Wachtell Partner Departs for Latham's New York Office

With by far the highest profits per partner in the world, Wachtell, Lipton, Rosen & Katz is seen as the Mount Olympus of corporate law firms. It would seem Wachtell partners would be the least likely to defect to other firms. Yet Barry Bryer, one of Wachtell's most senior corporate partners, is set to leave the firm to join the New York office of Latham & Watkins. Some observers note a trend: Increasingly profitable firms are pulling off previously unthinkable lateral acquisitions.

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With by far the highest profits per partner in the world, Wachtell, Lipton, Rosen & Katz sits atop the profession as the Mount Olympus of corporate law firms. Of all the law firm partners anywhere, those at Wachtell would appear the least likely to defect to another firm. But now one Wachtell partner has done exactly that. Barry Bryer, one of Wachtell’s most senior corporate partners, is set to leave the firm to join the New York office of Latham & Watkins. The move, expected to be officially announced next week, was first reported in the Daily Deal, a Law Journal affiliate. While lateral recruiting of partners has become routine throughout the industry, partners at the most profitable New York firms have until now generally been considered out of most other firms’ league. But some expanding firms have now begun to use their own growing profitability to pull off previously unthinkable lateral acquisitions. Bryer did not return calls for comment Thursday. Partners at Wachtell and Latham & Watkins also did not return calls seeking comment on the move. At Latham, Bryer is expected to work closely with mergers and acquisitions co-chair Charles Nathan. Bryer, 57, joined Wachtell from Cravath as an associate in 1977 becoming a partner in 1980. He has worked on several major transactions, many in the software and pharmaceutical area. He represented Lotus Corp. as the target of an acquisition by IBM and National Semiconductor Corp.’s as the buyer of Cyrix Corp. and Computer Associates as the acquirer of Cheyenne Software. The recruitment of Bryer is a major coup for Latham & Watkins. While clearly one of the nation’s top law firms, the California-based firm has struggled to crack the top tier of New York corporate firms, typified by the likes of Wachtell; Cravath, Swaine & Moore; Sullivan & Cromwell; Davis Polk & Wardwell and a handful of others. One of the major problems for ambitious firms has been their inability to convince top partners from the leading New York firms to come aboard to spearhead their practices. Many West Coast and Chicago firms have resorted to recruiting senior associates from the top New York firms, making them partners and hoping the practice takes off from there. But as firm profits have risen across the board, it has become easier for less grand firms to make sure they can offer the proper financial incentives to senior partners at elite firms. In 2003, Latham’s profits per partner were $1.3 million and rising. Though still far below Wachtell’s $3 million-plus per partner, the firm has likely pulled even with a number of leading Manhattan firms. The jump in profitability has been even more extreme at New York’s Thacher Proffitt & Wood. In 2002, the firm had profits per partner of less than $500,000. A well-respected firm with less than 200 lawyers, it was hardly considered a competitor of Paul, Weiss, Rifkind, Wharton & Garrison, which had 2002 profits per partner of $1.74 million. But Thacher Proffitt has boomed in the last two years, especially in the structured finance area. Chairman Paul Tvetenstrand said profits per partner for 2004 are around $1.1 million. The firm has celebrated its success by recruiting partners from much bigger name firms. In February, Thacher Proffitt firm welcomed Steven R. Howard, the former co-head of the investment funds practice at Paul Weiss. “From our perspective, there’s been a huge change,” said Tvetenstrand. “People are much more comfortable making the move to us.” Tvetenstrand said the firm’s improved profitability was clearly a major factor in its ability to recruit. But he said, beyond money, partners were also drawn by Thacher Proffitt’s smaller scale and, in some cases, a chance to build a practice from scratch. NEW OPPORTUNITY Indeed, once the obstacle of money is overcome, the chance to take on a new opportunity clearly has some appeal to partners who have already reached a pinnacle of success. Ralph Ferrara stunned the legal community early this year when he left his perch on the management committee at New York’s Debevoise & Plimpton to become the head of the Washington office of New York’s LeBoeuf, Lamb, Greene & MacRae. But though Ferrara made clear that he was being well-compensated, he also said at the time that the prospect of building a substantial white-collar defense and securities practice at LeBoeuf was a major attraction for him. “I thought I would be at Debevoise forever,” he said at the time. Daniel Cunningham, now the senior partner in the New York office of London’s Allen & Overy, is one of only two partners to have left Cravath, Swaine & Moore to work at another law firm. The other is David Boies. Cunningham Thursday said his 23 years at Cravath had been wonderful but he saw a rare opportunity in Magic Circle firm’s fledgling New York office. “I was at a point in my life that I wanted a new challenge,” he said. One legal recruiter who asked to remain unnamed said the most elite firms could face a challenge from new competitors who can be more flexible on partners’ retirement ages. The top New York firms almost all have lockstep compensation and have depended on mandatory retirement ages of 65 or younger to make sure rising partners can be accommodated. Other firms, the recruiter said, can appeal to many top partners who are approaching mandatory retirement but feel their productivity has not diminished. These firms either have much later retirement ages or are willing to waive the issue with regard to certain recruited partners. At Wachtell, the founding partners are not subject to the same retirement age as other partners, which is why Martin Lipton, 73, and Herbert Wachtell, 72, remain active partners. The high level of compensation at Wachtell ensures many partners are able to retire much earlier. Last year, the firm saw the retirement of three relatively young partners: Seth Kaplan, Barbara Robbins and Richard Feintuch. Though Bryer may be the first Wachtell partner to depart directly to another firm, he is not the first to wind up at a competitor. Lawrence Lederman left Wachtell in 1991 after a falling out with his partners over a book he had written about major deals of the 1980s. Shortly after leaving the firm, he became a partner at Milbank, Tweed, Hadley & McCloy.

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