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2 Leaders, 2 Years Later

They lost colleagues and loved ones along with their headquarters at the World Trade Center. Now they reflect on the tragedy of September 11 and their return to business almost-as-usual.

At 4:30 one morning two months after the World Trade Center fell, James Dunne walked through the streets of Midtown Manhattan toward a borrowed desk in a borrowed office. “Getting to work early?” a construction worker asked. And then, sensing something, he added, “Were you downtown?” Dunne, the sole surviving partner of Sandler, O’Neill & Partners, late of the south tower’s 104th floor, nodded.

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“Give ’em hell!” the worker urged.

A few months later, John Duffy was checking into a hotel in California. When the clerk punched in his frequent-flier number, she gasped and burst into tears. The address that came up: 2 World Trade Center, the south tower, where Duffy’s firm, Keefe, Bruyette & Woods, had occupied the 88th and 89th floors.

It was like that the first year, when the simplest acts could be freighted with heroism or colored by grief. Both men had been leaders of boutique investment-banking firms, and heartbreaking numbers of their employees died on September 11. At Sandler, O’Neill, Dunne lost his two partners — one a mentor, the other his closest friend. At Keefe, Bruyette, Duffy lost his co-CEO and his 23-year-old son. But they survived and kept going. Competitors and clients rallied, offering office space and business. New employees filled the ranks of the lost and poured everything into their jobs. Transactions tumbled in; the firms’ fortunes soared. The press followed their stories — Dunne’s firm was on the cover of Fortune that January — and Duffy published a book, Triumph Over Tragedy.

Now, as the second anniversary approaches, it is all in some ways much harder. The urgency, camaraderie, and sense of mission have faded. The firms’ milestones are noted in internal memos instead of newspaper headlines. Coming to work, once a daily act of heroism, is now more of a daily grind. With time and breathing space, says Dunne, “You doubt yourself. You wonder all the time. [Before] it was so obvious what to do. It was much easier in that sense.”

But if life is less vivid at the two firms, the creeping sense of normalcy is a sort of triumph. Truth is, Keefe, Bruyette and Sandler, O’Neill have thrived; each firm has emerged from its time of trial not only larger than before, but stronger and more supple. Dunne lost 66 of his 171 employees. Today, he has 222, and Sandler, O’Neill underwrote 24 M&A deals last year, more than any other Wall Street firm. Keefe, Bruyette, which lost 67 of 220 employees, has 258 today and was just three deals behind Sandler last year. Part of it was the luck of timing. The shattered firms were in rebuilding mode just when the rest of Wall Street was exhaling employees, so they had their pick of qualified applicants.

And while Duffy and Dunne have suffered terrible loss, they, like the firms they lead, have become stronger and more nimble. Suddenly, the rough-hewn Dunne found himself forced to fill the roles of his dead partners — Chris Quackenbush, with his soft, empathetic touch, and founder Herman Sandler, with his sage perspective. “I was always the bad guy,” Dunne says. “But without Chris and Herman, we don’t have that balance anymore.” Duffy, though always a conscientious manager, learned to pay closer attention to his employees’ emotional state — especially as events like the anthrax attacks and the crash of American Airlines Flight 586 in Queens rubbed nerves raw again. “What you couldn’t afford,” Duffy says, “was three people that were ready to freak out, freaking out the other five that weren’t really that nervous.”

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Both men have also settled into much more prominent roles as the public faces of their firms. That, too, is a big change. Duffy had long ducked the press — and all the more so after Keefe, Bruyette suffered an embarrassing scandal involving its former CEO and a porn star. At Sandler, O’Neill, colleagues claimed that putting the blunt Dunne on the air would damage the firm’s business. Today, the two are highly visible leaders. Duffy published his book, the proceeds from which go to the families who lost loved ones at Keefe, Bruyette. This June, Dunne and Jack Welch were key speakers at Leadership Day, a yearly JP Morgan Chase affair. Dunne was introduced as a “superstar.” His late partners, he laughs, would have thought twice before letting him attend. “I’m direct,” he says. “I’ll let it rip.”

With Duffy, now 54, the sense of relief at the return of business-as-almost-usual in the second year is all but palpable. “This is business,” he says firmly. “This isn’t family. If we can’t demonstrate that we’ve got the products or goods or services that our clients need, they’re going to go someplace else.”

For Dunne, 46, the second year has brought time for introspection. “See, the adrenaline that was running through the first several weeks and months was just enormous,” Dunne says. “You weren’t taking stock, you were reacting. Now, the kids are in bed, the phone has stopped ringing. The second year, there’s been much more time to think about it.”

One of the things he thinks about is how much he misses those two partners of his. “What I loved about my job was I had been with the two smartest guys I knew,” he says, gesturing toward their photos, taped to his office window. “We’d talk and they might convince me that I was wrong, or I might convince them that they were wrong. I don’t have that luxury anymore.” Dunne takes down the photo of Chris Quackenbush and studies it briefly before returning it to its spot on the window. And for a moment, his own reflection appears in the glass between the images of his two dead friends.