Attributing the dip in profitability to late client payments and market volatility, Cadwalader posted a slight decline in profits per equity partner last year, according to reporting by The American Lawyer. But revenues rose for a third year running.
“It was a solid year, but I would say we certainly can and will do better,” says Cadwalader chairman W. Christopher White.
In contrast with results in 2012, when profits rose sharply, the firm’s PPP sagged this past year by 1.5 percent, to $2.61 million, a little off the previous year’s $2.65 million. Though both partner and associate head count remained flat, revenues rose by 3.2 percent, to $481.5 million from $466.5 million.
White credited continued strength in transactional practices for the revenue increases. The firm experienced a rebound in capital markets work, he says: In particular, commercial mortgage backed securities and collateralized loan obligations advisory work surged. “[The commercial MBS] market is coming back very strong and we continue to be … the most dominant firm in that market,” says White. The firm represented issuers of U.S. commercial MBS in 79 deals totaling $59.1 billion last year, according to the newsletter Commercial Mortgage Alert. (Sidley Austin, the second-ranked, handled 17 such issues, according to the publication.) Cadwalader was also top underwriter counsel for commercial MBS, with 54 deals.
A year after a major drop in head count in 2012, lawyer numbers held steady last year, growing by two lawyers to 437 last year, while the equity partnership grew by just one, to 56. But the firm made some big lateral acquisitions, luring over as its new corporate cochair a former Cravath, Swaine & Moore M&A partner, James Woolery. He joined the firm from JPMorgan Chase & Co. where he was cohead of North American M&A. In January the firm announced that Woolery would succeed White as chair next year.
Woolery is credited with helping revive the firm’s M&A practice. Among major matters last year, the firm represented Irish biotech drugmaker Elan Pharma International Ltd in efforts to deflect a hostile bid by rival Royalty Pharma SARL last spring that ended with a $8.6 billion sale of the company to Perrigo Company plc in July. It also acted for the financial adviser to the special committee of Dell Inc.’s board of directors in the company’s $24.4 billion acquisition by Silver Lake Partners in February, the largest leveraged buyout since the economic crisis began.
Some of Cadwalader’s other marquee practices were busy. According to bankruptcy court filings, the firm’s lawyers have been advising Merrill Lynch Capital Services Inc. in the city of Detroit’s Chapter 9 bankruptcy. And its antitrust lawyers served as cocounsel in US Airways Group Inc.’s court challenge to the U.S. Department of Justice’s attempt to block an $11 billion merger with American Airlines Group Inc. (The case settled in November.)
White placed part of the blame for the PPP dip on some delays in client payments. “Part of that is simply a timing issue,” White says. “Sometimes that slips into next year. And we experienced that this year.”
Expenses also increased slightly last year, he notes: the firm gave $50,000 raises to its nonequity partner tier last year, costing the firm about $4 million. “We simply wanted to reward and incentivize our younger partners,” he notes, by “closing the gap” in pay between nonequity and equity partners.
The firm continued to be moderately active in the lateral market. Joining the firm in London were two structured finance partners, Bruce Bloomingdale and Jeremiah Wagner, from Mayer Brown, and two restructuring partners, Holly Neavill and Louisa Watt, from Latham & Watkins and Richards Kibbe & Orbe, respectively. In Beijing, the firm picked up Rose Zhu, a corporate partner, from K&L Gates. In the U.S., the firm brought over Steven Eckhaus, an executive compensation partner, from Katten Muchin Rosenman.
The firm also saw some significant departures. Cadwalader, Wickersham & Taft’s global financial restructuring practice cochairs, John Rapisardi and George Davis, moved to O’Melveny & Myers along with bankruptcy partner Peter Friedman in May. The team represented the U.S. Department of the Treasury and the Presidential Task Force on the Auto Industry during the Chrysler Group’s and General Motors Company’s Chapter 11 cases.
White notes that the firm underwent a major effort last year to analyze its path to partnership; as part of that, it eliminated minimum billable hours requirements for associates, assuming they are in good standing.
This report is part of The Am Law Daily’s early coverage of 2013 financial results of The Am Law 100/200. Final rankings and full results for The Am Law 100 will be published in The American Lawyer’s May 2014 issue and on AmericanLawyer.com. The Am Law Second Hundred will be published in the June issue.