Q&A with Arnold S. Jacobs

Proskauer Rose’s Arnold S. Jacobs, a ’64 Cornell Law graduate who has been called “the dean of securities law” by Crain’s New York Business, took Donna Karan International and Bear Stearns public. He defended William Casey, when he was head of the CIA, in a securities fraud matter. He represented the biotech company Celgene in a more than $1 billion equity public offering. Oh, and he set a world record by writing a law review article with 4,824 footnotes.

Let’s start with the 4,824 footnotes. How did that come about?

Until 1984, I held the record for the most footnotes in a law review article: 1,247. Then a professor wrote an article with 1,611 footnotes, besting me handily. I sent him a congratulatory letter (with footnotes), but he never responded. I then decided to write an article with so many footnotes that no one would ever beat the record. The topic of the 495-page article was an in-depth treatment of Section 16 of the Securities Exchange Act, governing reporting and short-swing profit recapture of insiders of public companies. Twenty-one years later, for better or worse, I think I still retain the dubious title.

How did you find out about the record in the first place? Was it in the Guinness Book?

I did try to get it into the Guinness Book of World Records. Twice in fact. But, as my son says in the book he wrote¹, the Guinness Book of World Records was more interested in identifying persons with fingernails as long as rattlesnakes rather than the extraordinarily profound and important issue of who holds the footnote record for law review articles. As a consolation prize, the new record did make it into the Harper’s Index,² The New York Times,³ The [London] Times,⁴ The Wall Street Journal,⁵ The National Law Journal,⁶ and (of course), numerous publications understandably poking fun at footnotes in law reviews in general and my record specifically.

So what drew you to the law?

I know this is going to sound corny: it was the intellectual challenge and the prospect of being with nice, smart and dedicated professionals. Think of how early in your legal career you can perform intellectually challenging work. Really, almost from the day you start practicing after law school. And the intellectual challenge becomes greater the longer you are in the profession. How many other jobs in the world give you this opportunity?

Once you began practicing law, how did it differ from what you expected?

The matter on which I was completely naïve was the differences among law firms.

Some firms have talent in depth, a cooperative sprit and good management (Proskauer fits comfortably in this classification). At the other extreme, other firms are akin to a series of individual lawyers practicing under the same roof with a revolving door though which the partners regularly leave. In the cooperative, well-managed firm, the best minds and talents are devoted to solving client problems as a team. On the other hand, the client suffers when lawyers in a firm are not motivated by the corporate culture to pitch in.

What do you enjoy most about your work?

Creating new methods of accomplishing a result for a client. This does not happen often but it did for me in 2007.

We were the lead counsel for three hedge funds and a mutual fund trying to take over a large public company, Take Two Interactive⁷, without a proxy fight or tender offer.

The management in place at Take Two in early 2007 was not popular with stockholders. It was, however, popular with a wide variety of regulators, which were investigating its affairs. The four funds replaced the management by showing up at the annual meeting and voting the 46 percent of the stock they owned. The funds’ designees were elected because the four funds had more votes than the management. This is the first time any public company board has been changed in this way, ever, anywhere.

It sounds simple, but the legal analysis was very complicated.

What’s the best piece of advice you’ve ever received?

The first was that the partners who control the clients control the firm.

The second was never submit a memorandum, contract or letter to a client that contains a typographical error. No matter how brilliant the legal analysis, how clever the drafting or how cogent the reasoning, the client will believe that the advice given is less than perfect.

One day, I wrote a letter to the general counsel of a client. His name was Stuart Krinsly. By mistake the letter was addressed to Stuart Krinsky. So I would add a corollary: if you make a typographical error, don’t misspell the client’s name. But matters were even worse. I did not know that Stuart had changed his name from Krinsky to Krinsly, and he tried to keep the name change secret. So the axiom to the corollary is that if you insist on misspelling a client’s name, don’t under any circumstances use the name with which the client was born but from which he had secretly changed.

Nice advice. Did you lose him as a client?

Nope. He stayed with us for many years.

1  A.J. Jacobs, The Know-It-All, One Man’s Humble Quest to Become the Smartest Person in the World p. 15.

2  Harper’s Index, May 7, 1989.

3  The New York Times, June 9, 1989.

4  The Times, January 17, 1989.

5  The Wall Street Journal, December 12, 1988.

6  The National Law Journal, January 16, 1989.

7  A few months ago, Take Two launched the video game Grand Theft Auto IV. GTA IV’s launch was the biggest in dollar terms of any entertainment event, ever, anywhere.