B000U5KFIC EBOK (18 page)

You know, someone once told me New York had more lawyers
than people.'

Warren Buffett

ERTAINLY WE WERE NEVER GROOMED FOR THE LAW," said Wendy
_JMunger, an attorney who teaches arbitration and negotiation
part-time at the University of California at Los Angeles Law School. But,
she added, "We do tend to be a pretty verbal bunch."

Emilie Munger was definitely influenced by family tradition when
she decided to enroll in law school. Law was "a way to understand the
family," explained Emilie. "I think we're all analytical that way. Philip
didn't chose law, but could have. He likes to read and think and analyze.
He twice won the California state championship as a high school
debater."

There was no grand plan, but the Munger children have tended to follow family tradition when it comes to careers. Four of Nancy and Charlie's eight children are attorneys, and five of their children are married to
lawyers.

Molly Munger was the first of her siblings to take the step, though
she probably chose law more by instinct than by reason. "My family had
no particular consciousness-girls grew up and got married and you
should have something to do-in case your husband died or something.
That thinking had an influence on me. My last year at Radcliffe, in the
spring the other girls all had the diamond rings. I didn't think `I'm going
to Harvard Law like my dad,' but when I realized I didn't have a job, I
thought I should go to grad school. I wasn't good enough in math for economics. Then I filled out this Harvard Law questionnaire, which asked,
did any member of my family attend Harvard...."

For Molly, a light went on. She knew it was the right thing to do.
Charlie Munger, usually reticent about expressing his emotions, let his
first daughter know how he felt about her decision in an indirect way.

"Only extremely rarely had he done anything at Christmas or birthdays other than a check or cash," said Molly. "The idea of him out
shopping is extremely funny. He bought us all Brooks Brothers gift certificates, He loves Brooks Brothers. Or once he was enamored with a certain type of briefcase, so he bought all of us one. He's the kind of man
that when I graduated from college, I said 'I've graduated.' Then I said, 'I
think it would be nice if you bought me a watch.' He looked up from his
paper and said 'Oh yes, that's very appropriate. Go out and pick yourself
out a watch and send me the bill.' And as I left he looked up again and
said, '. . . and have it engraved, from your loving father.' So imagine my
amazement my freshman year at law school, living in a seedy' Cambridge
student duplex with such poor heating that one person spent the whole
winter standing in front of the oven. I was unwrapping this package from
my father. It's this thing. This nicely framed set of head shots of four people. My great grandfather, my grandfather, my father, and my high school
graduation picture. Some little note from him. Well -love from Daddy.' I
clung to that object."

Despite her original ambivalence, Molly took to the profession deeply
and happily. She worked in the U.S. Attorney's office in Los Angeles as a
prosecutor, then built a private-practice career bringing suits against perpetrators of complicated financial scams. In time, she followed her heart
and went into public interest law. Molly was among the leaders of a coalition in the late 1990s who made a futile attempt to defeat a proposition
that eliminated affirmative action in California schools and government.
In the late 1990s, she, some colleagues, and her husband Steve English,
founded a public-interest law organization called the Advancement Project. There, Molly continues the sort of work she formerly did for the National Association for the Advancement of Colored People and other civil
rights organizations.

IN 1962-riiE SAME YEAR Buffett started buying shares in the beleaguered
New England textile manufacturing company, Berkshire HathawayCharlie Munger helped established two new ventures in Los Angeles. The
first was a law firm and the second was a securities firm called Wheeler,
Munger and Company.

A breakaway group of Musick, Peeler & Garrett colleagues prevailed
upon Charlie to join them in creating a practice that quickly became known as a group of "superlawyers," a premier small firm with clients
not only in Los Angeles, but across the nation. Charlie had been with
Musick, Peeler & Garrett for 13 years when he and six other attorneys, including Roderick Hills (later chairman of the Securities and Exchange
Commission) and his wife, Carla Anderson Hills (who in time became the
U.S. Trade Representative), struck out on their own. Their idea was to be
a democratic organization, meet the highest standards of conduct, recruit
only the best, and build the finest law firm anywhere.

Roy Garrett by this time had developed heart trouble and in order to
ease the load on himself, brought into the firm a high-level man who
Charlie described as a "control freak." Munger was among the seasoned
attorneys who finally got fed up.

"The formation of the new law firm was not at the time perceived as
a pure sad loss for Musick, Peeler & Garrett," said Charlie. "Everyone
hated to see Fred Warder and Dick Ebenshade leave, but many welcomed
the departure of others, particularly Rod Hills and Charlie Munger. The
new managing partner especially hated Rod Hills' constantly maneuvering himself into responsibilities that, at other firms, were not handled by
lawyers so young."

Nancy Munger recalls this period of rebellion as one of the most exciting phases of her life: The real estate ventures were underway and
"Most of the discussion about forming the new firm went on at our house.
Charlie also established his first investment company. He cut loose from
our past. I didn't have sense enough to be scared. I had faith. I didn't
worry a lot. I had more children and just lived."

Her confidence in the new projects was bolstered by her knowledge
of her husband: "He judges people pretty well-which ones to join with
and which ones not to join," said Nancy. "He has avoided attaching himself to people who are problems-that's helpful."

Rod Hills, rather than Charlie, was actually the driving force behind
the new firm. A street-smart lawyer, Hills talks fast, and covers a lot of
ground. He was horn in Seattle, but when he was still very small, his father lost his job and the family headed for California. Their car broke
down in Oregon and they hitchhiked the rest of the way to Los Angeles.
Hills grew up in East LA, played football well enough and earned good
enough grades to get a scholarship to Stanford. He found his calling when
he enrolled in law school and ended up clerking at the U.S. Supreme
Court. It was Munger who recruited Hills for Musick, Peeler, & Garrett.

"It was not the hardest firm to get a job with," said Hills, "but they
had a couple of people like Charlie who were quite unusual. After three
years, the firm offered me a partnership. I decided I didn't want to accept, for a lot of reasons. We had a baby, my wife was Assistant District
Attorney, there was a senior partner I didn't think much of. I decided to
quit. Charlie said he'd quit, too. We'd share office space. He said he didn't
really want to practice law anymore. I said okay, as long as I can use your
name on the firm. Charlie is the most unique person I've ever met. In
many respects, he reminded me of justice Frankfurter. He has the same
kind of mind. He wouldn't accept anything on face value. His interest in
almost everything can be so intense, he will have a perspective that others will not have. He's a fair person, he can understand the prejudices and
weaknesses of other people and make allowances for them. He is not as
judgmental as others. He wasn't a lawyer like other lawyers. He would
take on clients that he cared about. He worked for people that I would not
have worked for. He used to say, `Why do you insist upon being a traditional lawyer? You guys were first in your class at Harvard, Yale, and
Michigan; many of you clerked in federal court. Do things that other people aren't doing.'"

When they branched out on their own, Hills was 31 years old and
Carla Anderson Hills was 28. To them Munger, who was only 38 but had
the demeanor of a much older person, represented grey hair and maturity.

Carla Hills was a native Angeleno who attended Stanford, where she
made a name for herself playing tennis. She then went on to Yale Law
School, and after graduating in 1958, worked for two years as Assistant
U.S. Attorney in Los Angeles.

"My father had a great working relationship with Carla Hills," said
Molly. "He thought she was a great working lawyer." Though Molly wasn't
consciously aware of it at the time, her father's respect for Carla Hills may
have been a signal that it was acceptable for Molly to study law as well.

Some of the lawyers brought clients with them into the new firm and
Charlie was no exception. Rod Hills estimates that in the early years,
Charlie's clients provided at least 10 percent of the work. In addition,
Hills said Munger was instrumental in helping them hold on to existing
clients and attract new ones.

"We started out with Aerojet General and Federal Mogul," recalled
Hills. "They all came with us because it looked like we had some substance with Charlie there. Charles Rickershauser had been with Gibson,
Dunn and Crutcher, but was California's corporations commissioner. He
wouldn't have joined our firm if Charlie hadn't been there. Because he
did, we got the Pacific Coast Stock Exchange as a client."

Hills said the practice started off with a healthy burst and quickly got
even better. "The first year we made any real money in the firm, all of a
sudden I was rich, I'd made money. Somebody had made a suggestion about a tax shelter investment. I said, `Charlie, I've got this terrific investment opportunity.' I thought it was great, but Charlie said, `I have a much
better idea fora tax shelter.' He said `Give me the money.' I said, `As a matter of interest, what are you going to do with it?' He said, 'I'm going to
keep it. You're going to lose it either way. I'll pay the taxes on it and will
be eternally grateful for the contribution.' I took that as my lesson not to
invest in this tax shelter."

Rod and Carla Hills were partners in the firm from 1962 to 1974.
Carla gained experience in anti-trust and security cases and also taught at
the University of California at Los Angeles as an adjunct professor. The
Hills switched to careers in politics when in 1973 Carla was offered the
post of Assistant U.S. Attorney General in the administration of Richard M.
Nixon. The offer became void after Attorney General Elliot L. Richardson
resigned in the "Saturday night massacre" of the Watergate affair in February 1974. However, William B. Saxbe, the next attorney general, renewed
the offer. Hills became Assistant Attorney General in charge of the justice
Department's civil division. In 1975, she was nominated Secretary of
Housing and Urban Development by President Gerald R. Ford. She served
as U.S. Trade Representative from 1989 to 1993 in the cabinet of President
George Bush. She now has a consulting firm, Hills & Co., that works with
corporations on trade issues.

Rod Hills also clambered up the White House political ropes. He left
Munger, Tolles in 1974 to become White House General Counsel to President Gerald Ford and then ended up as chairman of the Securities and Exchange Commission. He now has a consulting firm, Hills Enterprises, and
spends most of his time on corporate workouts, reorganizing or closing
down troubled companies. His most publicized assignment was with the
now defunct Drexel, Burnham Lambert following its junk bond scandal.
Most recently Hills has worked with Federal Mogul Corp. and Waste Management Inc.

Once ensconced in Washington, the Hills stayed but they remain
connected to Munger, Tolles. Of the Hills' four children, three became
lawyers. Their daughter Allison married Kelly Klaus, an attorney in the
Munger, Tolles' San Francisco office.

During those early years, Charlie kept cementing relationships that he
felt were valuable to the firm, including attracting Chuck Rickershauser,
another former clerk at the U.S. Supreme Court, as a partner. Munger
and Rickershauser met in 1965 when Munger was moonlighting as a real
estate developer. A new statute had been enacted in California dealing
with condominium-like projects. It was a change in the concept in real estate law, and Munger thought the legislation hadn't been written properly. Rickershauser was about 36 years old at the time and was serving as corporations commissioner under Governor Pat Brown.