September 29, 2008 4:26 PM

Who Loses Out in Wachovia Sale to Citi?

Posted by David Bario

With today's news that Citigroup Inc. will swallow up Wachovia Corp.'s banking operations in an FDIC-brokered $2.1 billion deal, it's clear that the tempest roiling Wall Street is not through claiming major victims. And the failure this afternoon by Congress to approve a $700 billion bailout package suggests the storm is not about to blow itself out. 

To assess the impact of the Wachovia deal on lawyers, we looked at some of the top firms that have handled deals and litigation for the bank and its subsidiaries since 2003. (All data is from Firm360.com, a data service of Thomson West.)  

 On the deal front...

Until recently, Wachovia was the one doing the buying, and it was shelling out far more than today's sale price. Sullivan & Cromwell, which represented Wachovia in the deal with Citigroup, has handled the bank's biggest deals of the past five years. Partners H. Rodgin Cohen (The Am Law Daily's inaugural dealmaker of the week two weeks ago) and Mitchell Eitel advised Wachovia in its $20.9 billion acquisition of Golden West Financial Corp. in May 2006. Eitel also represented Wachovia in a $13.8 billion deal to acquire SouthTrust Corp. in June 2004.

While no one is worrying about Cohen's ability to weather this particular storm, it will be tough for other legal counsel not to notice the loss of a client that over the last five years was involved in 29 separate deals with a combined value of $47.5 billion.

Last May, Simpson Thacher & Bartlett partners Lee Meyerson and Maripat Alpuche advised Wachovia in its $6.9 billion acquisition of A.G. Edwards & Sons, Inc. Simpson Thatcher also represented the bank in its $13.1 billion merger with First Union Corp. in 2001. In September 2005, Alston & Bird and Morrison & Foerster together advised Wachovia on a $3.8 billion deal with Westcorp.

In litigation...

Wachovia and its related companies were involved in more than 50,000 separate matters, from simple employment disputes in state courts to 39 matters before the U.S. Supreme Court. Almost 40 Am Law 200 firms have represented Wachovia on five or more matters since 2003.

The busiest among those firms over the past five years: Seyfarth Shaw has represented the bank on 65 matters, mainly labor and employment; Reed Smith can count 56 matters involving commercial disputes, regulatory matters, and labor and employment issue; and Troutman Sanders has handled 54 matters, mainly commercial disputes. In addition, Morgan, Lewis & Bockius, McGuireWoods, Hunton & Williams, Simpson Thatcher, and DLA Piper each have handled more than 20 matters for Wachovia since 2003.

With the banks looking a bit like cascading dominoes these days, the dealmakers and litigators that once propped up giants like Wachovia may have to content themselves with picking up the pieces for a while.

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