Both Sides of the Aisle
Gadsby & Hannah Goes Bi-partisan
It became apparent by the mid-sixties that Gadsby, Hannah, Colson & Morin was “too Republican.” Several of their clients, including Grumman’s Lew Evans, told them they should get a high-profile Democrat in the firm. It turned out that, at that very moment, Lynch’s pal Dick McGuire was looking for a place to hang his hat – if he were to join, he would add the Democratic powerhouse to the firm. Dan Lynch brought Dick into the office, and they chatted for a long while. Colson had done a good deal of work with McGuire while representing the New England Council. McGuire was very close to the entire Democratic leadership, especially Tip O’Neill, who was then chairman of the House Rules Committee. Due in large part to Lynch’s relationship with McGuire, he was eager to join the firm, but he said he wanted to bring in a lawyer from New Orleans named Merrigan with him. How could they say no?
Morin and Colson reviewed the scenario over a few drinks. Now how would they name the firm? Merrigan wanted his name in it, McGuire too. They came to a practical solution. They were running the firm – who cared what the name of the firm was? So they agreed – they both dropped their names, and the firm became Gadsby, McGuire, Hannah, and Merrigan. Befitting their new powerhouse image, they moved into penthouse offices at 1700 Pennsylvania Avenue, perhaps the most prestigious address in the District, looking out at the White House next door.
In 1968, Florida Senator George Smathers retired from the U. S. Senate. Smathers was elected in 1950 after Harry Truman recruited him to run against Claude Pepper, who had been part of a cabal that attempted to dump Truman from the 1948 ticket. He beat incumbent Pepper soundly, but the race is most famous for a speech Smathers apparently never gave. Smathers was alleged to have given a speech in rural Florida that went something like, “Are you aware that Claude Pepper is known all over Washington as a shameless extrovert? Not only that, but this man is reliably reported to practice nepotism with his sister-in-law, and he has a sister who was once a thespian in wicked New York. Worst of all, it is an established fact that Mr. Pepper before his marriage habitually practiced celibacy.” No one could prove that he ever said these things, but it has become part of political lore.
Smathers was a friend of Merrigan, and landed at 1700, where business was rolling along stronger than ever.
But not all was fine in the penthouse. Merrigan and Colson did not get along at all. Merrigan was very high-strung and had a ferocious, uncontrollable temper – a brilliant lawyer, and a New Orleans gentleman, except when he got mad. Colson couldn’t resist goading him, and eventually Merrigan had had enough of Colson and left.
The Mutual Fund Business Explodes
By 1967, due in large part to Morin’s reputation, the firm had been retained to represent the ten largest mutual fund organizations in the country (Keystone, the United Fund, Fidelity, Mass Investors Trust, to name a few) against the SEC’s attacks. The SEC’s offensive, and Morin’s defense of the industry, would eventually culminate in the passage of Investment Company Amendments Act of 1970.
At the same time, there was a ferocious battle going on between the banks and the mutual funds. Banks wanted the rules of their common trust funds relaxed so they could take fees from them and still be exempt from registration with the SEC (giving them a competitive advantage over the mutual funds). One of their most important allies was James Saxon, who was Comptroller of the Currency at the time. Saxon’s top priority as Comptroller was to expand the national banking industry and to liberate national banks from regulation he determined to be unduly burdensome, putting them in direct competition with the mutual funds. During his first year in office, Saxon approved 434 new bank charters, compared to the 237 charters issued in the previous decade.
Five years earlier in February 1962, Saxon had appointed an Advisory Committee of 24 bankers and lawyers to review the findings of a survey conducted with national banks. The committee published its findings the following September in a volume entitled National Banks and the Future. With these recommendations as a foundation, Saxon permitted national banks to engage in businesses they had previously been denied entry to, including the sale of insurance, revenue bond underwriting, and the issuance of credit cards.
These developments exacerbated the disputes between the two industries, to the point where the Investment Company Institute (then called the National Association of Investment Companies) brought a lawsuit against Citibank and the other major national banks to enjoin them from conducting these forms of business. It was a very, very bitter fight between mutual funds and national banks, with billions of dollars at stake.
Saxon was one of Dick McGuire’s cronies in the government. In 1967, he was preparing to leave the Comptroller’s office and enter private business.
Morin received a call one day from Wilfred Godfrey, the chairman of the Keystone Funds. Godfrey, a hard-nosed, crisp Welshman and CPA by training, was calling from Paris.
“Say it isn’t so.”
“What isn’t so?”
“I’m reading in the Herald-Tribune here in Paris that Jim Saxon has become a member of your firm.”
Morin said emphatically, “No way is he a member of this firm, or ever will be.”
“Well I’m pleased to hear you say that, because obviously our relationship is at an end if he becomes involved in your firm.”
And Morin assured him there was no truth to it, and promised him he would find out how the report had come to light.
Morin and Colson went straight to McGuire, who confirmed that, without consulting either Morin or Colson, he had told Saxon, “I’ve got an office for you, you make the announcement.” So Saxon announced to the press that he was joining the firm.
Colson let McGuire know there was no way that Saxon was coming into the firm.
McGuire said, “it’s Saxon or me.”
Colson said, “It’s you then – good luck!”
And McGuire left, joining with Saxon in a venture that failed in short order.
With McGuire and Merrigan gone, Colson and Morin were once again faced with the name change issue, which they resolved once and for all. The firm would simply be called Gadsby & Hannah, no matter who came or left. And that is the way it remained, even decades after both Morin and Colson had left, until the firm merged with McCarter & English in 2006.
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Tags: charles morin, dick mcguire, fidelity investments, george smathers, James Saxon, Tip O'Neill, Wilfred Godfrey