Sweet Sixteen: Cravath Swaine & Moore

Star practices/people

Rev £308m
PEP £1.65m
RPL £622,000

Global 495
London 20
New York 475

The closest to a Slaughter and May equivalent in the US, ­blueblood Cravath’s focus is on quality not quantity.

The firm deserves its inclusion in the Sweet Sixteen for its ­transactional practice alone (where bedrock clients include giants of the US economy such as IBM, Time Warner and Royal Dutch Shell). But Cravath is as well known for its litigation capability, which contributes around 50 per cent of revenue each year. Indeed, the firm’s ­presiding partner since January 2007, Evan Chesler, is one of the US’s most respected litigators.

Cravath’s M&A practice, even in the peak years of the private equity boom, was less dependent on sponsors. It was, and is, much more of a corporate-driven ­practice. Consequently the firm has been well placed to switch along with the market from ­private equity-led deals to ­advising on strategic M&A and boardroom turmoil.

Top deals» Manor Care on £3.15 takeover by Carlyle takeover

» Banco Santander on the £50.2bn takeover of ABN Amro

» TXU board on £22.5bn acquisition by KKR

And while Cravath’s M&A team (15 partners in New York and London, with a leverage of around 4.5 to one) is modest, its international referral links ensure the firm regularly appears on the top deals in the US and beyond. Last year that meant roles on the takeovers of ABN Amro, TXU and Endesa, to name just three.

Corporate partner Richard Hall featured on all three deals and is a standout transactional name, as are partners Mark Greene, James Woolery and Kris Heinzelman.

Contrast Cravath with Sullivan & Cromwell. While the two are matched on quality, the former lags far behind the latter in terms of international investment. Cravath, like Slaughters, argues its best friends strategy provides all the overseas relationships it requires. Externally the firm’s apparent decision to sit tight and reject the growth sought by the vast majority of its competitors looks shortsighted.

The current Cravath partners reaping the benefits of a tightly held equity pool might not complain. The next ­generation may see things ­differently.

Cravath remains primarily ­domestically focused. It closed its Hong Kong office in 2003 after eight years and maintains a small London office, but primarily services European matters through its best friends network.

Cravath, one of the few true US all-equity lockstep partnerships, rarely hires laterals,which is a restricting factor on its ­international growth.

The verdict
Cravath has the brand name, is at the top of its game and has little interest in expanding its ­international reach. Cravath will always be Cravath, but long term the lack of investment and growth could see its returns slip in comparison with its hungrier competitors.