Starting from Scratch

Forty years ago, "the typical criminal lawyer was a little disreputable, a little specialized," says Bruce Baird, cochair of Covington's white-collar defense and investigations practice. That was before Robert Fiske (pictured) and Charles Ruff, a pair of federal prosecutors, popularized white-collar defense as a big-firm pratice area. Fiske prosecuted drug kingpin Leroy "Nicky" Barnes while serving as U.S. attorney for the Southern District of New York from 1976 to 1980; Ruff, a former Watergate special prosecutor, was U.S. attorney for the District of Columbia from 1979 to 1981. "There hadn't been people who had been lions of the bar who had been criminal lawyers before," Baird says. "Suddenly [the attitude toward] criminal lawyers changed from, you would never hire one to, everyone should hire [one], if you can." Today most Am Law 100 firms have white-collar defense practices, Baird notes, and the practice area "has gone from nothing to perhaps the biggest single aspect of litigation at many firms."

They were at different firms and in different cities, but in the 1970s, Richard Beattie and Jack Levin laid the legal groundwork for the then nascent private equity industry. For Levin, it began with a call from First National Bank of Chicago, which wanted help with what it called "risk investing." Beattie (pictured) was representing Henry Kravis and George Roberts, who were then at The Bear Stearns Companies Inc., in leveraged buyouts. In both cases, these clients were forming partnerships to buy private companies whose profit potential, in their view, wasn't being fully exploited. "There were no examples on the legal side so you had to make it up as you went along," Beattie says. There was much to make up. "Frameworks for dealing with ratios for sharing profits between management and capital providers, general partners versus limited partners, tax ramifications, carried interest, and senior borrowing versus subordinate borrowing all had to be developed," Levin says. To see the legacy of the two lawyers' improvisational skills, look no further than the nation's 2,797 private equity firms, which are currently backing 17,744 U.S.–based companies.