A short but sweet history
Though not a household name, Munger, Tolles & Olson has a distinguished, if not terribly long, history. Seven lawyers founded the firm in 1962. One of them, Charles T. Munger, is a longtime friend of billionaire investment guru Warren Buffett. Munger left the firm to go into the business world (he owns the Daily Journal Corp., which publishes The Los Angeles Daily Journal and The San Francisco Daily Journal), eventually becoming Buffett's partner and vice chairman of Berkshire Hathaway, Buffett's investment company. The name partner, however, still maintains an office at the firm's Los Angeles headquarters.
Another of the founding members, Harvard Law professor Roderick Hills, recruited one of his students, Robert Denham, to join the firm in 1971. Denham served as managing partner of the firm, and then joined Buffett's management team at Salomon Brothers, helping to rescue the firm from allegations that it had rigged the market in certain U.S. Treasury securities markets. Denham became CEO of Salomon, overseeing its 1997 acquisition by Travelers Group, Inc. before heading back to the cozy confines of partnership at Munger in 1998. In January 1999, the firm turned an historical corner when it selected Ruth Fisher and Robert Johnson as the firm's first co-managing partners.
The few, the proud, the Munger
While certain Munger partners like Denham - and especially name partner Ronald Olson - have gained fame as superlawyers, the physical size of the firm hasn't kept pace with its reputation. With only two offices (in Los Angeles and San Francisco) Munger is a small but powerful player in the legal world. As of January 2000, the firm claimed only 150 attorneys. Munger, Tolles & Olson is an elitist shop in virtually every sense of the word. Tough to crack as an associate, Munger Tolles is even tough to hire - the firm is choosy when it comes to taking on work. The two types of selectivity, of course, go hand in hand. Unlike large firms that have gone on hiring sprees in the superheated legal economy of the late 1990s and early 2000, Munger has chosen to remain ultra-selective when bringing in new lawyers, and has said "thanks, but no thanks" to other firms interested in merging. "I've been hearing for 20 years that a mid-size firm can't make it. I say, 'You do your thing, and we'll do ours,'" Ronald Olson, a name partner at the firm, told The Recorder in 1999. "For us, it's pretty simple. We believe the best people will get the best results, hence the best clients." So far, the Munger philosophy is working just fine.
Most of Munger's highly publicized work comes from litigation and more than two-thirds of its attorneys are litigators. The department is led by name partner Ronald Olson, who brings the firm well over $10 million a year and whose book of business includes companies such as Universal Studios, Atlantic Richfield Company (ARCO) and Merrill Lynch. Widely admired, Olson was voted California's most influential lawyer in a 1997 poll of 200 attorneys conducted by California Law Business. In 1998 Olson won recognition for arranging a $400 million bankruptcy settlement between Merrill Lynch and Orange County. Though hardly pocket change, the $400 million settlement was considered a triumph by many, given that the county was seeking $2 billion in damages. Merrill Lynch perhaps heeded the experience of another of Ron Olson client, Alyeska Pipeline Service Co. In disputes related to the Exxon Valdez spill, Alyeska settled for $98 million. Exxon chose to fight and got hit with $5 billion in punitive damages.
Lights, camera, lawsuit!
Oh yeah, they do corporate work too
Because Munger is best known for its star litigators, its corporate and other departmental work is often unfairly overlooked, associates say. The firm represents Berkshire Hathaway, Universal Studios, and Kaufman and Broad in M&A work and has advised Southern California Edison in connection with the restructuring of California's electric utility industry, including the diversiture of its various power generation facilities. Munger is also counsel to new economy companies including Broadband Sports and Salus Media as well as tech-focused investors such as The Yucaipa Companies and Michael Ovitz. The firm built up a respectable real estate practice in the 1980s through the efforts of former partner Dan Garcia, a top advisor to the mayoral administrations of Tom Bradley and Richard Riordan. The still-thriving department is now led by Dick Volpert and O'Malley Miller.
High-caliber candidates, lots of clerks
Becoming a Munger attorney isn't easy. Our contacts universally acknowledge that getting hired at the firm is extremely competitive and that hiring is based largely on top schools and grades. Munger interviews at the usual first-string names: Boalt, Chicago, Columbia, Duke, Harvard, NYU, Michigan, Penn and Yale as well as USC, Texas and UCLA, among others. One third-year tells us that "being near the top of the class and a clerkship or some other special experience is almost mandatory." Another thinks that "the firm views recruitment of outstanding attorneys as its most important task. The firm looks for top graduates of the best law schools and people who have had prestigious clerkships." This repeated emphasis on clerkships isn't just for show. As a corporate associate points it, "with almost one out of every eight lawyers here being a former Supreme Court clerk, the selectivity bar is quite high."
The whole firm has a say in hiring
Candidates with Munger suffer through the regular rigmarole of on-campus interviews and half-day or full-day callbacks. But Munger's hiring process becomes interesting behind the scenes after callbacks. "Everyone who met that candidate writes up a review and sends it to the recruiting committee," explains one associate. The committee meets and makes recommendations to the membership at large. Each candidate is then discussed and voted on by the firm as a whole. "Generally what happens is that people put up the resume and the grades on the overhead projector," says one associate. A discussion about the candidate, usually led by members of the committee, ensues and then a vote is taken. "A 10 percent dissent means a no," says one insider.
Where do you think you're going?
The firm's stringent hiring standards seem to pay off, since many associates seem to agree that "no one leaves Munger to go to another law firm." As at many other top-tier firms, turnover has "increased somewhat in the past year as people take jobs at Internet companies" or "go in-house or to the government." A sixth-year litigator seems unfazed by the defections, taking them in stride: "The lawyers at Munger, Tolles have sterling credentials, and thus have myriad opportunities available to them."
Keeping pace with competitor firms' salaries has kept attorneys from abandoning ship as well, as "Munger has matched the highest going rates for associate salaries," according to a third-year litigator. But some are concerned about the bottom-line impact of the new bonus structure, part of which "gives first- and second-year associate bonuses, whereas previously they did not receive bonuses until their third year." "Consequently, all we know about bonus size is that it will keep the firm competitive with compensation packages at other comparable firms and that it will reflect quality of work (as opposed to any pure hours-based component)." A fourth-year translates: "I don't know how the new base package is going to effect the bonus numbers. It might bring them down from my expectations."
Good enough for us
Associates seem content with their offices as well as their officers. While the Los Angeles and San Francisco may be "no frills," the offices are "comfortable." A third-year litigator suggests that the firm "would rather spend money on things other than fancy office space." Support services are satisfactory, too. While the San Francisco "satellite office does not have the full array of support services," the "ratio of attorneys to secretaries is never more than two to one." An M&A intellectual exults that "support services are available and associates are encouraged to use them so as to devote their time to thinking through legal issues."
Same story, different firm
Munger attorneys admit they struggle with the same recruiting and retention problems with women and minorities as many of their competitors. While "the firm is committed to gender equality" and is "very conscious of the issue," it has "not yet found a successful formula for retaining enough women lawyers," says a SF litigator. An L.A. "working mom," though, insists that "the firm has been more than willing to accommodate my requests for a flexible schedule." A second-year sums up the sentiments of several when she says there are simply "too few women associates at the moment."
Take a vote
Munger is unique among law firms for its democratic culture - many major firm decisions are put to a vote. This "intellectually stimulating" band of "self-motivated individuals" who are "more brainy than practical" work to make the firm "very democratic, with both partners and associates taking part in various firm decisions such as hiring." Indeed, several attorneys insist that the firm is "committed to minimizing (although not eliminating) distinctions between partners and associates." A labor lawyer adds that "although there are firm votes on many issues, for many important decisions a consensus is reached or majority garnered through informal means (walking the halls, canvassing attorneys, one-on-one meetings) prior to the formal vote."
Forewarned is forearmed
Munger players do think that potential candidates should consider seriously what they want before deciding on Munger because "some of the things that make it unique have side effects." One associate warns that although "you get a lot of responsibility and thus more interesting work," with "responsibility comes additional pressure. Additionally, the open culture and democratic governance means that if you want to change something, you can, but that means that you will spend time and energy (including emotional energy) trying to make those changes."
"If you are looking for a place where you will socialize a great deal with your co-workers, Munger is not the place for you. People do their work and then go home," cautions a litigator. "At the same time, you will know most of the other lawyers here because the firm is relatively small and you do have interaction with people at the firm lunches and at the weekly Friday evening gathering." Those contemplating Munger should also "realize this is an intense place full of perfectionist, smart attorneys," points out a corporate newcomer. "This doesn't mean you'll work long hours, but it does mean your work will be scrutinized and people will have high expectations."
Ms. Kevinn Villard
Gibson, Dunn & Crutcher;Irell & Manella;Latham & Watkins;O'Melveny & Myers
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