Cadwalader Wickersham & Taft made a spectacular raid on the New York office of Latham & Watkins yesterday (6 February), snaring the latter’s global head of private equity, Ronald Hopkinson.
One M&A partner at a rival firm described Hopkinson’s move as absolutely astonishing, adding “you could not overplay its significance”.
Hopkinson’s clients include private equity groups Carlyle, Blackstone and Welsh Carson. His company clients include Harrah’s Entertainment, which he recently advised in connection with its $27.8bn (£14.18bn) sale to Apollo and Texas Pacific.
A Latham lifer until now, Hopkinson made partner in 1996 and has since played a significant role in some of the largest leveraged buyouts and private equity deals in the marketplace. His departure will be seen as a significant blow to Latham’s international private equity practice.
For Cadwalader it marks the start of an all-out assault on the private equity market. Hopkinson told The Lawyer yesterday that his arrival was the first step on what he hoped would be “a very significant commitment to this area”.
Hopkinson said as Cadwalader’s new head of private equity it would be his role to grow the group with a focus on quality rather than volume.
“We will absolutely be looking to beef up the group with very high-quality partners,” Hopkinson added. “I would not be doing this unless I was convinced [Cadwalader] was committed to building a top private equity practice.”
Hopkinson pointed to Cadwalader’s financial institutions practice and industry expertise in sectors such as healthcare as providing a platform to grow the practice. In particular, he highlighted private equity groups that were focusing on restructuring and pre-bankruptcy techniques as an acquisition strategy as sources of deals in the current climate.
Sullivan & Cromwell partner Frank Aquila lent weight to the argument that a top-tier private equity hire at this point in the cycle could make sense.
“While private equity deal levels are certainly down at the moment, clearly many private equity groups have built tremendous amounts of capital over the past 12 to 24 months that have yet to be deployed,” said Aquila. “It is reasonable to expect that when the credit markets come back they will begin deploying that capital again.”
Hopkinson’s hire comes one day after Cadwalader reported its financial results for 2007 (www.thelawyer.com, 5 February), showing a fall in average profit of 6 per cent from $2.9m (£1.48m) to $2.72m (£1.37m). However, Martha Klein, a senior consultant at M Legal Consulting pointed out, “that’s still more than most firms in New York”.
Cadwalader, Klein added, has a reputation for hiring big guns such as M&A star Dennis Block and paying a lot of money for the privilege.
“This looks like another Dennis Block,” Klein added.
David Gordon, the New York office managing partner of Latham said: “Ron Hopkinson was a valued member of the corporate department and we wish him well in his new endeavours.”