Skadden’s Sheila Birnbaum: Handling Companies’ Biggest Crises

An Interview with Sheila L. Birnbaum, Esq., Practice Leader, Complex Mass Torts and Insurance Litigation, Skadden, Arps, Slate, Meagher & Flom LLP,

EDITORS’ NOTE Sheila L. Birnbaum, known as the “Queen of Torts” and “Madame Products Liability,” began prac- ticing law in the early ’70s at Berman & Frost in New York. After a few years in pri- vate practice, she became a professor at School of Law, later serving as a professor and the first woman associate dean at New York University School of Law. She joined Skadden, Arps, Slate, Meagher & Flom LLP, initially as a part-time counsel, in 1979. The head of Skadden’s Complex Mass Torts and Insur- ance Litigation Group, Birnbaum has argued twice before the United States Supreme Court and won both times. A for- mer president of the New York Women’s Bar Association and executive director of the Second Circuit Task Force for Racial, Ethnic and Gender Fairness, she is the recipient of numerous awards, including the American Bar Association’s Margaret Brent Women Lawyers of Achievement Award, the John L. McCloy Memorial Award from the Fund for Modern Courts, and the New York University Law Alumni Award for outstanding achievement in the legal profession. She was profiled in The National Law Journal as one of the three out- standing lawyers of 2003 and was named by Fortune magazine as one of the “50 Most Powerful Women in Business” in 1998. Sheila L. Birnbaum and senior partner Joseph H. Flom

FIRM BRIEF Founded in 1948, Skadden, In recent years, corporations have in- significant experience, and I believe that Arps, Slate, Meagher & Flom LLP (www. creasingly needed legal advice in con- Skadden’s ability to respond to corporate skadden.com) is one of the best-known nection with crisis situations. What crises is unmatched. Our roots are in hos- and most highly regarded law firms in the factors are driving this trend? tile takeovers, which are often considered world. With a practice that includes merg- The whole area of corporate regula- the ultimate corporate crises. And as cor- ers and acquisitions and other areas of tion has become more complicated in porations become increasingly global, our corporate law, litigation (including mass recent years. Added to that, many attor- one-firm approach and breadth and depth torts and insurance, government investi- neys general, including New York State of practice allow us to bring enormous gations, antitrust, international arbitra- Attorney General Eliot Spitzer, have resources to bear across various disci- tion, and intellectual property), corporate become increasingly active in the regula- plines. In short, it’s important to view a restructurings, and tax, Skadden serves a tory sphere. When there is a government corporate crisis from all angles, in order to broad spectrum of clients, including investigation, whether at the state or fed- preserve the integrity and position of our approximately 40 percent of the Fortune eral level, private attorneys are usually clients within the markets, as well as the 250 industrial and service corporations; waiting in the wings to pursue civil litiga- investment community. financial and governmental entities; small tion based on the same allegations. The To what extent do you carry out high-technology start-up companies; and combination of these circumstances is this type of work as a team, rather cultural, educational, and charitable forcing corporations and law firms to view than as individuals? institutions. The firm employs approxi- corporate crises in a new light. We have always been very team-ori- mately 1,800 lawyers and a total of 4,400 In this environment, it is important ented, and as corporate crises multiply and people in 22 offices around the world. for corporations to turn to law firms with become more complex, I find myself work-

VOLUME 29, NUMBER 2 POSTED WITH PERMISSION. COPYRIGHT © LEADERS MAGAZINE, INC. LEADERS 47 ing more than ever with lawyers from differ- I don’t think it has changed all that today and lawyers of your generation? ent disciplines. It’s very exciting to be deal- much. Good CEOs are always looking for It’s difficult to generalize about young ing with my partners in this way. Part of the the same thing: advisers who are both lawyers today. When I came into this pro- Skadden credo is to respond quickly and to practical and smart about the law and busi- fession, we worked all the time. I’m not offer a 360-degree view of the situation at ness. It’s a combination. To help manage a sure that was entirely good, but that’s hand, in order to provide the client with the crisis, you have to understand not only the what we did. Work came first, and families best possible service. The results are opti- legal consequences of what you’re doing, came second. A lot of young people now mal when attorneys from various appropri- but also the public relations and financial don’t want to do that. They want to find a ate disciplines are familiar with each other consequences. Legal advisers assist the better balance, and I think that’s a positive and are comfortable working together. corporation in responding to all the thing. But it’s a change, and it’s not yet A number of major law firms groups that need to be managed, which clear what kind of adjustment must take have a significant international pres- might include employees, customers, and place within law firms to accommodate ence. What makes Skadden unique? shareholders. All these constituencies that shift. Are young people going to adapt We have seen, both internationally must be communicated with; the days of to the old way, or are we all going to adjust and domestically, a substantial increase in “no comment” are over, which I think to the new way? I would prefer the new the size of a number of law firms through CEOs understand. That said, it’s not help- way. However, the law is a very interesting mergers. This has changed the face of the ful if their attempts to communicate make business, and nothing is predictable. After legal profession, in that regional firms have things worse from a legal perspective. So all, there’s a reason they call our work become national firms, and national firms they expect us to provide them with a bal- “practice.” We’re always practicing; we have become international firms. But what anced and practical approach. never get to be perfect. makes Skadden unique is the fact that Has Sarbanes-Oxley (SOX) af- Is it difficult to retain the young we’ve grown organically rather than merg- fected the way corporations and their people whom you train? Does it ever ing with or acquiring other firms, and we leaders deal with crises? cause problems when people decide have dealt holistically with large-scale legal Yes. Indeed, Sarbanes-Oxley has led to move on? and business issues for more than 40 years. to a great deal of change. CEOs are now I’ve been with this firm for 26 years, Further, our culture encourages people to more directly involved in more aspects of and many people still work here who work together. This makes a very big differ- corporate oversight. This can be both chal- joined long before I did. There is a core ence in the quality of the service we can lenging and time-consuming, and they group – lawyers and non-lawyers – whose provide to our clients. Skadden remains at need a great deal of help. Now, everyone in first and only job has been at Skadden, so the top of its game because of the collegial, the corporate world needs to have a better- retention is not really an issue. For exam- team-oriented approach of an extremely than-passing knowledge, if not an in-depth ple, my research assistant in 1980 went on talented and committed group of lawyers. understanding, of the rules laid down in to become a partner in this firm. That said, In the end, that’s rather unique, and our Sarbanes-Oxley, and how they work. not every associate is going to become a clients appreciate it. How is public perception af- partner, so inevitably people will leave. But Is your crisis management work fected by this new emphasis on cor- generally speaking, we do a very good job primarily focused in the United porate malfeasance? Is there now a of keeping the people we want to keep, States, or is it more broadly based? sense that corruption is endemic and I think those who leave agree that To what extent do you see this type throughout the business world? their experience at Skadden has been a of work increasing overseas? Yes, I think there is. In environments great platform from which they can build Our crisis management work has like this, the pendulum always swings too exciting careers in law, business, govern- increased tremendously in the U.S. as well far to one side or the other, but I do think ment or the non-profit sector. In fact, as overseas. I think we’re going to see even it will swing back to the center soon. After many of them become Skadden clients. more of it internationally, as investigators in all, we don’t want to cripple our busi- Also, we make it a point to stay in con- foreign jurisdictions become more aggres- nesses. It would be a great mistake to tact with our alumni by identifying partners sive and follow the lead of their counter- over-regulate, because that would nega- to serve as liaisons to them, inviting alums parts in the United States. The regulatory tively affect the enterprises that keep the to periodic reunions, publishing a newslet- environments in Europe and Asia seem to American economic engine growing. We ter specifically for former Skadden attor- be evolving into more of a U.S. model. Of certainly don’t want to destroy ingenuity neys to keep them apprised of what’s course, there are different types of corpo- and innovation. going on at the firm and with their fellow rate crises. Reorganizations and bankrupt- You mentioned consolidation alums, and maintaining a section for cies are common examples; we have han- within the industry. Does a law firm alumni on our Web site. And recently, we dled these types of matters in Europe and need to be of a certain size and scope created an alumni career network to assist Asia, and I expect that will grow. in order to compete successfully? both alumni seeking new employment and You mentioned a few of the types I think it does, but it is more impor- clients who need to fill key positions. of corporate crises with which you tant to have the right people in the right Women play an important role have been involved. What other types places, with the right talents and expertise. within the firm. What has been the of crises do corporations face? Skadden has never wanted to be everything driving force behind that? There is no model for the corporate to everybody. Because of that, we have cho- From the time Skadden was founded, crisis – it can take any form, ranging from sen to place our foreign offices in financial all facets of diversity have been extremely corporate control contests, corporate gov- centers that are important to our clients. In important, and they remain so. Giving ernance issues and directors’ and officers’ those markets, we want to work on cross- diversity top priority is absolutely the right liability claims to accounting restatements, border deals, high-level arbitrations, and liti- thing to do as a matter of principle as well tax controversies, state and federal govern- gations – the types of practices we engage as for our business. We pride ourselves on ment investigations, Congressional hear- in in the United States. In order to succeed the fact that more than 60 of our partners ings, and securities or mass tort class on a global scale, we must have the talent, a are women, and we have women partners actions. Skadden has experience in advising vision of where we want to be, and a sense in numerous leadership positions, in on all types of crisis situations and is well- of clarity regarding what types of work we every specialty, and in nearly every office. positioned to find solutions for our clients. want to do. And we are very pleased with Skadden has been at the forefront among What do CEOs expect from your the global position we have today. law firms in trying to help women balance firm, and how has that expectation What do you consider the great- work-life issues, which sometimes evolved over the years? est difference between young lawyers involves working part-time. We also work

48 LEADERS POSTED WITH PERMISSION. COPYRIGHT © LEADERS MAGAZINE, INC. VOLUME 29, NUMBER 2 very hard at promoting ethnic diversity at I keep weighing the available options for relationships. We need to maintain our our firm. It’s important to keep this resolutions. You have to see the bigger relationships with current clients, as well emphasis on diversity at our core, because picture. When people ask me, “How are as create new client relationships. You we live in such a heterogeneous world. we going to do that?,” I just say, “We have can’t just sit back and wait for people to All of Skadden’s women partners to keep moving pieces around.” Of course, come to you. You have to be out there let- are invited to participate in an an- you have to have a vision of where you ting the world know that you have the tal- nual retreat with clients and other want those moving pieces to end up, and ent, experience, and ability to assist them women leaders. What is the rationale you’re always trying to get to that end and succeed. behind this event? goal. I never begin work on a corporate You have been responsible for The retreat is an opportunity to crisis without first determining where we some great wins in your career, in- deepen our relationships with clients and want to end up. It may be trying to settle, cluding two in the U.S. Supreme offer them a forum in which they can net- it may be trying to fight, or it may be trying Court. Do you ever take the time to work and develop relationships with oth- to fight and settle. But wherever you want appreciate all you have achieved? ers. These days, a lot of firms run wo- to be, you have to know how you’re going For a very short time, and then it’s on men’s retreats, but I believe we were one to get there. to the next problem and the next issue. of the first, if not the first. We take our In your position, your time is in- When I look back over everything I’ve women partners and women clients and evitably pulled in a number of differ- done, it feels good. And I am proud that go off for a weekend. We organize a num- ent directions. Many of your clients many of Skadden’s victories have had a ber of sophisticated programs with top- want Sheila Birnbaum, and no one substantial impact on the corporate world. notch speakers in addition to setting aside else will do. How important is it for For instance, our victory in the Avery case time for golf and the spa. At our most you to make time for direct client for State Farm in Illinois last year, in which recent retreat, three panels of clients and contact? we reversed a $1.1 billion judgment Skadden partners discussed issues rang- It’s very important. Very often, a against State Farm, has really changed the ing from crisis management to dealing client will specifically ask for me to lead face of litigation in Illinois. Not only did we with dissident shareholders, to joining a the team, and I don’t think I’ve ever made get the judgment reversed and dismissed, corporate or non-profit board. We also a promise to do so that I haven’t kept. which in itself was a great victory, but the talked more informally about issues that That means I have to juggle other things, Illinois Supreme Court also set down some affect women differently than they affect but it is very important for me to be avail- rules of the road concerning class actions men, including human rights, family able to clients. Of course, it’s much easier that will affect cases all across the state. So responsibilities, maternity leave, and part- today, with cell phones and Blackberries, we know that the work we do can have time work. as you’re never really away, no matter implications far beyond the immediate Before joining Skadden, you were where you are in the world. You pay a client and the immediate case. Our victo- teaching at New York University. What price for that, but your clients are entitled ries can affect the litigation landscape for made you think the move to Skadden to that personal interaction, because they the better, and that makes you feel like was right for you at that time? come to rely on your involvement and you’ve achieved something especially I really loved teaching. In fact, before judgment. It’s important to the corpora- worthwhile. I was a lawyer, I taught fourth grade in the tion. It’s important to the CEO, the general You still seem to enjoy your job public school system. How- counsel or the litigation counsel – who- so much, even after all these years. ever, I felt that the action in my area of ever you’re interacting with on a daily Do you feel that way every morning? interest – products liability – was not in basis – because when a crisis occurs, those Yes, I do. I feel blessed to be doing the law school, but in the courthouse. So I immediate decisions make all the differ- what I love to do, and what I have learned wanted to go back to the active practice of ence in the world. If you misstep in mak- to do well. It has been a long time, but I law, and I got in touch with Skadden after ing these decisions, there could be an still like coming to work in the morning a conversation with an old friend. Within a enormous price to pay, both in personnel and tackling the next problem. No two week of making contact with the firm, they and company finances. days are ever the same, and there are made me an offer to join as counsel. We all As your business continues to always new issues. I think you have to clicked, and I really liked the idea of build- grow globally, what are one or two evolve over the years to meet new chal- ing the firm’s products liability practice key priorities or challenges for the lenges. When I graduated from law from the ground up, as well as the energy, firm going forward? school, I could never have envisioned the lack of pretentiousness, and entrepre- Our top priorities are continuing to legal world as it is now. But here I am, still neurial spirit of the firm. And who could hire and train the brightest and most moti- having a great time, and I can’t imagine turn down the opportunity to work with vated legal talent, and having the right doing anything else.• Joe Flom? Joe’s support for building my practice was unflinching. Everyone was incredibly helpful in trying to make my practice work, but he and John Feerick [who later became dean of Fordham Law School] were especially generous. This has always been a very open firm, and all that really matters here is merit. Skadden’s aim is to deliver the best service possible, and for that, you have to have the best people, and help them to stay at the top of their game. In corporate crises, you’re dealing with very tense situations and very tense people. How do you stay calm? As people get tenser and more hys- terical, I get calmer. It’s a blessing that’s in my genes; it’s not something I have to work at. I am very calm in crisis situations; Skadden’s women partners at the firm’s annual retreat for senior women clients

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