Layoffs, infighting and record PEPs: The Lawyer’s first year in New York
8 December 2008
24 March 2008
15 December 2008
17 November 2008
4 May 2008
21 January 2008
When ;The ;Lawyer launched in New York in October 2007, we had no idea what an era-defining year it would prove to be on Wall Street.
But associate editor Matt Byrne seemed to have an inkling. In his very first column from New York he wrote: “The US may be on the brink of financial meltdown, but there is no sign of that on the streets below Central Park.”
Even ;in ;his ;wildest dreams Matt could not have envisaged the scope of the financial crisis that would grip Wall Street and shake the world. The credit crunch had hit the debt markets that summer, but it had yet to develop into the global crisis that would shock the world almost a year later.
In January Matt was joined by reporter Julia Berris and a clear sign of things to come emerged when Cadwalader Wickersham & Taft made 35 lawyers redundant. The story of Cadwalader’s year would mirror the turmoil in the financial markets and provide our New York and London teams with a stream of stories.
“With its massive structured finance practice, layoffs at Cadwalader were not a matter of if, but when. The hard-nosed firm is reaping the credit crunch whirlwind,” they wrote in a revealing feature on 21 January.
“The question now is, what next for Cadwalader? And what next for the man most closely associated with its meteoric rise, and architect of its business strategy, chairman since 1994, Bob Link?”
Following the feature, Link was replaced as chairman by Chris White, but retained his position as managing partner. Six months later the firm made another 96 lawyers redundant.
The threat of partner layoffs first revealed by The Lawyer on 4 August, and a significant drop in profit, served to foment a revolutionary atmosphere among the partnership.
The full extent of the bitter infighting was revealed by The Lawyer on 17 November, when we wrote: “The partners of Wall Street’s fifth most profitable firm have revolted against their managing partner following a disastrous year that has seen their core markets collapse.
“Cadwalader Wickersham & Taft managing partner and former chairman Bob Link will be removed from the management committee in an extraordinary meeting this ;Wednesday ;(19 November). He will remain as a partner at the firm.
“A Cadwalader partner said: ‘Bob has to be the fall guy. His strategy failed and he has to go.’”
In February we launched a ;twice-weekly ;email entitled ‘The Lawyer in New York’. The very first email revealed to the world that Latham & Watkins and Skadden ;Arps ;Slate Meagher & Flom had reaped revenues of more than $2bn (£1bn) during 2007.
By March 2008 The Lawyer had compiled the financial results for the entire US top 50 – months ahead of any other publication.
As we reported: “The mood among lawyers in New York after the US’s fifth-largest investment bank, Bear Stearns, was snapped up for $236m (£117.03m) by JPMorgan Chase last Monday (17 March) suggests that in 12 months’ time there will be some US law firms posting significantly poorer numbers than they managed last year. But for the moment, for all this year’s market tumult, 2007 will go down as a standout year for the top US firms.
The average increase in total revenue was 16.2 per cent, while the corresponding ;rise ;in average profit per equity partner (PEP) was 11 per cent. By any standards, these are healthy results.”
In May The Lawyer published ;the ;debut Transatlantic Elite supplement, unveiling for the first time a select group of 16 firms – dubbed the ‘Sweet Sixteen’ – that dominate the transatlantic legal market.
The UK’s magic circle giants – Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters – made the cut, alongside elite US firms such as Sullivan & Cromwell and Simpson Thacher & Bartlett.
The likes of DLA Piper, Herbert ;Smith ;and Shearman & Sterling did not. There seems little chance of any new firms gatecrashing the elite in 2009, but the new year’s financial reporting season will be watched keenly.
After two once proud firms – Heller Ehrman and Thelen Reid – dissolved last year, most observers are expecting more turmoil in the US legal market. And The Lawyer will be there to tell you all about it.