Learning From Fire : Union Bank Tenants’ Precautions After First Interstate Blaze Pay Off

Standing at the foot of the burning Union Bank building, Frank Baxter was using a portable telephone and an airline guide to arrange early morning flights to whisk his traders to the five other cities where Jefferies & Co. has branches.

As flames licked at the sides of the building where the securities firm has its headquarters, Baxter kept trying to count down from the top to see how close the fire was to his offices on the 33rd floor. He did not know the exact number of floors, so he could not tell for sure whether the blaze was on his floor or one above.

William M. Bitting, however, knew fairly soon Monday night that the fire was on the 34th and 35th floors, where the law firm in which he is a senior partner was just wrapping up an extensive remodeling project.

But the news was not all bad. Bitting got a telephone call from his insurance agent assuring him that the firm’s policy covering losses from business interruption was in effect at the new value.

About five weeks earlier, alarmed by the devastation of the fire at First Interstate Bancorp’s headquarters a few blocks away in downtown Los Angeles, Bitting had decided to increase the policy limit to several million from a few hundred thousand dollars.

The May 4 fire at First Interstate was also on the minds of half a dozen executives from Union Bank who had gathered in an office two or three blocks from their headquarters Monday night to wait for a report on the damage.

The 40-story building is owned by a joint venture of Equitable Life Assurance Society, which also owns half of the First Interstate tower, and Nissei Realty. But Union Bank occupies the first 19 floors and has its executive offices on the top floor.

While computer operations are based primarily in Monterey Park and a few other service buildings, the headquarters contains Union Bank’s securities trading operation and other sensitive divisions, as well as a valuable art and malachite collection on the top floor.

Unlike First Interstate, which had an elaborate emergency plan for restoring services in the event of a disaster, Union Bank had no such arrangement covering its headquarters at 445 S. Figueroa St.

“We have plans for our service buildings, but we were still in the process of putting together contingency recovery programs for the headquarters building,” said Patricia K. Sisley, manager of public relations for the bank, who was one of the people downtown Monday night.

The executives downtown, including Charles D. Kenny, executive vice president and general counsel, and John Dorman, chief of contingency planning, had been alerted by telephone and were on hand to see what needed to be done.

Fortunately for Union Bank and Jefferies & Co., this fire was stopped by the Los Angeles Fire Department before it reached the devastating proportions of the First Interstate blaze. But it once again highlighted what businesses can do to plan for a disaster.

Jefferies & Co. has a rough contingency plan for dealing with a fire or other disaster. About 20 traders can be accommodated in a nearby office building that houses most of their computer equipment. Others would be sent to the branches in Atlanta, Boston, Chicago, Dallas and New York.

Arrangements are also in place for traders in the other offices to cover specific accounts if necessary. A computerized record of daily transactions and the firm’s position in stocks and bonds is also sent each day to a firm in New Jersey for storage.

After the First Interstate fire, Baxter, Jefferies’ chief executive, said he decided to add another layer of insurance by sending a second record of the transactions to a firm in “earthquake-free Arizona.”

By the time Baxter was allowed back into his offices at about 2 a.m. Tuesday, he knew the blaze had been centered one floor above. He was prepared for extensive damage, particularly to the computers, telephones and stock-quote machines that form the heart of the trading operation.

“I was amazed,” he said in a telephone interview Tuesday morning. “One row of desks has water damage, and the lights are not working. But the phones and the Quotrons are working. The Los Angeles Fire Department did an incredible job covering most of our equipment. They even took out ceiling tiles so that the water would drip into buckets.”

At 3 a.m., when Jefferies executives begin their daily strategy sessions, it was clear that the big trading room on the 33rd floor would function and that the contingency plan would not be needed. Equipment was still covered with plastic, the ceiling lights were out and some executives who had rushed downtown were dressed casually. But it would be business as usual.

For Union Bank, the news was even better. There was no damage to any of the bank’s floors. Just a faint odor of smoke and the whir of fans clearing it away. Even the art and malachite collections were safe.

The damage was essentially contained to the 34th and 35th floors, where the law firm of Hill, Farrer & Burrill has its offices. The firm, which handles a wide range of civil and corporate matters, has grown steadily and recently leased the entire 35th floor in addition to its quarters on the floor below.

“It was a pretty substantial remodeling and it was just being finished and the workmen were pretty much gone,” said Bitting, a senior partner and litigator. “They were still putting in some furniture and refinishing.”