I just read Susan Beck’s piece at the American Lawyer reflecting back on 25 years of legal journalism. That prompts this odd post.
The year is 1987. There’s a hearing in a court in San Francisco that will likely affect the price of a publicly traded security. An arbitrage house retains us: “We must know the result of that hearing first — the instant the information becomes public. We want to be able to trade before our competitors can act on the news.”
What do you do?
You and a colleague arrive at the courthouse an hour before the hearing will begin. One of you goes to the pay phone on the second floor of the courthouse — down the hall from where the hearing will be held — and gets on the line to New York. That person is about to hold an open line to New York for three hours.
The other of you goes into the hearing room, elbowing your way to a seat in the back, near the door. (It’s like the sign outside the country church: “Services 9 am Sunday. Come early for a seat in the rear.”) The hearing lasts a couple of hours, and the judge announces the ruling. All of the lawyers and arbitrageurs push through the door and run down the hallway.
Ha! All of those other guys curse as they run past your guy, who’s holding the open line to New York! You get on the phone and explain the decision. The guy in New York says: “Repeat that.” You repeat it. The guy in New York shouts: “Buy!!!”
And all of the other lawyers and arbs are just now jostling out of the courthouse doors downstairs, heading to the Greyhound Station across the street, where there’s a bunch of pay phones.
So your arbitrageur-client is a happy man, and he retains you again several months later . . .