Cadwalader force-fed Lehman’s ‘humble pie’

Cadwalader Wickersham & Taft New York had to move to shore up its relationship with key client Lehman Brothers this year after the bank threatened to withdraw work from the US firm.

The row, which is understood to have abated after the senior management placated the bank, came after UK partner Andrew Wilkinson acted against what Lehman perceived as its interests in the Le Meridien restructuring.

The alleged conflict occurred when Wilkinson advised Goldman Sachs’ Whitehall fund on the hotel group’s highly sensitive restructuring.
When Whitehall made a bid to buy the senior debt, Lehman was faced with exercising its pre-emption rights or see its £250m mezzanine exposure written off. Lehman then had to buy up over £600m of senior debt mostly from its own funds.

Just as the deal was being signed at New Year, a senior member of Lehman’s executive board is understood to have called Cadwalader managing partner Bob Link in New York to express his views on their future relationship. Cadwalader is understood to bill the bank upwards of $20m (£11.1m) per year.

A source close to Cadwalader said: “A restructuring practice can generate conflict issues. It was obviously a tense situation, but we still have a pretty good relationship with Lehman.”

A source close to the bank said: “There was a lot of eating of humble pie.”