Cadwalader Wickersham & Taft’s week of woe was caused by a misguided management strategy that its current administration is trying desperately to clean up.
Back in January my New York colleague Matt Byrne met with Cadwalader’s New York management after its 35 redundancies had rocked the market. Wall Street was reeling after the subprime losses of Bear Stearns, Citigroup and Merrill Lynch led to all three parting company with their leaders.
Cadwalader’s chairman and managing partner was Bob Link. He was the man who had focused the firm on the securitisation market that was now dead. Matt asked the obvious question: will Link resign?
Link was in the room. He stared daggers at Matt while his partner and management committee member Greg Markel stepped in to defend his boss and state that the firm was planning no changes. He also promised no more redundancies this year.
The next day Link stepped down from the chair and finance head Chris White was promoted. Link is still managing partner, but he now focuses on operational matters, while White is the strategy chief.
Thirty-five cuts were significant, but understandable. The 96 announced last week reveal just how much Link gambled on structured finance.
Although it’s arguable that Link hasn’t exactly gambled and lost (Cadwalader’s sky-high profit should be at least partially maintained by the cull and expected partner departures), there are still 96 unhappy lawyers who definitely have lost.
And London looks pretty lost right now, too. The City office took a disproportionately high hit during the redundancy round and is stuck in the tricky position of having very little say over its future.
“The firm’s run by the management committee and nobody from London sits on the management committee. London’s not involved in the management of the firm,” opined a partner in London.
But Cadwalader is not an international firm. It is a New York firm with a London office. London is making attempts to diversify, but it is in hope rather than expectation that it will be left untouched when the time comes to thin the partnership.