"Clients Are Extraordinarily Understanding"

Today's Wall Street Journal profiles H. Rodgin "Rog" Cohen, Chairman of Sullivan & Cromwell. 

Here at "Adam Smith, Esq.," we're not into gossip and we're not into profiling celebrities (well, celebrities in our world, anyway) for the sake of same--unlike some sites doubtless familiar to you.

However, the roster of high-profile firms Cohen has represented just in the past few weeks is stunning, including AIG, Barclays, Fannie Mae, Goldman Sachs, Lehman Brothers, JP Morgan Chase, and Wachovia.  According to this creative graphic from the NYT's "DealBook," Cohen was tied to more rescues in the past couple of months than anyone else save Hank Paulson, Ben Bernanke, and Tim Geithner, President of the New York Fed.

If you're keeping score at home, Cohen scores connections to six deals; Richard Beattie at Simpson Thacher, Edward Herlihy at Wachtell, and Brad Karp at Paul Weiss tie for second (among lawyers) with three apiece; and Donald Bernstein at Davis Polk and Harvey Miller at Weil Gotshal tie for third with two apiece.

But that's not why I'm writing about Rog Cohen.

I'm writing about him because of this observation:

Mr. Cohen's immersion in the banking system also has at times put him in a difficult position. As he jumps from one client to the next, it is sometimes hard to tell whom he may be representing at a given moment.

In mid-September, Mr. Cohen represented Wachovia in its preliminary merger talks with Morgan Stanley. Several days later, after those talks faltered, he advised Japanese bank Mitsubishi UFJ Financial Group as it negotiated a 21% stake in Morgan Stanley.

Mr. Cohen was counseling Lehman Brothers until it sought bankruptcy protection Sept. 15, and then pivoted to represent Barclays, which ended up buying the failed investment bank's U.S. operations. Late last month, as banks and private-equity firms rushed to examine WaMu's books, Mr. Cohen had to choose between four clients that wanted to hire him before settling on J.P. Morgan.

This foursquare raises the issue of conflicts, at a level of the game and an intensity of the stakes that we've rarely seen before. And Rog Cohen's response is simple: While it's certainly true that "Sometimes you just have to pass" on assignments, he says, the far more telling remark is that most of his clients have "extraordinary understanding of the circumstances."

"Conflicts!" has often been raised as an objection to the increasing consolidation of the global legal marketplace. How could it be possible, this line of reasoning goes, that the Global 100 law firms could consolidate to (pick a number) the Global 5, the Global 10, or the Global 25, without running grossly afoul of conflicts?

Rog Cohen has just given us our answer.

And the answer is slightly more nuanced than that "clients are extraordinarily understanding." It's what Jamie Dimon has to say elsewhere in the same article: "I don't think you can replace judgment and experience and he has both in great quantities."

Now we're getting closer to the issue. By all accounts, Rog Cohen (and, yes, credit where due, his team at S&C) are the "go-to" people in banking crises like these. Why wouldn't the most sophisticated clients want to hire the most sophisticated team to go to bat for them?

This, by the way, is exactly the same phenomenon expressed with pellucid brevity in my favorite plaque of all of those dedicated to Central Park benches, which appears on one on the east side of the walk just north of the Zoo, donated by an anonymous but clearly once-needy client: "Stanley Arkin, 'The Man to Call.'"

So if Rog Cohen is "the man to call" if you're AIG, Barclays, JP Morgan Chase, Lehman, etc., in these situations, where exactly is the "conflict?"

Clients don't perceive one, and I would like to ask what cramped, sclerotic, and antiquated view of what "professionalism" means could find one?

Let's go one better: In what other profession would going to the most qualified expert raise the hint of the shadow of the bizarre notion of "conflicts?"

If your firm needs a strategic management consultant, would you deem one who has dealt with similarly situated firms "conflicted?" If you need an orthopedic surgeon, would you go to anyone other than the most highly qualified and experienced in your metropolitan area? Rule out a banker who knows law firms inside out?

You get the point.

Clients are adults, and can by and large be trusted to know their self-interest best.

Are, then, the 19th-Century notions of "conflicts" a barrier to globalizing and consolidating law firms? If you want my view, it's that clients seek concentrated--not dispersed--expertise, and that deep and long-standing industry knowledge is precisely where competitive advantage comes from. This stands "conflicts" on its head, and says that clients seek depth, not shallowness.

Then again, if you don't want to take my word for it, ask AIG, Barclays, JP Morgan, et. al. Or just ask Rog Cohen.