Last week I had a chance to sit down with Howard Altarescu of Orrick, who I felt compelled to get to know better when he was the first, and still the only, person to know the answer to a question I like to pose, whenever I have the chance, to groups of lawyers discussing business issues facing law firms. First the question, and then my conversation with Howard. (The answer to the question is at the end of this column, but jumping ahead, as P.D. James or Sir Arthur Conan Doyle would attest, is cheating.)

Q.: What is the one line item that appears on virtually every corporation’s balance sheet but not a single law firm’s?

Actually, that introduction was not remotely fair to Howard, although it was intended to engage you, Dear Reader, in thinking about the answer to the question as you read on. The fact is that I’d heard about Howard for quite some time and when I found myself in the same room with him, the opportunity to connect was not to be denied.

Howard’s background is distinguished, to say the least:

  • Boston University BA and BS
  • Boston University School of Law JD and Articles Editor, Boston University Law Review
  • Partner at Cadwalader
  • More than 20 years at Goldman Sachs
  • And now a partner at Orrick, since June of 2008 (think about that timing for a moment-after Bear Stearns’ collapse but before Lehman’s). 

Howard is today working with a number of financial institution clients run by former Goldman colleagues (and others) and is also representing the FDIC on its proposed new securitization program.

Howard also considers himself a confirmed capitalist and a Liberal Democrat, which is a combination I find scarce and therefore (Econ 101) valuable. Part of that relatively unusual combination of traits may come from Howard’s background, where he was the second college graduate in his family and the first to go to law school. His father owned a small TV shop in the Bronx, and Howard grew up in New York and, save for his BU days, has always been based here.

And, since you asked, none of his three children is going or will go to law school, and that appears to be more than fine with Howard.

But back to Howard: He joined Cadwalader right out of law school and had the good fortune to become a protege of Tom Russo (now GC of AIG after a brief stint at Patton Boggs and 15 years as chief legal officer at Lehman Brothers). Early on at Cadwalader, Howard worked on the seminal KKR deal of Houdaille Industries. KKR was so little known in the market at the time that the team had to conduct due diligence on who, exactly, these guys were.

Howard also got the chance to work on the first Freddie Mac structured mortgage pass-through offering in 1975. When I say “first,” I mean first. Howard related how he was told to sit down with a clean legal pad because there were literally no precedents for this type of deal structure. He walked the halls at Cadwalader, going from partner to partner, asking them for their input in each separate piece of the deal.

This led to other first-of-its-kind deals, including representing Freddie Mac on its first CMO issuance (in 1983) and Goldman Sachs on its first mortgage-backed bond issuance (1984, in case you were wondering).

Shortly thereafter, Goldman decided to get into the mortgage business in a serious way and hired Howard away from Cadwalader. He would be there for over 20 years.

Howard was head of the mortgage finance department, and soon became involved in Mexico advising the government on the creation of a secondary mortgage market. This led to a fine run until the 1994 peso crisis, which needless to say blew it all away. But in the process, Howard had been “bitten by the emerging markets bug.” He reported that the following six years (1994-2000) involved his commuting to South America and leaving notes for his children such as “Tuesday: To Mexico. Wednesday: Argentina. Thursday: Home for dinner.” Stress on the system aside, this seemed to work until Mexico defaulted, Russia defaulted, and Argentina defaulted. Howard reports his reaction at that point: “No mas!”

What next? John Thain, then President of Goldman (2001) suggested Howard go to the equities division, but, Howard reports ruefully, he declined. Rueful? Yes, because Howard returned to the mortgage department (COO of Principal Finance, Head of Mortgage Finance and other roles) and then the mortgage market simply died. Whereupon Howard decided it was time to do something else.

While Howard was in discussions with a number of former Goldman colleagues and others, a long-lost friend from 20 years earlier at Cadwalader, Mark Levie, called Howard from Orrick and one thing led to another.

Why Orrick?

“I hadn’t, honestly, followed the firm and I was not looking to go back into the practice of law; but the more I got to know about Orrick and the more people I met, the more I felt that this was something different and quite interesting. The attitude was innovative, commercial, and entrepreneurial.  There was also a focus on teamwork and culture that very much reminded me of Goldman Sachs.  Partners on the transaction side like Cam Cowan in DC, Michelle Taylor in Hong Kong, and Jim Croke and Ron D’Aversa in New York, as well as litigators like Mike Delikat, Josh Rosenkranz and Michael Hefter, really know their clients, take a proactive approach, post other partners on developments, and treat their practice as a business.”

So what does Howard actually do today?

“I have a broad strategic, advisory and business development role. A typical day involves lots of calls and meetings, with clients focused on business development opportunities as well as with other partners on a variety of transactions and other matters. Like at Goldman, I believe there is great value to the firm in teamwork, being inclusive and open, posting broadly, giving others the opportunity to provide input as well as for all to benefit from whatever may be learned in particular situations.”

And when is the mortgage securitization market coming back?


He reported that they’re working on deals, some of which are private placements that don’t rely on ratings agency imprimaturs. In the short term, he believes, there won’t be a large volume of deals because of the difficulties in getting a rating agency blessing; but in the meantime, smaller deals can be done with sophisticated investors without ratings, and some public deals are also possible.

I tell Howard that I don’t believe ratings agencies will ever again have a scintilla of credibility, and I ask him how will we ever again have large-scale deals in that case?

He proposes a future in which consortiums of investment banks or other institutional investors could sponsor mutual ratings.

As a securities lawyer, I can’t resist asking him about what the disclosure documents for these hypothetical new securitized issues would look like. First, he penetrates to the heart of the issue of disclosure documents with this memorable observation:

“Disclosure documents have always been written for litigators after the fact.”

Going forward, Howard says we need to get back to the founding purposes of the securities laws:  “Full, fair, and accurate disclosure to investors must be the primary purpose.”

He believes that the key provisions in deal documents will involve the loan repurchase enforcement mechanism when there are rep/warranty breaches..  In exigent circumstances, who gets what voting rights and when? Recalling, perhaps, the early days of his career when no templates existed and there was little if any prior art: “Nothing is carved in stone.”

Meeting adjourned.

So what, if anything, can we learn from Howard’s experience?

You may be concluding, “Not much,” because you’ve decided it was a different era. And indeed it was, in many ways. Howard reported that when he was a first-year associate at Cadwalader (nine months in, to be precise), Tom Russo was leaving to join the then-newly formed CFTC and Howard was told that he would be taking over Tom’s key client relationships in the broker-dealer sector because “you know these people better than anyone else in the firm.”

Could that happen today? You be the judge.

But something more timeless and essential struck me about Howard’s career: He was at the crossroads of innovation.

A couple of weeks ago I participated in a conference at Georgetown Law (which I had helped organize), during which Prof Peter Sherer of the University of Calgary presented a paper  about the history of leading law firms during the Great Depression. His conclusion?

The firms that survived, and thrived for another 80 years and potentially more, were those that had a “critical mass of flexible young partners” and that were able to remake their firm competencies and expertise and, accordingly, benefit from a flight to quality by clients.

How does this relate to Howard’s career?

  • Agility
  • Being at the forefront of what’s new
  • Thinking young

Take a lesson.


And oh yes, the answer to the question posed at the top of the show?

Retained earnings.

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