London headcount: 64 lawyers, 21 partners
Lawyer headcount change since 2016: 0%
London managing partner: Gregory Petrick
Office specialities: Financial services, capital markets finance, real estate finance, private and public M&A, shareholder activism, tax
Representative matters:
- Greencoat UK Wind on oversubscribed £450m share issuance.
- Deutsche Bank as arranger of the €400m North Westerly VII ESG CLO transaction.
- Credit Suisse, as arranger and placement agent, on the first CRE CLO in Europe since the credit crisis.
- Acellus on $482m combination with CHP Merger Corporation.
- Investec on €1bn secured note programme.
- Defendant in £1.5bn Danish tax claim
Breaking its three-year streak of revenue drops, Cadwalader’s City office looks finally to have regained some ground.
For the financial year 2021, the New York-headquartered firm heralded record London revenues of $66.2m, a striking 61% increase on 2020. Its global financials tell a similarly auspicious story with profit per equity partner (PEP) up an astonishing 72% to $4.38m, while global revenue surged to an impressive $608.9m, a 35% year-on-year increase.
The rebound comes after years of floundering global metrics and a decade-long slump following the financial crisis and the collapse of former clients Bear Stearns and Lehman Brothers. While it broke its run of global revenue decline in 2018, this is the first year the firm has topped its pre-crash turnover of $556m in 2007.
While its London office saw formidable five-year growth from 2012 jumping from $10.8m in revenue to $50m in 2017, this was followed by three years of consistent revenue decline to 2020.
Despite initially responding to the Covid pandemic with pay cuts in April 2020, the firm has come out of this crisis financially stronger. For its gains, London managing partner Gregory Petrick credits the firm’s ‘very focused and lean machine’ for being able to capitalise on market opportunities deriving from high levels of liquidity, central banks’ low interest rates and the propping up of the market by economic stimulus programmes.
It is a recipe for success for a firm with roots firmly embedded in Wall Street, says Petrick: ‘Our business is primarily helping lenders and it was an extraordinary market with a lot of opportunity in the last year. Those institutions which are the backbone of our client base were looking for ways to deploy capital economically. A lot of alternative asset classes, like high yield, had unattractive returns while those offered in the practices that we are in were more favourable.’
This is the product of a strategy adopted in late 2016 of retrenching to concentrate efforts on Cadwalader’s core client base of financial institutions, large corporates and funds. This process saw a significant reduction in the workforce, including dropping five equity partners, withdrawing from Hong Kong and Beijing in 2016 and closing its Brussels office in 2018.
Now 7% London headcount growth has put Cadwalader back on par with its 2017 position and it is gearing up to bolster its few specialist pillars in London. The firm’s ambitious growth plans are reflected in taking a new City office in 2020 with space to accommodate more than double its current headcount. Says Petrick: ‘We have space for 130/140 lawyers in London now. We want to grow to around 120 lawyers and plan to do that deliberately while not rushing in order to get the right people.’
Already in 2022, the firm announced the additions of leveraged finance partner Matthew Smith and restructuring partner Bevis Metcalfe from Baker McKenzie. Consistent partner promotions, which saw capital markets lawyer Sabah Nawaz and tax lawyer Catherine Richardson elevated in 2022 and financial regulation lawyer Michael Sholem made up in 2021, are also set to continue.
However, despite opening in Dublin in 2021, its European strategy beyond London is muted. With no plans to open elsewhere in the region, the fate of the Ireland base still hangs in the balance.
Petrick observes: ‘I’m hesitant to make a big deal of it as it is something that we are working on exploring to see if it is a viable office long term. Part of the reason we opened it was that in the post-Brexit era we needed a base in an EU jurisdiction to access the EU regulatory environment. We are now exploring whether it can become more than that.
‘Our strategy is focused on few geographical areas, fewer than many other firms, and on being the best in class; really concentrating on that financial institutions base. London is central to the firm’s overall growth strategy, so our efforts in Europe are going to concentrate on growing London deeper in the areas we currently practice and opportunistically in other practices that are synergistic with our brand and strategy.’
The firm has reasons to be cheerful after a redemptive year of revenue growth and ambitious expansion plans in the City. However, as it learned in 2008, its narrow focus and heavy reliance on financial services leave it more vulnerable to economic volatility.
With market trends falling in the firm’s favour of late, Petrick remains sanguine on the London office: ‘Success for us as a US practice in London is to be very focused and high quality; regarded as the best in our specialist areas. That’s where we are going to get to in the next 18 months.’