After three years of falling revenue, Cadwalader, Wickersham & Taft saw top-line growth in 2018 as well as another profit hike.
Cadwalader’s profits per equity partner jumped 8 percent to $2.7 million, even as the firm’s equity tier grew by three lawyers to 43 partners. Combined with the growth in 2017, the firm’s profits per equity partner have risen about 28 percent over two years, said managing partner Patrick Quinn.
The firm’s gross revenue rose about 3 percent—the first revenue rise since 2013—to $420.7 million. While the firm’s total lawyer head count remained unchanged, at 373 attorneys, its revenue per lawyer rose 3 percent to nearly $1.13 million.
In the last several years, Cadwalader’s head count has shrunk, and some of its offices have closed, in what the firm has called a strategy to focus on its core client base of banks, large corporations and funds.
“We, for the last two-plus years, have been working on a much more focused strategy for the firm, focusing on our natural client base and building the firm to be the best firm we can be for the clients who know and love us,” Quinn said. “To have had substantially positive numbers year over year, for the second year in a row, we’re essentially getting high grades for what we’re doing strategically.”
The firm’s capital markets practice, including its well-known securitization group, was a juggernaut in 2018, Quinn said, along with its finance and its corporate M&A practices.
“Not surprisingly in this economy, the transactional practices all performed really, really strongly. The litigation side of our practice is performing well also, but you probably would expect them to perform even more strongly if the economy turns a little bit and peoples’ attention turns to litigation,” Quinn said.
Meanwhile, the firm’s net income surge, at 16 percent, far exceeded its revenue growth. Quinn attributes that to the firm focusing on its “most successful practices” and high productivity last year. Also, some expenses from the year prior didn’t repeat, he said, such as when the firm closed its offices in Asia in 2016.
In London, the firm’s revenue fell 13 percent to $43.1 million from $49.6 million. Quinn attributed the decrease to head count attrition, including a four-partner restructuring team that moved to Milbank, Tweed, Hadley & McCloy in early 2018. He said the moves were “probably the single biggest line item” behind the drop.
Despite the fall, Quinn said the office exceeded the firm’s own projections. “London had a very strong year,” Quinn said. “Nowhere features bigger in our growth plans than London.”
Cadwalader, which has about 60 lawyers in London now, is finalizing new lease space that can accommodate more than 100 lawyers, Quinn said. “That’s certainly our ambition and we’re confident that we can accomplish that,” Quinn said about growing to 100 lawyers there. “We are very bullish on growth in London.”
The firm added two finance partners there in recent months: Samantha Hutchinson from Dentons, and Duncan Hubbard, formerly of Norton Rose Fulbright. Meanwhile, three of the firm’s five newly promoted partners were in London.
Despite reports of Cadwalader entertaining a merger a few years ago, Quinn said merging with another firm is not part of its strategic plan. “We are very focused on building the firm that we set out to build, which is something we’re doing organically and with lateral recruiting,” he said.
Cadwalader hired a string of partners last year, including Stephen Fraidin, Joel Mitnick, Alan Lawrence, Jonathan Watkins, Mark Chorazak, Pearl Yuan-Garg and Chris Cox, who rejoined the firm’s partnership. And in 2019, the firm added Vivian Maese, who was co-chair of Latham & Watkins’ financial institutions and fintech practice groups.
It also saw several partner departures in 2018, including the London group that joined Milbank; Jeffrey Robins, former co-chair of the firm’s financial services group, who landed at Debevoise & Plimpton; antitrust attorney Amy Ray, now at Orrick, Herrington & Sutcliffe; and London litigator Steven Baker, who went to White & Case. The firm’s entire health care team left last year to Crowell & Moring, citing the attraction of a firm where the group’s health care and nonprofit practice was more “mainstream.”
“It’s part of the modern practice of law, right, that people are mobile and people leave,” Quinn said. “We’re really happy about the lateral growth we have had, and we expect that lateral growth to continue to accelerate.”
Cadwalader was also in the headlines last year for a confidential settlement just before trial with the owner of the Washington Redskins over a $22 million legal malpractice lawsuit. When asked whether the settlement affected the firm’s financial results, Quinn said no. He declined to comment further on the settlement.
As for 2019, Quinn said the firm has already added high-profile lateral partners and he anticipates more growth, declining to discuss specifics. Quinn said he believes that the firm’s success will continue even during a market downturn.
“We are bullish certainly on 2019 and we believe we have built the firm that will be a firm of choice for our clients really in all economies,” he said.
Among its most high-profile matters, Cadwalader is advising the Federal Reserve’s alternative reference rates committee—whose members include several financial institutions—in the transition away from the benchmark interest rate LIBOR, the London Interbank Offered Rate.
Cadwalader’s securitization and asset-based finance practice continues to lead in advising both issuers and underwriters on commercial mortgage-backed securities offerings. In 2018, the firm advised issuers on 76 deals, or 62 percent of market transactions, totaling about $46.8 billion, according to figures from Commercial Mortgage Alert, which tracks real estate finance. On the underwriter side, Cadwalader advised on 51 transactions, representing nearly 42 percent of the total market share.
The firm continues to represent Assured Guaranty over Puerto Rico’s restructuring of $73 billion of bond debt, the largest-ever U.S. municipal debt restructuring.
The firm also represents North Carolina State University in the high-profile investigation by the Southern District of New York U.S. Attorney’s Office into bribes made by Adidas officials to prospective student-athletes and their families.