Cadwalader Wickersham & Taft’s profit per point dropped by 38 per cent during the last year, despite the firm reporting a profit per equity partner (PEP) slump of ‘only’ 30 per cent, The Lawyer can reveal.
Sources at Cadwalader were celebrating the PEP drop of 30 per cent, from $2.73m (£1.87m) in 2007 to $1.88m (£1.29m) in 2008, after being prepared for a decrease of as much as 50 per cent.
But a Cadwalader insider told The Lawyer: “You can massage PEP. A lot of partners are on big guarantees. If you take them out, it’s much closer to 40 per cent down.”
Equity partners receive three to 10 points. In 2007 each ;point ;was ;worth $400,000 (£273,886) and now $248,000 (£169,809) – a drop of 38 per cent.
Last week the firm was rocked by the defection of seven of its 11 London partners to Paul Hastings Janofsky & Walker, as first revealed on TheLawyer.com (14 January).
Chairman Chris White and managing partner and former chair Bob Link flew in to try to persuade the partners to stay, but it soon became clear that the New York management was unwilling to accept any of the partners’ demands.
They instead responded by announcing the transfer of former chairman Link to London to lead the rebuilding process.
Paul ;Hastings ;has inherited a tight-knit group of partners who focus on litigation, restructuring, funds and real estate finance. The firm expects around 15 associates to join the partners, which will bring the London office up to between 65 and 70 lawyers.