Lehman Brothers Kuhn Loeb was until 1984 one of the most prestigious investment banking partnerships on Wall Street. A partnership can be visualized from an economic perspective as a roughly symmetric voluntary contractual relationship among a nonhierarchical team of players – a “nexus of contracts” in every sense of the term. If one partner feels he can do better elsewhere, he can buy his way out of the contract. Because arrangements are roughly symmetric and because all contracts are voluntary, an economic analysis would indicate that there is little rationale for political strategizing, and still less justification for bitter competition for a position of political “authority” in the firm.

Such a perspective, however, fails to capture the relevant aspects of the bitterly political infighting that led to the dissolution of the firm in 1984. In July 1983, securities trader Lew Glucksman, coleader of the partnership, demanded that Peter Peterson resign as chairman of the firm. Peterson, who had been secretary of commerce under Nixon, found all avenues of appeal cleverly anticipated and blocked by the Machiavellian plots laid by Glucksman. The board of directors accepted Glucksman's demands to be appointed chairman and paid Peterson the necessary severance pay. This development dramatized, but did not heal, the rift between the aggressive securities traders led by Glucksman and the more traditional investment bankers in the partnership. Rumors flew, and counterplots were hatched. More and more partners demanded that they be bought out; each departure made the firm more vulnerable to the next.