Baker & Hostetler LLP History

Company Perspectives:

Baker & Hostetler LLP was founded on the belief that we would strive to create successful, long-term relationships with clients, dedicate ourselves to the profession and be good corporate citizens in the communities where we live and work. That belief has helped us grow into one of the nation's largest law firms with 500 attorneys operating from nine offices coast to coast and in every time zone. Our firm has been shaped by the strategic integration of skilled attorneys who have a strong work ethic and a dedication to client service. We have developed the people, the experience, the resources and the technologies to provide legal services worldwide. Through our multidisciplinary approach, we help clients meet their business, professional and personal objectives. Whether our work is a corporation's complex multi-district litigation or an individual's financial and estate planning, clients receive comprehensive legal services. We add value to the services we provide by listening to clients, learning their businesses and counseling them as advisors, confidants and, in many cases, friends. Key Dates:

Key Dates:

1916:

The partnership of Baker, Hostetler & Sidlo begins in Cleveland on January 1.

1924:

The firm moves to larger facilities in the Union Trust Building.

1931:

The firm is renamed Baker, Hostetler, Sidlo & Patterson.

1938:

The firm becomes Baker, Hostetler & Patterson after Tom Sidlo retires.

1939:

A Washington, D.C. office is opened but then is closed in 1943.

1971:

The firm's first merger is with Cleveland's Falsgraf, Reidy, Shoup and Ault.

1973:

The firm reestablishes a Washington, D.C. office.

1979:

The firm adopts its permanent name of Baker & Hostetler; merges with the Washington, D.C. firm of Morison, Murphy, Abrams & Haddock; begins offices in Orlando, Florida, and Columbus, Ohio, through mergers with local firms.

1980:

Merger with Orlando's Johnson, Motsinger, Trismen & Sharp adds a Winter Park satellite office; merger with Clark, Martin & Pringle leads to Baker & Hostetler's first Denver office; Cleveland office relocates to the National City Center; merger with Columbus firm Moritz, McClure, Hughes & Kersher adds ten lawyers.

1986:

Seventeen lawyers are added from merger with Columbus firm of Gingher & Christgensen.

1988:

The firm closes its Winter Park office and moves its Orlando office to the SunBank Center.

1990:

Merger with McCutchen, Black, Verleger & Shea adds offices in Los Angeles, Long Beach, and Houston.

1997:

Firm opens a Cincinnati office.

2000:

Formal affiliation with Brazil-based Franca Ribeiro Advocacia, is announced.

Company History:

Headquartered in Cleveland, Baker & Hostetler LLP is one of the nation's largest law firms. It provides counsel in virtually all legal specialties to large corporate clients such as Ford and Boeing, small startup firms, and also foreign governments such as Peru. It serves traditional industries and also more recently created companies in such cutting edge areas as computers and biotechnology. The Baker law firm remained a modest operation until multiple mergers in the 1970s and 1980s added hundreds of attorneys and new branch offices in several states.

Origins and Early History

The law firm of Baker, Hostetler & Sidlo was started by three of Cleveland's top lawyers during the Progressive movement. Newton Diehl Baker (1871-1937) graduated from Johns Hopkins University and then the Washington and Lee University Law School in 1894. In 1901 Cleveland Mayor Tom L. Johnson recruited Baker to work for the city, and in 1902 Baker became the head of the city's new law department. There he helped Johnson push for various reforms and from 1912 to 1915 served as Cleveland's mayor. Mayor Baker soon recruited Joe Hostetler and Thomas Leon Sidlo, two graduates of Cleveland's Western Reserve University.

When his second mayoral term ended, Baker decided to form a law firm with his two aides as his fellow partners. Shortly after the partnership of Baker, Hostetler & Sidlo was formed, Baker became President Woodrow Wilson's secretary of the War Department. The other two partners in 1916 served two main clients: the National One Cent Letter Postage Association and the International Molders Union of North America.

While Baker remained in the Wilson cabinet until early 1921, the firm added many new clients, including the Toledo Street Railway Commission and also the publisher of the Plain Dealer, which remained a client into the 1990s. E.W. Scripps hired the firm to write his will and trust, which led to representing the Scripps Howard newspaper chain for decades. In 1920 the Baker firm helped incorporate the Midland Bank, which remained a client until it merged with The Cleveland Trust Company in 1946. Other new clients in the 1920s included General Electric, Goodyear, the Federal Reserve Board, American League of Professional Baseball Clubs, the Federal Reserve Board, and the Hydraulic Steel Company. They began representing the owners of the Cleveland Indians baseball team, and in 1927 lawyers Baker and Hostetler became minor owners of the team.

In the 1920s and 1930s the firm represented the state of Ohio in a lawsuit called the Chicago Water Steal Case. Ohio and several other states objected to the depletion of Lake Michigan when its waters were diverted to flush sewage out of the Chicago River. A 1929 U.S. Supreme Court ruling prevented the uncontrolled diversion but also resulted in the construction of locks that regulated the water flow into the Chicago River. This case helped build the Baker firm's national reputation.

Another 1920s case ended up having widespread ramifications. The Baker firm represented The Ambler Realty Company and other landowners who objected to the Village of Euclid's zoning law that limited their development to just residential use. According to the Baker firm's history, in 1924 the U.S. Supreme Court 'ruled in favor of the Euclid ordinance in a landmark decision that opened the way nationally for widespread zoning.'

During the Great Depression, the federal government created the Tennessee Valley Authority (TVA) as a public power entity. The Baker firm represented a group of private electrical power companies headed by the Commonwealth and Southern Corporation that sued the government over what some critics said was an unconstitutional and socialistic program. However, the TVA survived the challenge and remained long after the Depression ended.

Although several Baker lawyers left for military or government service during World War II, the firm continued to provide services. Probably its most significant litigation was United States v. Cold Metal Process Company (Baker's client) filed in 1943. Although the government appealed this case all the way to the U.S. Supreme Court, it ultimately failed to cancel two Cold Metal patents used in making steel. The Baker firm continued to represent Cold Metal in other litigation filed during the 1950s.

Practice in the Post-World War II Era

In 1947 the Baker firm's clients, a group of plumbing supply companies, were granted an acquittal by the trial judge in a case where the federal government tried in vain to prove a general distribution antitrust conspiracy. Filed in 1940, United States of America vs. Central Supply Association was 'the largest mass trial in the history of the U.S. District Court for the Northern District of Ohio,' according to the Baker firm's history.

The firm prospered in the immediate postwar period. In 1949 it brought in over $1 million in fees for the first time in its history. During the 1950s, the partnership successfully represented major league baseball in several important lawsuits that challenged baseball's exemption from antitrust laws, its farm system, and the so-called 'reserve clause.' Baseball also used the firm to help it preserve the rights of individual teams to control broadcasts of their games.

In the 1970s and mainly the 1980s the Baker law firm grew rapidly through multiple mergers and the addition of its first permanent branch offices. This expansion was led by Managing Partner John Deaver Drinko, a West Virginia native who had joined the firm in 1945. In 1971 the firm acquired the 12 lawyers of Cleveland's Falsgraf, Reidy, Shoup & Ault, whose clients included Continental Products Company, Newbury Industries, and the business interests of Cleveland's Frohring family and Cincinnati's Schott family. Two years later the firm added its first office outside of Cleveland when it merged with Washington, D.C.'s Frost, Towers, Hayes & Beck, a five-lawyer practice that dated back to 1923. The Frost firm represented Sperry Rand, Textron, and other Fortune 500 firms.

In 1979 the firm took several major steps. First, it adopted the permanent name of Baker & Hostetler. Second, it strengthened the Washington, D.C. office by merging with that city's Morison, Murphy, Abrams & Haddock, a ten-lawyer firm that had been started in 1952. Morison, Murphy specialized in antitrust and administrative law for clients such as Frontier Airlines and Sperry & Hutchinson.

The Baker law firm played a role in resolving Ohio's savings and loan (S & L) crisis that began in 1985 when Cincinnati's Home State Savings Bank collapsed after losing $144 million. Andrew Welsh-Huggins wrote, 'Home State took down the Ohio Deposit Guarantee Fund and started a run that eventually led to the closing of 69 other thrifts insured by the private deposit insurance fund.' Under the direction of Robert B. McAlister, a Baker lawyer appointed to head Ohio's Commerce Department's Division of Savings and Loan, eventually all the closed S & L's were allowed to reopen.

M & As, IPOs, and Other High-Profile Work: 1990s-2001

In the mid-1990s Baker & Hostetler's work in mergers and acquisitions (M & A) increased, which led the firm to add to the 50 lawyers in its Business Practice Group in Cleveland. Most of them worked on M & A, plus securities and debt and equity financing. For example, the Baker firm assisted McDonald & Co. Investments Inc. when it helped Qualitech Steel Corp. raise $500 million. The law firm also backed Boykin Management Co.'s initial public offering and represented Key Equity Capital Corp. when it bought CSM Industries Inc. for $50 million.

The firm in 1997 opened a new office in Cincinnati to cover southern Ohio, since it already had offices in Cleveland and Columbus in northern and central Ohio. The firm's clients in the Cincinnati area included E.W. Scripps Co., which owned the Post newspapers and WCPO-TV.

Genetically engineered foods became a major controversy in the 1990s, so in early 2000 the U.S. Department of Agriculture set up a committee to make suggestions concerning health and trade issues involving biotechnology. The department appointed Baker & Hostetler's Dennis Eckart, a former Democratic senator from Ohio, as the committee chairman.

Baker & Hostetler represented the government of Peru in a case with possible widespread consequences for other nations. The Second Circuit U.S. Court of Appeals in October 2000 ruled that Elliott Associates, a New York hedge fund, was entitled to all of Banco de la Nacion's assets in New York State to pay off a debt guaranteed by Peru, which ended up settling out of court for $58 million. Peru, with the law firm's counsel, had tried to pay a reduced amount under the Brady Plan that allowed for creditors to partially forgive developing nations' debt under certain terms, but Elliott refused the offer. The appeals court decision could encourage other creditors to seek full repayment of loans and thus make it more difficult for debtor nations to restructure their debt.

The Cleveland law firm in 2000 also was involved in a sensational case concerning the murder of Marilyn Sheppard about 45 years earlier. Her husband, Dr. Sam Sheppard, served ten years in prison before the Supreme Court overturned the murder conviction that led to the television series and movie The Fugitive. The follow-up trial, for wrongful imprisonment, would ultimately determine if the estate of Dr. Sheppard, who died in 1970, would be entitled to compensation for lost wages. Baker & Hostetler represented James Neff, who was writing a book on the case. Neff's research files initially were sought as evidence in this case that pitted the search for truth against First Amendment rights, but the prosecution decided to drop its requests.

After several years of working together on various projects, in 2000 Baker & Hostetler strengthened its international practice by starting a formal affiliation with Sao Paulo, Brazil's Franca Ribeiro Advocacia. Started in 1951, the Brazilian firm of 36 lawyers served mainly corporate client based in Latin America, the United States, and Europe.

As of August 31, 2000, Baker & Hostetler had 166 lawyers in its Cleveland home office. Its largest branch office, in Washington, D.C., had 80 lawyers, followed by 76 in Columbus, 48 in Orlando, 45 in Houston, 41 in Denver, 31 in Los Angeles, ten in Cincinnati, and five in Long Beach. Its litigation practice of 190 lawyers and its business practice with 156 lawyers were by far its two main concentrations.

At the end of the 1990s, Baker & Hostetler increased its gross revenues but declined in the American Lawyer's annual ranking of the largest U.S. law firms. It went from 53rd in 1997 (based on gross revenue of $162 million), to 54th ($180 million) in 1998, to 63rd in 1999 ($191 million). The partnership of over 500 lawyers had come a long way from its original three lawyers but faced stiff competition from other large law firms. For example, its 1999 profits per equity partner of $340,000 was less than that of 90 of the other elite American firms in the annual survey. Baker & Hostetler was also not listed in the world's 50 largest law firms in a survey in the November 1998 issue of the American Lawyer.

At the start of the new millennium, Baker & Hostetler faced stiff competition from numerous large law firms, including some with many more lawyers. The United Kingdom's Clifford Chance and Chicago's Baker & McKenzie each had about 3,000 lawyers. New laws and international pacts, such as the North American Free Trade Agreement, presented other challenges to the law firm's clients. While Baker & Hostetler had no overseas offices, many of its rival law firms maintained at least a few such branches in order to cope with an increasingly globalized economy. These were just a few of the situations that would impact the future of Baker & Hostetler.

Principal Competitors: Akin, Gump, Strauss, Hauer & Feld, L.L.P.; Paul, Weiss, Rifkind; Skadden, Arps, Slate, Meagher & Flom.

Further Reading:

• D'Allegro, Joseph, 'Collecting on Peru's Sovereign Debt,' Global Finance, January 2001, p. 63.
• Franz, Neil, 'USDA Names Chemical Reps to Biotech Panel,' Chemical Week, February 2, 2000, p. 18.
• Gleisser, Marcus, 'Law Newton Baker,' Plain Dealer (Cleveland), December 31, 1999, p. 13S.
• Hagan, John F., 'Prosecutor Abandons Effort to Get Author's Notes,' Plain Dealer (Cleveland), February 4, 2000, p. 3B.
• Johnston, David Cay, 'Writer Fights Subpoena in Sheppard Case,' New York Times, January 10, 2000, p. C13.
• Kelly, Katherine, Foundations for the Future: A Commemorative Volume in Honor of Our 75th Anniversary: Baker & Hostetler, Counsellors at Law, LXXV, 1916-1991, Cleveland: Baker & Hostetler, 1991.
• Larkin, Patrick, 'National Law Firm Opens Office,' Cincinnati Post, September 11, 1997, p. 6C.
• Schiller, Zach, 'Baker & Hostetler Growing in Mergers, Acquisitions,' Plain Dealer (Cleveland), January 1, 1997, p. 2C.
• Segal, David, 'In the Business of Billing? Lawyers Say a Rush for Money Is Shaking Profession's Standards Series: The Ethics Squeeze: Law Series Number: 2/3,' Washington Post, March 22, 1998, p. H01.
• Welsh-Huggins, Andrew, 'Robert McAlister, Who Helped Pull Ohio from S & L Crisis, Dies,' Cincinnati Enquirer, December 11, 1999, p. C8.

Source: International Directory of Company Histories, Vol. 40. St. James Press, 2001.

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