Is Cadwalader ready for life after Wilkinson?

It is the end of an era for Cadwalader Wickersham & Taft. As exclusively revealed on last week (8 March), restructuring star Andrew Wilkinson is finally making his long-rumoured move to Goldman Sachs to become co-head of restructuring alongside Lachlan Edwards, who recently joined from Rothschild. At the same time the firm’s involvement in the Eurotunnel saga is drawing to a close.

By any standards these should be unsettling times for Cadwalder’s London lawyers. However, the members of the restructuring team who were on a departmental jolly to Swiss ski resort Flims at the end of the last week seem remarkably upbeat. “We’ve known that Andrew was going for a while,” confides one. “Over the last 18 months we’ve brought in work other than from Andrew and we’ve got a good team of people who’ve developed.”

Another source close to Cadwalader observes: “It’ll be less of a pyramid and it’ll be more collegiate.”

With James Douglas, another partner in the group, expected to return to his native New Zealand later this year, Cadwalader will have to rely on a group of four London partners: Peter Baldwin, Michelle Duncan, Tony Horspool and Richard Nevins. Just below them is a strong group of associates, which includes corporate lawyer Lowson Jepps, formerly of Slaughter and May, and contentious workout lawyer Stephen Parker, formerly of Freshfields Bruckhaus Deringer. They will be joined by Allen & Overy senior associate Karl Clowry, who is joining shortly as special counsel, having worked on the Schefenacker and TXU restructurings.

That said, Wilkinson’s departure means there is no recognisable frontman for Cadwalader in London. For a decade he has been one of the most influential figures in restructuring, never afraid to create enemies in the pursuit of his clients’ ends. Highlights of his reign at Cadwalader include acting for the 1994 and 1986 Barings noteholders and vulture fund Halcyon when it torpedoed the liquidation settlement. Since then there have been fisticuffs on various restructurings, notably Colt Telecom, where Cadwalader was criticised in 2003 by Mr Justice Jacob on its conduct, and MyTravel.

Yet it may be a good chance for Cadwalader to take stock of the restructuring market in 2007. It has had roles on GAL, Treofan and Schefenacker among many others, but observers question whether Cadwalader’s bias towards bondholders and special creditor committees is sustainable in the long term. Cadwalader insiders say the practice has broadened into work for an increasing number of funds, such as Silverpoint and Blue Bay, as well as growing contacts with the distressed debt groups at Morgan Stanley and Credit Suisse First Boston.

However, Cadwalader is also facing bigger competition. Bingham McCutchen continues to be active, while Kirkland & Ellis has made no secret of its ambitions in this area. (Both firms have Cadwalader alumni: James Roome at Bingham and Lyndon Norley at Kirkland.) Latham & Watkins partner John Houghton has also been visible, particularly for Deutsche Bank.

And can Cadwalader’s London practice institutionalise Wilkinson’s relationships with key clients? Wilkinson has been close to senior figures such as Simon Mansfield, who recently made partner at Goldman Sachs. He also attracted work from Jason Granite of Deutsche – another Cadwalader alumnus who worked with Wilkinson on deals such as the junior debt repackaging on Eurotunnel, among others.

The intriguing question is how New York will react. Cadwalader insiders are adamant that the firm is not about to headhunt, but the US end has long been keen to keep the UK in check.

London has always had separate priorities when it comes to client development, as vividly demonstrated in 2004. New York had to patch up its relationship with Lehman Brothers (then a $20m (£10.36m)-a-year client) when the bank threatened to withdraw work after Wilkinson, who was aggressively representing Goldman Sachs, acted against what Lehman perceived as its interests in Le Meridien’s restructuring.

In truth, Cadwalader’s New York restructuring business is not only less of a creditor practice than Wall Street firms such as Milbank Tweed Hadley & McCloy and Akin Gump Strauss Hauer & Feld, but is also much less of a creditor practice than the one Wilkinson has built up in the UK. US restructuring head Bruce Zirinsky might just see an opportunity to reshape London in New York’s image.