Dow Jones family's power rests with Hub law firm

The fate of Dow Jones & Co. and its flagship newspaper, The Wall Street Journal, lies in the hands of a patrician New England family that has shunned hands-on management and has instead entrusted much of its legacy to powerful but discreet Boston lawyers.

The Bancrofts, heirs to the controlling stock of Dow Jones, have a $5 billion offer for their company from media magnate Rupert Murdoch and his News Corp. The family indicated Tuesday that it is not interested, and late yesterday the Dow Jones board said it would not act on the offer.

But that has not dampened speculation about a possible sale, which has continued to buoy Dow Jones stock since it jumped 55 percent on Tuesday.

The Bancroft heirs, who collectively own stock that would be worth about $1.2 billion if the Murdoch offer were accepted, have occasionally been divided on the question of how best to manage their Dow Jones holdings. While the heirs are scattered about the country and engaged in their own endeavors, the center of their financial power has remained in Boston, with the law firm of Hemenway & Barnes , on State Street, which will probably play a major role in their final decision .

With about 30 lawyers engaged in trust and estate law, Hemenway & Barnes has a catch phrase -- "A Wealth of Experience" -- that neatly describes its niche: managing old money.

Underscoring the law firm's influence, messages on Tuesday and Wednesday declining Murdoch's bid were relayed to Dow Jones by Hemenway & Barnes partner Michael B. Elefante. He is a Bancroft family attorney and a director who sits with three Bancroft family members on the 17-member Dow Jones board.

Nancy Reimer , an attorney at Donovan Hatem LLP in Boston who often works on cases involving family trusts, said Hemenway & Barnes has developed a powerful reputation for handling the estates of generations of wealthy Bostonians. In the case of the Dow Jones bid, she said, Hemenway & Barnes seems to be functioning as the "de facto gatekeeper" for the Bancroft family.

Although members of the family have said they are committed custodians of The Wall Street Journal, people who know family members describe them as being more involved with charities and other projects than with their company's flagship publication.

"There was a principle: The Bancrofts stayed out of the business," said Nell Eurich Lazarus , of Cambridge, former dean of Vassar College and a longtime family friend.

The contrast with other modern press families that control such papers as The Washington Post and The New York Times and lead those properties full time is striking.

Few Bancrofts have worked in Journal management, and the three cousins who remain on Dow Jones's board have put most of their energies elsewhere. One, Leslie Hill , became a pilot for American Airlines; a second, Christopher Bancroft, runs an investment company in Texas.

The third, Elizabeth Steele , runs a redevelopment company in Burlington., Vt., and is better known for her ties to environmental causes than for her importance to the news business.

"This isn't the defining piece of her, she doesn't wear on her sleeve that she's a member of this prominent family or on the board of Dow Jones," said Paul Burns , executive director of the Vermont Public Interest Research Group, a nonprofit advocacy group. He has worked with Steele on various projects.

The clan has not always been disengaged from the nitty-gritty of newspapers. Dow Jones's Boston connections date to 1887, when the company hired its first out-of-town correspondent, Clarence W. Barron , who ran a financial news service here. In 1902, Barron and two partners bought a controlling interest in the company from its New York founders, including Charles Dow and Edward Jones .

Hugh Bancroft, who married Barron's stepdaughter and was president of Dow Jones, committed suicide in 1933 at his Cohasset estate, by sealing the blacksmith shop's doors and windows and lighting a fire in the forge. His daughters, Jessie Bancroft Cox and Jane Bancroft Cook , who were both longtime Cohasset residents, became key heirs and owners of Dow Jones as the newspaper evolved into its modern form, focusing more on investigative and narrative journalism.

Despite Dow Jones's great brand name, its operations have frustrated investors who are looking for more aggressive management. The biggest institutional investors holding Dow Jones stock -- including Fidelity Investments , T. Rowe Price , and Hotchkis & Wiley Capital Management -- declined to say this week whether they support Murdoch's bid.

A smaller investor, Mark Boyar , of Boyar Asset Management in New York, who had about 280,000 shares of Dow Jones in his portfolio before the Murdoch bid, said the Bancrofts and the other board members should sell. Boyar said that while the Bancrofts have attempted to be custodians of outstanding journalism and maintained a hands-off approach, he sees the Dow Jones empire as ill-managed and under-performing.

"I don't view it as a newspaper," he said. "I view it as a company that compiles financial information, and has to figure out a way to monetize that in a much better way than it has done in the past. Rupert Murdoch will figure that out. The guys at Dow Jones don't have a clue."

Dow Jones stock was trading at $37.12 on Monday but jumped to $55 on news of Murdoch's bid. It closed at $56 yesterday.

Boyar said he is hoping the Murdoch bid will widen divisions within the family that opened up in the late 1990s, when two Bancroft cousins who aren't on the company's board, Elisabeth Goth and William C. Cox III, publicly questioned the company's management. "The younger ones would like to get their hands on the money," Boyar said.

But that would require a major break from a century of tradition in an old-line New England family. Their Dow Jones fortune is tied up in a trust system that is prevalent in Boston; in that system, change does not come quickly. The way trusts such as the Bancroft fortune are managed places great power and control in the hands of lawyers who make financial decisions on behalf of family members. It is a system that evolved in the 19th century, said experts in the field.

"Instead of giving money to the banks in those days, they gave it to their lawyers. That's how Boston became unique," said Robert Glovsky , president of Mintz Levin Financial Advisors , in Boston.

Elefante did not respond to phone messages this week. The law firm has several peers in Boston, including Hale and Dorr Capital Management LLC and Ropes & Gray's private client group.

It is not unusual for trustee lawyers to be caught in the middle between family factions. Hemenway & Barnes's Roy A. Hammer, Elefante's predecessor, was the subject of a lengthy profile in The American Lawyer in 1997 that described in detail how he handled challenges from Elisabeth Goth.

Kenneth P. Brier , cochairman of the Boston Bar Association's trust and estates section, said lawyer trustees typically have total authority over how to manage assets, but must act with impartiality and on behalf of beneficiaries.

Trustees respond "with great trepidation if you're caught between different wings of the family," he said. "The beneficiaries may have different views about how the assets should be managed. You're always looking in your rearview mirror."

Christopher Rowland can be reached at crowland@globe.com; Ross Kerber can be reached at kerber@globe.com.