WASHINGTON -- Wood Dawson & Hellman, the bond counsel firm that attracted nationwide attention in the mid-1980s when it was sued by the holders of $2.25 billion of defaulted Washington Public Power Supply System bonds, is being absorbed by Hawkins, Delafield & Wood, Hawkins announced Friday.
All eight Wood Dawson partners will join Hawkins Delafield as of today. The absorption of the firm, which agreed in August 1988 to pay bondholders $500,000 to settle the lawsuit filed over the firm's role as WPPSS bond counsel, signals the end of small, specialized New York municipal bond firms, market observers said.
Wood Dawson, which had continued as a prominent market player despite the WPPSS litigation, joins a string of other longtime specialty firms that have merged with such major players as Willkie Farr & Gallagher: LeBoeuf, Lamb, Leiby & MacRae; and Brown & Wood.
"We know the lawyers at Wood Dawson are excellent, and WPPSS is behind them," said Robert C. Rosenberg, a member of Hawkins Delafield's management committee, who also said in a telephone interview that the merger will give Hawkins Delafield "a much better geographic dispersion.
"Their strength lies in airport financing, public power, and general obligation work, [while] we do work in all areas. But they have clients in places who do not," including Alaska, Hawaii, Tennessee, North and South Carolina, and Virginia, he said.
"This is a very important step for our firm," Mr. Rosenberg said. "There are a lot of firms that have been redeploying personnel in other areas, such as bank or corporate work. It shows the stability of the municipal market that we are able to continue to grow when [other] people still hesitate. We will be offering more services with much more depth," he said, noting that the firm will continue to expand areas like resource recovery contracting work and corporate trusts.
In 1991, Securities Data Co. ranked Hawkins Delafield the leading underwriters' counsel firm for public finance transactions and the fifth leading bond counsel firm by volume. Wood Dawson ranked as the seventh leading bond counsel firm by volume in 1991.
Wood Dawson partner Samuel Hellman said the firm's WPPSS experience "did not enter into our decision" to join Hawkins Delafield. "We would have probably done it anyway," he said. "Many other smaller firms [like us] have taken a similar tack."
The announcement that Wood Dawson had agreed to pay bondholders only $500,000 stemming from the default of WPPSS nuclear power projects 4 and 5 bonds stunned the bond industry, which had expected the firm that helped draft official statements for the deals to get a stiffer penalty. Bondholders had charged in their lawsuit that the firm defrauded the public by preparing statements with material misrepresentations and omissions.
The figure was considerably smaller than the $7.25 million that WPPSS special counsel Houghton Cluck Coughlin & Riley had agreed on Dec. 24, 1988, to pay bondholders. Houghton Cluck had malpractice insurance, while Wood Dawson had none.
"It is the end of an era," said Dean Pope, a partner with Hunton & Williams in Richmond. "They were the last of the small specialty bond firms."
Another market observer said, they were the "last holdout" in an area that has grown increasingly complex. Just trying to keep up with arbitrage is overwhelming. "Add to that increasingly dealing with securities law, corporate law, and bank matters. I suspect this is the final shoe dropping on" the New York bond specialty firm.
"They've been through a pretty scary experience," the source added, referring to WPPSS. "Not having malpractice insurance worked to their advantage in settlement negotiations but, it's still pretty scary."
Hawkins Delafield attorneys say the law firm, organized in 1892, is one of the oldest in the country. It has offices in eight cities.
Wood Dawson is a direct descendant of a firm established in the late 1880s and has specialized in public finance since the turn of the century.
The following seven Wood Dawson partners will join Hawkins Delafield in its New York office: Mr. Hellman, Brendan O'Brien, Edward J. McCormick, Steven I. Turner, Donald G. Gurney, John B. Pirog, and T. Kam Wong. The eighth partner, John M. McNally, will be located in Hawkins Delafield's Washington office.