ON SEPTEMBER 17, 1973, Thomas Barr, heir-apparent to the senior litigation partner at Cravath, Swaine & Moore, perhaps the most famous corporate law firm in America, sat with Nicholas Katzenbach, former United States attorney general and IBM's general counsel. Katzenbach had just been notified that the Securities and Exchange Commission had suspended trading in IBM stock, indicating that a federal district court in Oklahoma was about to hand down its decision in an antitrust case brought by the small Telex Corporation against IBM. Since the late '60s, IBM had been involved in several antitrust cases, filed by struggling competitors. In all these suits, the company had prevailed. Indeed, a myth of invincibility had grown up around the company and its prestigious law firm.

As James B. Stewart tells it, in The Partners, when the light blinked on the telephone, Katzenbach called in Frank Cary, IBM's chairman; as the news was relayed, Katzenbach "turned pale." The judge had awarded Telex "$350 million in damages--the first time in history a plaintiff had been awarded more than one-third of a billion dollars. It was a loss of staggering proportions." In the next few weeks, the true magnitude of the loss began to be felt. Other computer companies filed law suits based on the Telex case. The United States government suddenly began to move forward with its own antitrust suit against IBM. In a short period of time, the price of IBM stock fell more than $60 a share on the New York Stock Exchange, which some Cravath lawyers called "the Barr market."

When the decision against IBM was handed down, the Cravath lawyers "were shocked, their image of Cravath's invincibility shattered. But they were even more shocked by the reaction of the IBM businessmen, who were apoplectic. Some looked suicidal; one burst into tears . . . For the young lawyers especially, in whom institutional loyalty to Cravath was only just taking hold, it was disturbing to watch the impact of a threat to the company on company men."

Against this background, Katzenbach, according to Stewart, rather than firing Cravath, gave the firm carte blanche: they were to win the Telex case on appeal, defeat all the other private plaintiffs, obliterate the United States government suit, regardless of cost, time limitations, or other restrictions. With the company on the line, IBM and Cravath organized a firm within a firm. Barr assembled what might be described as a legal SWAT team. He isolated his chosen recruits physically and mentally from the rest of the firm, and his handpicked litigators gave him their complete loyalty, working 24-hour days and subordinating their personal needs. Their recreation became Saturday football games organized by their disciplinary-minded leader. Divorces and other personal problems were suffered without comment as the cases wore on, in the end consuming almost a decade in the life of some of the young lawyers.

What was it like to go up against the Cravath shock troops? "I had never encountered anything like it in my life," one lawyer opposing Cravath remarked after losing his case, "The sheer manpower that took, the cost, I just felt overwhelmed. I've often wondered how they could operate if the client imposed any cost control at all. Everything showed this attitude. They buried us with paper. They produced reams of paper in futile endeavors. They made requests for admissions of fact that were ridiculous. We stacked up the paper--it was five or six feet tall." Cravath introduced a new standard to litigation. Motions to dismiss cases against IBM--supported by voluminous memoranda, with thousands of individual citations to the trial transcripts--were produced seemingly overnight, aided by banks of computers. Yet if only a firm like Cravath, organized like an army and supported by a company such as IBM, could have done such work, opposing counsel were still held to these new standards. Invariably, they were found lacking. By the end of the decade, IBM and Cravath had prevailed on all fronts, overwhelming and humiliating even the Justice Department.

IBM's antitrust battles were among the most important legal events of the '70s-- written about by several skilled reporters. But to my knowledge, Stewart is the first who has given us a concise readable report of the campaign from the viewpoint of IBM and Cravath. In his description of the IBM litigation and of other significant cases handled by a score of the most important corporate law firms in America, Stewart has attempted to "provide the true measure of the institution." It is a goal which has been attempted before, but Stewart is the first to come close to success.

A former associate at the Cravath firm, and a reporter for American Lawyer, Stewart has organized his book, like the texts used in American law schools, into case studies. Each chapter is devoted to an analysis of one or two influential corporate law firms, and to one important case or incident involving the firms. Stewart's goal is to catch the firms "at times when the stakes are high" and the law firm is stretched "to the full limit of its power." Moreover, he has sought to provide cases that illustrate the variety of law practiced by these firms. We see the law firms negotiate to protect their clients, America's most important banks, and simultaneously free the American hostages during the Iranian crisis. If this is perhaps the most sensational example of the power of the elite corporate law firm, it is also compelling reading. In the field of estate law, Stewart shows us how the venerable Wall Street firm of Milbank, Tweed, Hadley & McCloy handled the estate of Nelson Rockefeller. The bringing forth of a public offering of securities is illustrated by the example of Genentech, and its powerful San Francisco law firm of Pillsbury, Madison & Sutro. The near bankruptcy of a client by the example of Chrysler. A corporate takeover is detailed in the attempt of Curtiss-Wright to swallow the giant Kennecott Copper. All the illustrations are well chosen: they chronicle the birth, growth and illness of the American corporation, and the law firms' role as midwife, godfather and undertaker.

Institutions are Stewart's focus, and he never forgets that an institution is a sum of individuals. His disclosures are sometimes lurid. One Cravath lawyer, according to Stewart, displays "such bad judgment that he seemed at times positively dangerous . . ." and "came precariously close to the line between ethical and unethical conduct." Others, when the pressures increased, are described as exhibiting behavior that was "eccentric" and "odd."

I have no way of knowing if these descriptions are accurate, but having worked in a Wall Street firm, I think they ring true in general terms. Certainly, the pressure of high-powered corporate litigation, such as the IBM case, takes a huge toll on the lawyers involved and leads to erratic behavior, which has until now been best described by novelists such as Louis Auchincloss.

For all of the revelations in The Partners, it promises more than it delivers. Most lawyers familiar with the practice of corporate law in a major firm feel that the law firm, as an institution, is in the midst of change. Associate lawyers seem less willing to endure the long haul required to achieve partnership. And if they do not ultimately become partners, they are not in the least inclined to take the blow gracefully, ascribing their failure to their own mistakes. Instead, many see the decision as one of crass economics on the part of the firm. Legal education has improved vastly in the past 20 years, and it is difficult to distinguish between the top graduates of America's 10 or 20 best schools. Moreover the secrecy surrounding the nation's elite legal institutions is breaking down. At times, partners squabble publicly, and associates talk candidly with reporters about a firm's work.

In short, there is a breakdown in institutional loyalty, and though it is chronicled in Stewart's book, it is never examined. Stewart makes provocative statements, hinting at a summary to come. Thus, "IBM became a case that so taxed the institution of the corporate law firm that neither Cravath nor any other firm like it will ever be the same again." But cases like IBM are relatively few in number, and during the Reagan administration they are practically nonexistent. Stewart never explains his comment. This caveat aside, Stewart has written a facinating, fast moving narrative study of a vital American institution.