Cahill Bounces Back on Leveraged Finance Strength After Financial Year 'Anomaly'
A resurgence in leveraged finance work, plus the lawyers' "blood, sweat and collections," helped push Cahill's profits per partner past $3.8 million last year, said the firm's chairman.
March 11, 2020 at 04:29 PM
4 minute read
Boosted by strong performance in its leveraged finance and general corporate practices, Cahill Gordon & Reindel's revenue and profits rebounded last year, recovering from the firm's 7% decline in 2018.
Cahill's gross revenue rose in 2019 rose by 7.6% to $387.8 million, similar to 2017 levels, while the firm pushed up its average profits per equity partner by almost 12%, to nearly $3.84 million, surpassing 2017 numbers.
Cahill chairman William Hartnett said the firm's reputation as the "gold standard" for lender-side representations on high-yield bond work paid off in 2019, growing net income to $243.8 million, up 14.6%. The firm grew its bottom line, even with a net increase of two equity partners.
"I viewed '18 as an anomaly in the high-yield market, and I expected that to bounce back, and it did," Hartnett said.
Hartnett pegged the firm's billing rate increases around a modest 2% and said there were no aberrations, such as a high volume of receivables coming into 2019, that skewed the firm's financial performance. The results were driven by "blood, sweat and collections," he said.
Revenue per lawyer grew 9.6% at Cahill last year, from $1.24 million to $1.36 million. While the equity partnership grew slightly, overall head count dropped about 2.1%, meaning that even as profitability grew—the firm's margin rose from 59% to 63%—leverage dropped. Hartnett said Cahill managed to "control" expenses, too, although he said it was more "nickels and dimes" than in any major category, such as rent.
He said Cahill's biggest investments have been in its lawyers. "We have 30 partners who are fluent in leveraged finance [and] we have great associates coming up through the ranks. The only investment you can make to maintain the position we have maintained through 40 years is through the quality of your lawyers," he said.
"One thing we are not is complacent," he said. "We don't believe we have a monopoly on talent and marketing skills."
The firm's work on high-yield bonds, high-interest loans and other leveraged transactions is a key driver of business, accounting for 60% to 70% of all its corporate work, Hartnett said. Cahill lawyers worked on more than $84 billion of bond deals and nearly $200 billion in leveraged loans in 2019, compared with $50 billion and $245 billion, respectively, in 2018, according to statistics from Refinitiv Loan Connector.
That wasn't the only growth area, however. Hartnett said the firm had a "very strong year" in middle-market mergers and acquisitions, representing strategic buyers and sellers in certain transactions and lenders in other leveraged deals. He said partner Kimberly Petillo-Décossard has been recognized for her work in the field.
The firm's litigation department, led by Herb Washer, had good results but also helped fill the business pipeline for 2020, Hartnett said. He praised its work for Credit Suisse: in September, one judge threw out a class action against the investment bank over exchange-traded notes that suing investors had claimed were too risky, while in a case over foreign exchange rate-rigging, the bank partly defeated a class certification effort. That same month, two other civil suits accusing the bank of anti-competitive behavior were tossed.
The firm's first two months of 2020, particularly in corporate work, have been very busy, Hartnett added. While the novel coronavirus could hurt the economy, he sounded a tone of cautious optimism.
"I'm looking for double-digit bottom-line growth for 2020," he said.
The 2019 financial figures reported in this report are preliminary. ALM will report finalized data for the Am Law 200 in The American Lawyer's May and June issues.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllLaw Firms Sue Clients for Unpaid Legal Fees as Big Law Collection Goals Ramp Up
Law Firms Mentioned
Trending Stories
- 1The Law Firm Disrupted: Playing the Talent Game to Win
- 2GlaxoSmithKline Settles Most Zantac Lawsuits for $2.2B
- 3BD Settles Thousands of Bard Hernia Mesh Lawsuits
- 4Preparing Your Law Firm for 2025: Smart Ways to Embrace AI & Other Technologies
- 5Inside Track: Late-Career In-House Leaders Offer Words to Live by
Who Got The Work
Eleanor M. Lackman of Mitchell Silberberg & Knupp has entered an appearance for Canon, the Japanese camera maker, and the Brooklyn Nets in a pending trademark infringement lawsuit. The case, filed Sept. 16 in California Central District Court by T-Rex Law on behalf of technology company Phinge Corporation, pursues claims against the defendants for their ongoing use of the 'Netaverse' mark. The suit contends that the defendants' use of the mark in connection with a virtual reality platform will likely create consumer confusion. The case, assigned to U.S. District Judge Consuelo B. Marshall, is 2:24-cv-07917, Phinge Corporation v. Yankees Entertainment and Sports Network, LLC et al.
Who Got The Work
Fox Rothschild partner Glenn S. Grindlinger has entered an appearance for Garage Management Company in a pending lawsuit over alleged wage-and-hour violations. The case was filed Aug. 31 in New York Southern District Court by the Abdul Hassan Law Group on behalf of a manual worker who contends that he was not properly compensated for overtime hours worked. The case, assigned to U.S. District Judge Analisa Torres, is 1:24-cv-06610, Bailey v. Garage Management Company LLC.
Who Got The Work
Veronica M. Keithley of Stoel Rives has entered an appearance for Husky Terminal and Stevedoring LLC in a pending environmental lawsuit. The suit, filed Aug. 12 in Washington Western District Court by Kampmeier & Knutsen on behalf of Communities for a Healthy Bay, seeks to declare that the defendant has violated the Clean Water Act by releasing stormwater discharges on Puget Sound and Commencement Bay. The case, assigned to U.S. District Judge Benjamin H. Settle, is 3:24-cv-05662, Communities for a Healthy Bay v. Husky Terminal and Stevedoring LLC.
Who Got The Work
Caroline Pignatelli of Cooley has entered an appearance for Cooley, partner Matt Hallinan, retired partner Michael Tu and a pair of Cooley associates in a pending fraud lawsuit related to the firm's representation of startup company Carbon IQ and founder Benjamin Cantey. The case, filed Sept. 26 in New Jersey District Court by the DalCortivo Law Offices on behalf of Gould Ventures and member Jason Gould, contends that the defendants deliberately or recklessly concealed critical information from the plaintiffs regarding fraud allegations against Cantey. Gould claims that he would not have accepted a position on Carbon IQ's board of directors or made a 2022 investment in the company if the fraud allegations had been disclosed. The case, assigned to U.S. District Judge Robert Kirsch, is 3:24-cv-09485, Gould Ventures, LLC et al v. Cooley, LLP et al.
Who Got The Work
Attorneys from Skadden, Arps, Slate, Meagher & Flom have stepped in to represent PDD Holdings, the operator of online marketplaces Pinduoduo and Temu, in a pending securities class action. The case, filed Sept. 30 in New York Eastern District Court by Labaton Keller Sucharow and VanOverbeke, Michaud & Timmony, contends that the defendants concealed information that rendered the growth of PDD unsustainable and posed substantial risks to PDD’s business, including merchant policies that made it unprofitable for vendors to do business on PDD platforms; malware issues on PDD applications; and PDD’s failure to implement effective compliance systems. The case, assigned to U.S. District Judge Pamela K. Chen, is 1:24-cv-06881, Macomb County Retiree Health Care Fund v. Pdd Holdings Inc. et al.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250