came on board. The firm then became known as E.S. Pillsbury and Pillsbury, Madison & Sutro and was by this time a thriving and well-respected business with associates who held sway with large corporate and political figures.

Early 20th Century Expansion

A brief venture abroad occurred in 1901, when Oscar Sutro started a separate partnership in the Philippines called Pillsbury & Sutro. At this new office, Sutro drafted the Philippine legal code and reportedly befriended the islands’ governor general and future President of the United States, William Howard Taft. Following this work Sutro returned to California in 1905, and the firm’s name was shortened to Pillsbury, Madison & Sutro. The next year the infamous San Francisco earthquake completely destroyed the firm’s office and records. Nevertheless, the firm continued operating and in fact found much business involving local insurance companies, some of whom who were refusing to honor policies following the earthquake and subsequent fires.

Specifically, in 1906 Pillsbury Madison & Sutro won a landmark case by representing the California Wine Association and forcing fire insurance companies to pay for fire damage from the earthquake. According to a Pillsbury historical timeline, this case proved pivotal for all San Franciscans with fire insurance seeking to recover damages from their insurance companies.

The 1920s brought a new generation of attorneys to the forefront as E. S. Pillsbury retired to Santa Barbara, California, and Oscar Sutro left law to serve as vice-president of Standard Oil. Large corporations continued to provide the bulk of the firm’s business, and the firm continued to grow, boasting a work force of 26 lawyers by 1931.

At the onset of World War II, Pillsbury’s roster had grown to include 40 attorneys, but this force was severely depleted by the war, as 26 of the men, four of whom were partners, left to serve their country. During this time, business at home was handled by the 14 attorneys who stayed behind as well as local law professors. One attorney at Pillsbury Madison & Sutro, John Marshall, became the chief counsel for the Petroleum Administration for War.

Postwar Developments

In the postwar boom, as retail and housing facilities were cropping up at a rapid pace, Pillsbury Madison & Sutro expanded its focus to include cases generated by the finance and construction industries. In 1952 the firm represented the lender of all financing involved in building the Stonestown Shopping Center, the largest in the Bay Area and one of the largest in the nation. In 1960 the law firm drafted California’s first condominium law while representing Haas and Hanie Corporation, which built Nob Hill, the state’s first high-rise condominium.

Moreover, the firm’s interests were by no means limited to California or construction. In 1954, after the Central Intelligence Agency had helped install Shah Pahlevi in Iran, Pillsbury Madison & Sutro helped create a new international consortium to produce and refine Iran’s oil and give Western powers access to Iranian oil. This Iranian consortium would prove pivotal in establishing the United States as a major influence in the oil industry and political life of the Middle East.

Still, the representation of large corporations continued to be a mainstay at Pillsbury Madison & Sutro. In the mid-1950s, attorney John A. Sutro, a descendant of co-founder Oscar Sutro, successfully represented Pacific Telephone & Telegraph in a case involving the fees charged by municipalities to the phone company for occupying city streets with telephone lines and underground cables. In 1957 Pillsbury Madison & Sutro helped Standard Oil of California in its negotiations with Southern Pacific in the “largest fuel supply contract in the world at the time,” according to the firm’s timeline. Other important clients included various oil and financial corporations and Ford Motor Co., which hired the firm to represent it in a 1960 discrimination suit filed by a dealership. By 1979 the firm had opened two new offices, one in San Jose, California and the other in Washington, D.C.

The Progressive 1980s

In 1980 Pillsbury Madison & Sutro lawyers helped make financial history when they were hired by Genentech in that company’s bid to go public. Founded in 1976 by a professor at the University of California at San Francisco Medical Center, Genentech pioneered the new field of genetic engineering or biotechnology when it showed that gene-splicing was commercially viable. Pillsbury Madison & Sutro represented Blyth Eastman Paine Webber Inc., a New York investment banking firm and the main underwriter of Genentech in its initial public offering. That IPO, in just one minute, sold one million shares of common stock for $35 million, the fastest public offering in history at the time. The Genentech IPO marked Pillsbury Madison and Sutro’s entry into one of the major growth industries of the late 20th century, and the firm would go on to represent such high-tech companies as LSI Logic Corporation and others. To support high-tech firms interested in investing in Russia, Pills-bury Madison in 1989 chaired a group of advisors of the first Soviet-American venture capital fund.

While keeping pace with the ever-changing corporate climate, Pillsbury Madison & Sutro was also progressive in its internal operations: in the late 1980s it had more female attorneys on staff than any other firm in the country, and nine of its partners were women. During this time, the firm opened two new offices in California to reach its 1988 goal of becoming the premiere law firm in the state. In 1988 it opened its San Diego office, followed by a Sacramento office in 1989.

Company Perspectives:

The law firm ofPillsbury Madison & Sutro delivers cutting-edge, strategic services to our clients to help them achieve their goals. We are a hard working, energetic, skilled team of professionals —attorneys and staff —deeply committed to serving our clients. We conduct ourselves according to the highest standards of ethics, collegiality and mutual respect and recognize that our rewards depend on helping our clients achieve their goals. We have a clear and compelling view of what we want to achieve. That view is the basis for our strategic plan, which is regularly refined and updated with input from our clients, our people and our markets. We are accountable for the business we manage, and we give all of our professionals relevant, timely performance information that permits them to gauge their individual and collective success in serving our clients. We are proud of our achievements. We enjoy our work and find fulfillment in doing it well. We celebrate our success.

The growth ofPillsbury Madison & Sutro and other U.S. law firms in the 1970s and 1980s was fueled by several events. The U.S. Supreme Court ruled that restrictions on advertising for professional services were unconstitutional, helping all professions to become more business-oriented and competitive. Moreover, Steven Brill in 1979 founded the publication The American Lawyer to look at law firms’ finances and other internal operations. The comparative data published therein sparked a greater knowledge of the business and promoted lateral hiring of experienced attorneys from rival firms. Finally, the growth of new industries and the merger-and-acquisition craze of the 1980s also stimulated the legal industry.

Challenges in the 1990s

In 1991 law firms across the nation suffered along with the rest of the nation in an economic downturn. Moreover, many corporations began hiring their own inhouse attorneys for about half what outside counsel charged. “At our firm today,” said Pillsbury Madison Sutro attorney T. Neal McNamara at a 1991 American Lawyer seminar, “our clients are among our major competitors. Not only were they one of the root causes of our recession, they’re exacerbating it.” During this difficult time, Pillsbury merged with the firm of Lillick and McHose, a deal described in company literature as “the largest merger of law firms in history to date.” The well-known Pillsbury company name was retained through the merger.

In the 1990s Pillsbury Madison & Sutro continued its historic representation of oil firms. In 1992 the firm represented Chevron in its lawsuit against Penzoil and oversaw a Chevron-Penzoil restructuring deal worth $1.17 billion. In 1998 it helped Chevron Products negotiate a joint venture with Texaco to form Fuel and Marine Marketing LLC with offices in over 40 nations.

Also important to its business during this time were telecommunications corporations. In 1992 Pillsbury helped its long-term client Pacific Telesis Group spin off its wireless services to form an independent firm made up of four units: PacTel Cellular, PacTel Paging, PacTel Teletrac, and PacTel International Operations. In 1994 the firm represented Netcom Online Communications when it became the nation’s first company solely providing Internet access to go public. In 1996 Pillsbury again represented Pacific Telesis in its $16.7 billion merger with SBC Communications, the first unification of “Baby Bell” companies. The firm also advised Tele-Communications, Inc. (TCI) when it acquired Viacom’s cable systems for about $2.15 billion and in 1996 assisted AirTouch in its acquisition of the remaining 40 percent ownership of Cellular Communications. In 1997 Pillsbury Madison & Sutro represented Octel Communications when that company was purchased by Lucent Technologies for $1.8 billion. Other clients in the 1990s included BankAmerica Corporation, AT&T, the San Francisco Giants, Quaker State, and Healthsouth Corporation.

The scope of Pillsbury’s expertise was broadened in 1996, when it merged the operations of the law firm Cushman Darby & Cushman, an intellectual property firm based in Washington, D.C., into its own in 1996. That year, a team of Pillsbury lawyers helped client Haworth Inc. win a $211 million judgment from a rival firm, Steelcase Inc. The decision of the U.S. District Court for Western Michigan ended an 11-year battle over Haworth patented designs used to build electrified office panels, the building blocks of modern workstation cubicles. In a press release, the law firm stated the court “victory represents the second-largest award in patent litigation history.”

In 1997 Pillsbury signed a lease to consolidate its three existing offices in the San Francisco area to one headquarters in the 50 Fremont Building. “50 Fremont provides an excellent platform for the law firm of the 21st century,” said Pillsbury Chairman Al Pepin in the December 22,1997 PR Newswire. The consolidation was planned for completion early in the year 2000.

The American Lawyer ranked the Pillsbury law firm, with 1997 gross revenues of $215.5 million, as one of 11 San Francisco firms in the nation’s top 100 firms. American Lawyer and London’s Legal Business, in their first rankings of the world’s largest law firms, placed Pillsbury as number 39 based on 1997 revenues and number 41 based on its number of lawyers, which stood at 555.

In December 1998 Pillsbury opened an office in Carmel Valley about 20 miles north of its downtown San Diego, California, office, in response to more high-tech and life-sciences clients located along the coast north of the city who wanted attorneys located nearby. A similar move was made in early 1999 when the law firm opened its tenth office in Tysons Corner, Virginia, about 15 miles from its Washington, D.C. office. “The Northern Virginia area is a rapidly growing center of high-tech and biosciences business,” said Jorge del Calvo, the Pillsbury partner in charge of its Internet group, in the February 18, 1999 publication Recorder. Pillsbury and other law firms dealing with biotechnology and other high-tech businesses in the late 1990s began hiring more attorneys with Ph.D. degrees and other academic credentials.

Management Changes

In late 1998 Pillsbury Madison & Sutro elected Mary Cranston as the new chair of its managing board, effective January 1, 1999. A graduate of Stanford Law School and head of the firm’s litigation group, Cranston became the first woman to lead a major law firm. “The fact that I am the first female chair of a major US firm shows that there is a glass ceiling,” said Cranston in the February 1999 International Financial Law Review. She went on to suggest that “There have been many women coming out of law school for some time. This will ultimately be resolved as more women take up positions as legal counsel. Then we will have an old girls’ network to match the old boys’ network.”

According to American Lawyer, seven of the nation’s top ten law firms with the highest percentage of women partners were in San Francisco. The highest percentage of women equity partners was still only 27.5 percent, and the average at the 100 largest law firms was just 13.1 percent. Thus, one journalist in the April 11, 1999 San Francisco Chronicle concluded that “The real story is that the numbers are still pitifully low.”

At the same time Cranston was chosen, the firm elected Marina Park to a new position of firmwide managing partner. Park, a graduate of the University of Michigan School of Law and head of its Silicone Valley office, would split with Cranston the duties of the outgoing chair, Alfred Pepin, Jr. Park said in the December 9, 1998 Recorder that she and Cranston “have a shared vision for the firm’s future.... We look forward to helping the firm shed its stodgy image—which was never accurate.” Toward that end, one of Cranston’s first decisions was to open up corporate communications by sharing information from the law firm’s managing board. Prior to that time, only partners were apprised of board discussions, but Cranston soon began distributing summaries of board meetings to everyone in the firm.

Cranston and the other leaders of Pillsbury Madison & Sutro faced plenty of challenges in 1999. As a profile in the March 1999 American Lawyer pointed out, Pillsbury was badly in need of a turnaround “after years of sliding profits, plunging morale, and an exodus of more than 40 partners in the last two years.” The article noted that Pillsbury, “once the gold standard for West Coast firms... has in recent years looked like a devalued currency.” Despite such criticism, however, Pillsbury Madison & Sutro remained a top law firm nationwide, and the company’s executives and board were optimistic that under the new leadership of Cranston and a new strategic plan, the firm would recover from its profit slide to compete on a global scale.