The Score

January 19, 2010 7:09 PM

THE AM LAW 100: Cadwalader Posts Higher Profits, Lower Revenue

Posted by Nate Raymond

Cadwalader, Wickersham & Taft on Tuesday reported a 28 percent increase in profits per partner, the firm's first positive results since 2007.

Yet while the firm enjoyed a slight increase in net income, some of the increase in its per-partner average earnings appears attributable to a nearly 21 percent loss in the number of equity partners. Gross revenue fell nearly 10 percent, a drop that W. Christopher White, the firm's chairman, calls "very strong in light of a steep contraction in the finance market."

Cadwalader reported gross revenue of $456.5 million last year, down 9.78 percent from 2008, while net income inched up 1.38 percent to $147 million. Profits per partner hit $2.41 million, up 28 percent. Revenue per lawyer also climbed 3.25 percent to about $998,900.

The results compare favorably to those the firm posted in 2008, when revenue fell 13.8 percent and profits per partner dropped 30 percent. Profits per partner peaked in 2006 at $2.9 million, then proceeded to contract over the last two years, given the tightening of the credit markets that began in the fall of 2007.

White attributes the firm's 2009 financial results to its work on large corporate and restructuring deals last year and to cost-cutting measures the firm implemented early on in the recession.

Cadwalader in 2008 announced layoffs affecting 131 associates, job cuts that preceded much of the rest of the legal industry. The firm continued to cut jobs in 2009, though not nearly at the same level. The firm announced layoffs affecting 25 lawyers globally in early 2009; in July, the firm offered a one-year sabbatical to 34 lawyers. Cadwalader reported 457 lawyers at the end of August 2009, down 12.6 percent from a year earlier when the firm had 523.

"We continued to adjust to the contraction in the financial markets, and in 2009 recognized the benefit of the very difficult decisions that we made in 2008," White says.

The increase in profits per partner partly reflects a smaller pool of equity partners who will get a share of the firm's income. Cadwalader had 61 equity partners at the end of August 2009, compared to 77 a year earlier.

White says the smaller partner pool was a result of partner departures early last year. In January 2009, Bruce Zirinsky, previously cochair the firm's bankruptcy practice, left for Greenberg Traurig with another partner after only two months earlier having landed on the firm's management committee. That same month, in London, the firm lost seven partners to Paul, Hastings, Janofsky & Walker.

More recently, two New York real estate partners--Alan Lawrence and John Busillo--left Cadwalader last month for Arnold & Porter.

While revenue was down, White describes Cadwalader's performance as strong, "in light of how heavily oriented our practice was in the finance area." Other practices, such as corporate, litigation, and restructuring, were busy, he says, "a testament to how well balanced our practice is in other areas."

The firm was tapped on some of the largest transactions announced in 2009. Pfizer Inc. turned to corporate partner Dennis Block in January for its $68 billion takeover of Wyeth. And Cadwalader's private equity lawyers represented CVC Capital Partners in its bid to acquire Barclays plc's i-Shares.

Cadwalader has requested more than $40 million in fees for its work advising Lyondell Chemical Company as debtor's counsel in its Chapter 11 bankruptcy, records show. Partner Deryck Palmer is lead debtor's counsel to Lyondell.

Cadwalader also was busy in 2009 representing the government. The firm acted as the Treasury Department's bankruptcy counsel for the restructuring of Chrysler LLC and General Motors Corporation under an $8.59 million contract. Cadwalader also represented Treasury on the restructuring of CIT Group Inc., which filed for bankruptcy in November. Partner John Rapisardi handled both engagements.

White says he is "cautiously optimistic" for 2010. The firm has seen increased demand for litigation and transactional work, he says, and continues to have "very strong demand" in restructuring.

This report is part of The Am Law Daily's ongoing Web coverage of The Am Law 100’s 2009 financials. Results are preliminary. Final rankings and full results for The Am Law 100 will be published in The American Lawyer's May 2010 issue and on The Am Law Second Hundred will be published in the June issue.

The final published results of last year's Am Law 100 rankings are available here.

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