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On 10 April 1961, Dr. Jules Joskow and Dr. Irwin Stelzer found a new kind of company. The two noted economists, advised by Dr. Alfred E. Kahn (one of the country's foremost economists and future "father of airline deregulation"), create National Economic Research Associates, the first consulting firm dedicated to methodically applying rigorous microeconomic thought to litigation and regulatory matters.
The firm's 17 members work from offices in New York City and Washington, DC on projects involving natural gas field price matters, particularly oil wellhead price controls. Clients include many major combination gas and electric utilities with regulatory problems that extend beyond gas costs.
NERA takes on projects in the US utilities industry involving testimony before state regulatory commissions and antitrust work in a range of industries. The FCC's investigation into AT&T's pricing policies lead AT&T to retain NERA to assist with developing the economic theory and the cost and market studies that would be required in hearings to be held on the matter. NERA continues to work with AT&T on its issues with the FCC, state commissions, and the DOJ for more than 20 years.
Within only a few years of the firm's founding, NERA branches into areas far beyond its initial natural gas litigation work. NERA experts takes on antitrust work related to the television industry, and pioneers the application of discounted cash flow analysis in determining the appropriate rate of return in utility regulation.
In the firm's first securities-related matter, NERA is retained by the New York Stock Exchange to complete economic studies relating to the SEC's investigation into fixed commission rates for securities transactions.
The new decade sees NERA economists taking on groundbreaking work involving the Arab oil embargo and various government and private entities in the US energy sector, and expanding their consulting work across a variety of disciplines, including communications, shipping, transportation, postal rate economics, airlines (including cases for TWA and Pan Am), consumer products, television and newspapers, and sports economics (most notably National Soccer League vs. NFL).
NERA moves to larger offices in New York City, expands the Washington, DC office, and increases staff from 17 to 65.
NERA takes on its first employment discrimination project with the AT&T vs. FCC case.
The firm expands to the West Coast with a new office in Los Angeles.
NERA is at the forefront of the energy industry's transformation in the 1970s. Our economists perform cost-benefit work for the Atomic Energy Commission, setting the standard for analysis to be done in preparation for opening a new nuclear plant, and take the initiative in addressing the lack of energy policy in the US by helping to form the Energy Research Group (ERG). NERA's work for the ERG provides the basis for public reports and testimony before the US Congress, federal agencies, state regulatory bodies, and state legislatures.
NERA works with Congressional staff to draft what ultimately becomes the Public Utility Regulatory Policies Act (PURPA), which establishes a federally mandated policy with respect to the regulation of the electric utility industry.
NERA works on a significant number of Section 2 Sherman Act antitrust projects as well as several large M&A cases such as Mead/Occidental. Our antitrust experts also begin working in the health care field, analyzing mergers involving hospitals, health insurers, pharmaceuticals, and medical device companies, and often providing support in related litigation. NERA's prominence in antitrust leads the firm to host its first annual Antitrust Seminar in Aspen, Colorado. This seminar, which brings together senior antitrust attorneys, in-house corporate counsel, and government officials with NERA economic experts, is still held each year in Santa Fe, New Mexico.
In this period of exponential growth and change, NERA continues to conduct groundbreaking work in its traditional areas of expertise, but with a growing diversification of subject matter. The firm does important work on deregulation in the railroad sector, designing the regulatory regime for freight transportation through the hearing process. In addition, NERA is involved in several high-profile antitrust and competition policy cases, including the breakup of AT&T and a series of large cases for Southern California Edison. NERA economists also work on a case for the Major League Baseball Players Association to assist in arbitration of players' salary awards, and undertake an important employment discrimination matter between the DOJ and United Telecommunications.
NERA conducts environmental work related to the 1978 Amoco Cadiz oil spill. This and other environmental work, primarily relating to damages to natural resources and cost/benefit studies on environmental pollution, form the basis for a new practice group focused on environmental economics.
NERA is acquired by Marsh & McLennan Companies, a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy, and human capital.
NERA opens its first non-US office in London, largely to assist the UK government with matters related to privatization. The privatization of the UK electricity industry is a groundbreaking assignment for NERA, one that proves that economists can be useful in previously unrealized ways.
Dr. Jules Joskow, one of NERA's founding members, is elected as the firm's new President.
The firm formally establishes its Securities and Finance Practice – today the largest securities practice among all economic consulting firms. The practice gets its start with a shareholder lawsuit against LILCO, then quickly expands. By focusing on the expert use of econometric methods such as the event study, the practice offers objective, scientifically based testimony in litigation, a change from the subjective testimony that is prevalent in securities casework at the time.
Dr. Richard (Dick) Rapp is appointed NERA's new President, while Dr. Jules Joskow is named Chairman of the Board.
NERA is retained for a World Bank case involving the restructuring of the Polish oil and gas pipeline market. Initial assignments assisting governments, utilities, and aid agencies throughout Europe in the transformation from state-run industry to regulated monopoly to competitive market become a worldwide line of business for the firm.
By the end of its third decade, NERA has a staff of 275 in 11 offices across North America and Europe, and is recognized as the world's only truly international economic consulting organization.
NERA continues to expand and evolve, and the firm's international expansion continues apace with new offices in Madrid and Sydney. By the end of the decade, NERA's staff includes 400+ members, including 300 consulting economists. The number of women at the firm also grows steadily, and the number and seniority of women continue to differentiate NERA from many of its peers today.
Marsh & McLennan Companies asks NERA to assist some of their clients with forecasting DES and Agent Orange liabilities. These projects form the basis of what will become NERA's Mass Torts and Product Liability Practice.Throughout the decade, the practice is retained on a significant amount of cases forecasting asbestos exposures, the first of which is National Gypsum in 1992-93.
NERA's Securities and Finance Practice begins publishing the first in a continuing series of closely followed reports on trends in shareholder class action litigation.
NERA begins offering services related to intellectual property litigation. The mix of IP work steadily broadens to include trademark disputes, trade secret and copyright disputes, and transfer pricing work. As time passes, NERA's IP Practice grows to provide valuation advice outside the litigation arena. Today, NERA also does an increasing amount of survey work for trademark, copyright, and patent cases.
NERA's Securities and Finance Practice inaugurates the Finance, Law & Economics Seminar for senior securities litigators, in-house counsel, regulators, and economists.
In its fourth decade, NERA completes projects in more than 100 countries and embarks on a concerted expansion in the Asia-Pacific region. NERA's experts establish themselves as authorities in the areas of financial regulation and financial risk management. Other growth areas within the firm include the Environmental Economics Practice, whose experts conduct important work on issues related to the US Clean Water and Clean Air Acts, utilities, climate change, emissions reduction, and emissions trading, particularly regarding cap-and-trade markets in the UK and Europe.
NERA's Securities and Finance Practice experiences tremendous growth, and is retained on a majority of the decade's high-stakes and high-profile litigation matters including Enron, WorldCom, United States vs. Martha Stewart and Peter Bacanovic, the Lyondell bankruptcy, and many, many others. In addition, the number of major asbestos bankruptcies increases sharply, and NERA's Mass Torts and Product Liability Practice is involved in almost all the major cases.
NERA opens its Tokyo, Japan office, pioneering the move of US-based economic consulting firms into Asia.
NERA formally establishes its Global Transfer Pricing Practice. Due to the cross-border nature of the work, the Transfer Pricing Practice leads NERA into Japan, China, France, Germany, and Switzerland, and becomes a leading sector for the firm in terms of multinational engagements. NERA's Securities and Finance Practice adds a group in the Washington, DC office, giving the firm capabilities in connection with government regulatory agencies and deep expertise in derivatives.
NERA reaches 500 employees working from offices around the globe.
Dr. Andrew Carron (right) is appointed NERA's new President, while Dr. Richard (Dick) Rapp assumes the role of Chairman.
In the wake of the global financial crisis, NERA does important work in the areas of options backdating, subprime lending, auction-rate securities, structured products, Ponzi schemes, the impact of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, bank litigation, and fraud detection.
NERA reaches its 50th anniversary. As the firm celebrates its first half-century, we look ahead to the next one. New financial reforms are having a significant impact on the regulatory and legal environment for companies around the world, which continue to face myriad challenges in managing the risks and disputes that impact their businesses. Many disputes are becoming increasingly multinational in their scope, and NERA continues to expand its presence in markets that are active in international arbitration and litigation.
The new decade proves to be one of exciting transitions for NERA. In 2013, Dr. Lawrence Wu, a noted NERA economist specializing in antitrust and intellectual property issues, takes over as the firm's President. He succeeds Dr. Andrew Carron, who assumes the role of Chairman.
NERA continues to grow and expand its operations in the new decade. The firm opens an office in Mexico City, giving NERA a physical presence in Mexico and strengthening our ability to provide consulting services in Mexico and throughout the Latin American region.
Over 50 years ago, we were the first to create a microeconomic consulting firm, and since our founding, NERA has grown and expanded in many ways. What began in 1961 as a small consultancy has evolved into a large, geographically diverse firm working with clients in 120 countries across dozens of industries. Yet through all of these changes, NERA has maintained its focus on economics. We are proud of our heritage and continue to help clients succeed by staying true to our core, founding principles: focus, independence, defensibility, and clarity.
It is with great sadness that NERA says goodbye to Jules Joskow. Jules co-founded NERA more than 50 years ago, along with Irwin Stelzer and the late Fred Kahn, and he remained a part of the NERA family for the rest of his life.
When Jules helped to found National Economic Research Associates in 1961, it was the first firm of its kind. Jules and his colleagues had the vision to create the first true economic consulting firm, and the drive and astonishing intellectual weight to make it grow and prosper.
In his own practice, Jules specialized in directing studies involving the application of statistics to problems in market structure and market share analysis, studies of the costs of environmental controls for the nuclear industry, and cost studies related to ratemaking in the electric utility industry. He also conducted important work on the design and evaluation of statistical surveys, particularly with reference to their use in litigation, an area of focus which is now a practice area for NERA. For many years, he consulted to the telecommunications industry on such matters as market determinations and costing methods, appropriate methodologies for pricing competitive and non-competitive services, and the measurement of damages in an antitrust context.
As an expert economic and statistical witness, Jules testified before regulatory commissions and the courts and spoke frequently on pricing and regulatory problems before various forums. He served as an Adjunct Member of the Special Committee on Empirical Data in Legal Decision Making of the Association of the Bar of the City of New York, and as an editorial adviser on statistics textbooks to several publishing companies. His work was published in leading economic journals including the Review of Economics and Statistics, Journal of the American Statistical Association, Social Service Review, and Public Utilities Fortnightly.
Jules's role within the firm was far-reaching. He served as Vice President when NERA was founded, when we had 17 employees in New York and Washington, DC. From 1985 to 1991, he served as NERA's President and, later, as Chairman of the Board. By the time he retired 20 years ago, after a distinguished consulting career, the firm had hundreds of employees and offices around the world.
Jules was, of course, pleased with NERA's success and how the firm had changed and grown over the years. When he looked back on what he created on the occasion of NERA's 50th anniversary last year, he also stressed what hasn’t changed: the firm's "dedication to integrity, quality, and service." He said, "For that I am very proud."
He was also proud that his son, Andy, carries on his legacy at NERA as a Senior Vice President.
In the first history of NERA, composed by Jules in 1990, he wrote about the process of choosing the firm’s name: "We decided on National Economic Research Associates because… we thought it would be best that the firm’s name not be tied to that of an individual." NERA's name, its growth, and its future, however, will always be linked with Jules.
We at NERA will always appreciate Jules's contributions—visionary, intellectual, and cultural—without which none of us would be working here today.
Donations can be made in the memory of Jules and Charlotte Joskow to:
UJA-Federation of New York
130 East 59th Street
New York, NY 10022