The greatest legal product ever sold was doing absolutely nothing

If you run a service business, you are probably trying to figure out how to bill more hours, sell more deliverables, or package your "methodology." This is because you lack imagination.

In the late 1970s, the most profitable product the New York law firm Skadden, Arps sold was a service it explicitly did not perform.

Corporate boards were terrified of hostile takeovers. So, they paid Skadden a hefty retainer. The point of this retainer was not to seek Skadden’s brilliant legal counsel. The point was to make sure that when a corporate raider eventually came for them, the raider could not hire Joe Flom.

Inside the deal world they always love a casually sociopathic metaphor and simply called this paying to "sterilize Joe."

Consider the elegance of that structure for a minute. Every service brand sells something invisible, like a promise or a feeling of safety. Skadden managed to sell something even thinner: its own absence. The client was not buying a lawyer. They were buying a guarantee that a specific lawyer would not be legally permitted to stand across the table and destroy them.

A business model where you charge premium rates to not work sounds like a joke you tell at a bar association mixer. For Skadden, it was the foundation of a global empire.

Here is how a firm built by outsiders managed to survive itself. The Christian Science Monitor’s review of Caplan mentions “sweat-shop” work habits and critics on ethics.

The firm was founded on April Fools’ Day in 1948 by three guys who had failed to make partner at established firms. They started with $12,000.

That same year, they hired their first associate: Joe Flom. Flom was Jewish, the son of garment workers from Brooklyn. At the time, the elite "white-shoe" firms of Wall Street operated like private country clubs and had zero interest in hiring him. So, Skadden scraped together $3,600 a year to bring him on.

Flom’s early legal specialization was simply "whatever the person with the checkbook needed him to do." It took him seven years to find his niche: proxy fights and hostile takeovers.

People like to write books about his brilliant strategic foresight, but at the time, it was mostly just a strong aversion to starvation. Flom’s move into takeovers had less to do with being a mystic who foresaw the 1980s deal boom, and entirely to do with the fact that the white-shoe firms refused to touch them. The prestigious firms thought hostile takeovers were “dirty business." Their aristocratic corporate clients didn't want their lawyers rolling around in the mud.

So Big Law left the mud completely empty. Flom had it to himself for two decades.

The Growth Lesson: Skadden’s first, impenetrable economic moat was simply the snobbery of its competitors. The establishment firms built the barrier to entry, handed Flom the keys, and locked themselves out.

Every law firm is constrained by one very annoying rule: you cannot act on both sides of the same fight. For 99% of law firms, this is a cost of doing business. It means turning away revenue.

Skadden reverse-engineered it into a subscription model.

By 1978, Flom was the undisputed king of the mud. He was involved in 21 of the 22 major hostile takeover contests in the United States. When one guy is in every single fight, his sheer availability is a strategic asset.

So companies started paying for it. Put Skadden on retainer, and you legally conflict them out of representing anyone trying to buy you.

Look at what this does to a balance sheet. The conflict-of-interest rule, designed by the bar association to limit a firm, became the actual product. Every new retainer client was just a future defense mandate waiting to be triggered. At this turn, Skadden charged a massive premium because the work was urgent.

In a small market with one dominant expert, being unavailable to the other side has a value of its own.

Every successful chaotic business has a rainmaker who makes the money, and an exhausted operator who makes sure the rainmaker doesn't accidentally burn down the building.

At Skadden, the rainmaker was Flom. The guy with the ledger was Peter Mullen.

Mullen arrived at Skadden in 1961 after being passed over for partnership at Dewey Ballantine. (There is a beautiful, dark irony here: Dewey Ballantine eventually became Dewey & LeBoeuf, which famously imploded in 2012 in the largest law firm bankruptcy in history, largely tied to paying its partners money it didn't have. The firm that rejected Mullen died of the exact disease he spent his life curing).

While Flom was out terrifying corporate America, Mullen slipped a radical piece of financial engineering right under the partners' noses: he withheld 7.5 percent, after tax, from every partner’s account.

In a firm full of hyper-aggressive, overworked lawyers fixated on profit, Mullen unceremoniously skimmed the top to build a war chest. Flom made the firm rich. Mullen made sure the money didn't tear the partnership apart.

By 1978, Skadden was the top money-making firm in America. It was also, by all accounts, a chaotic, frenetic workaholic factory. Their internal watchword was "opportunism."

Normally, this is how service firms die. They ride a massive wave, hire a thousand people, sign 20-year office leases, and completely drown when the market shifts.(San Francisco’s Brobeck did exactly this with the 1990s dot-com boom. They built a hyper-aggressive culture, leased a palace, and evaporated by 2003 when the tech money ran out).

In markets like India, firms keep their shock absorber somewhere else: inside the word “partner.” As Legally India has noted, one firm’s partner could be another firm’s senior associate, and at some firms salaried partnership is the norm while equity is the exception. In 2016, India’s largest firms ran at between 2.3 and 5.9 fee-earners per partner, according to Legally India’s figures. Count only equity partners, and JSA’s 2015 ratio jumps to 8. A deep bench of salaried partners gives a firm room to adjust in a lean year without betting the building on one wave. It is less a pyramid than a staircase with a very flexible landing.

Skadden survived because Mullen took the cash from the 1980s takeover frenzy and used it to buy permanent breadth. He oversaw expansion into new practices and 14 new offices, including Tokyo. By 1990, they had $500m in revenue and 1,000 lawyers. When the M&A market eventually slowed, the firm didn't collapse, because it was no longer just a takeover shop.

The dirty secret of scale: A frantic, toxic culture is entirely survivable, provided someone in the back office is quietly converting the chaos-cash into diversified assets before the music stops.

Fast forward to March 2025. The Trump administration is preparing executive orders to punish major law firms over their diversity and pro bono work.

Other firms, like WilmerHale and Jenner & Block, strap on their armor and sue the government.

Skadden? They get word the order was coming and go to the negotiating table. They cut a deal, committing to $100 million in pro bono work (veterans' affairs, countering antisemitism) to ensure the executive order never gets issued.

Alumni are furious. They write open letters invoking Joe Flom's legacy of fighting the good fight. But from a purely structural standpoint, you have to admire the absolute consistency of the firm's DNA.

In 1978, Skadden charged clients money to keep itself out of a fight. In 2025, Skadden committed $100 million of free legal work to keep itself out of a fight.

It is the exact same survival instinct. Only the direction of the wire transfer changed.

The Ultimate Takeaway: Skadden’s brand was never "we are the most polite, well-run firm in the world." Its brand was "we are the lawyers you cannot afford to face." You didn’t hire Skadden for their bedside manner. You hired them to make absolutely sure their artillery was facing outward.

You can survive an infinite amount of internal dysfunction, so long as you legally monopolise your clients' worst fears.

A confession before you go: none of this was written to teach anyone how to run a law firm. We wrote it because we find the business of law endlessly entertaining, and because a firm that got paid to stay out of the room is too good a story to leave alone. If you came looking for an actual strategy, we have, regrettably, written that too. We’ve looked at why a law firm’s marketing materials end up as, essentially, a historical fiction novel, how lawyers love to talk about being "trusted advisors” and why this can become a comforting delusion, how Reading the Economic Times and emailing the partnership to say "we should pitch this" is an industry-wide disease, or how the only way to sell preventative legal advice is to secretly smuggle the broccoli inside the cheese sauce of an M&A deal they’ve already agreed to fund.

And then there is more where that came from. Such as when the Red Sea is blocked, your cargo ship took a detour around the entire continent of Africa, and now highly paid lawyers in London are fighting to the death over who has to pay the surcharge for 14 extra days of diesel fuel.

Those pieces have far fewer jokes about Joe Flom, and far more about what to do on Monday morning.

About the author: Prachi Shrivastava is a qualified lawyer, a former business journalist, and the Founding Advisor at Lawfinity Solutions.

Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.

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