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Posted at 10:35 AM ET, 02/23/2011

Joseph Flom dies: Lawyer who mastered hostile takeovers was 87

By Emma Brown
Emma Brown

Joseph H. Flom, a lawyer whose ruthlessness and expertise in corporate mergers and acquisitions reshaped America's business landscape during the 1980s and helped turn his tiny New York firm into one of the nation's largest practices, died today at a hospital in New York. He was 87.

"It is an understatement to say Joe was an individual without equal. He was a most trusted adviser, beloved and respected partner and mentor, faithful friend and formidable adversary," said Eric J. Friedman, executive partner of Skadden, Arps, Slate, Meagher and Flom, in a statement.

flom.jpg

Mr. Flom's success came from his mastery of hostile takeovers, in which a raider purchases a target company without consent. Such unwanted advances by corporate suitors had long been scorned as dirty business by white-shoe law firms; to Mr. Flom, takeovers were a path to power and profitability.

He and his firm were involved in nearly every major merger and acquisition fight of the 1970s and 80s, including U.S. Steel's multibillion takeover of Marathon Oil, Chevron's purchase of Gulf Oil and RJR Holdings' purchase of Nabisco.

Mr. Flom was best known for mapping strategies on behalf of buyers, often engineering costly and risky lightning raids in which his clients attempted to take over companies by offering to buy stock from shareholders for considerably more than market rate.

But he was so feared as an adversary that he was frequently retained by companies nervous about becoming takeover targets. This was a practice known as "sterilizing Joe": As long as Mr. Flom worked for you, he couldn't work for your enemy.

When his client was threatened with takeover in 1978, Mr. Flom launched a private investigation into wrongdoings by the raider, Occidental Oil, and its chief executive, Armand Hammer.

Mr. Flom's investigators alleged that an Occidental subsidiary had caused environmental problems and that Hammer, seeking help with his side business as an art collector, had paid a Soviet official $100,000. Hammer dropped the takeover, saying that no "acquisition was worth this battery of problems."

Hammer later hired Mr. Flom to represent his company. "It is a great comfort to have Joe on your side," Hammer wrote in his biography, "and a sore distress to have him against you."

Joseph Flom was born in Baltimore, grew up poor in Brooklyn and, after serving in the Army during World War II, argued his way into Harvard Law School without ever having earned an undergraduate degree.

He said he was motivated by hunger to study law, which he expected would lead to politics and a life of relative privilege. "When you don't have enough to eat," he told a reporter in 2008, "you never forget that."

Upon graduation in 1948, he said, his Jewish heritage and admitted lack of social graces blocked him from jobs with prestigious law firms. Rather than polishing his manner, he used his coarse and scrappy demeanor to become one of the most powerful and feared corporate lawyers of his generation.

He landed his first job as the lone associate working under three young partners -- Skadden, Arps and Slate -- who also had been turned down by established firms. "We've got to show the bastards that you don't have to be born into it," he often told his colleagues.

Mr. Flom built a reputation for clever, determined aggression, especially in corporate proxy fights. He became a name partner in 1960, and over the next several decades was a driving force behind the rise of Skadden, Arps into a sprawling general practice with a specialty in mergers and acquisitions.

The firm now employs more than 2,000 lawyers in nearly two dozen offices around the world.

The watershed moment came in 1974, when Mr. Flom advised the investment bank Morgan Stanley and its client, the International Nickel Company of Canada, widely known as Inco, in a hostile takeover of a Philadelphia battery manufacturer called ESB.

That effort legitimized takeovers, which soon came to define and drive Wall Street.

"It was precedent setting," wrote Fairleigh Dickinson University economics professor Patrick A. Gaughan in his 1996 book about corporate mergers and acquisitions. "Firms and their chief executives who had inclined to be raiders but had been inhibited by public censure from the business community now became unrestrained."

Mr. Flom was a past chairman of the Woodrow Wilson International Center for Scholars in Washington. He donated generously to Democratic candidates and gave millions of dollars to philanthropic causes, particularly education.

He established a fellowship program for recent law school graduates who want to work in public interest law. He also played a key role in establishing a program to help poor and minority students at the City College of New York prepare for admission to top law schools.

His first wife, Claire Cohen Flom, died in 2007. He married Judi Sorensen in 2008.

She survives, along with two sons from his first marriage, Peter and Jason Flom; his first wife's daughter from a previous marriage, Nancy Laing; six grandchildren; and two great-grandchildren.

Mr. Flom had a legendary capacity for work -- during a six-week family vacation in Spain, he flew back to the United States five times to advise clients.

"Hold my calls," he'd tell his secretary during busy moments. "Unless it's new business!"


By Emma Brown  | February 23, 2011; 10:35 AM ET
Categories:  Emma Brown  
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