Time to play "Name That Firm:" Here are some clues.
- “They are definitely the firm to watch,” said the managing partner of one leading New York firm recently overtaken by [Firm X] in the profit charts. “Even though they recognize the business realities, most law firms still hold on to certain ways of doing things. [Firm X] is run like a corporation.”
- Given that profits per partner have doubled in the past five years, the firm chair was asked how long that can keep up: “Are we going to have difficulty sustaining this?” he asked. “No, short of some cataclysmic event that hits everyone else too.”
- “It’s exactly the shark tank that everybody says it is,” said a former partner, “If you’re a shark, it’s great.”
- “We’re a meritocracy,” [the Firm X managing partner] said. “This is not a place for people who want some place to be comfortable.”
- “It would be relatively easy to achieve what they have,” said the head of one rival firm. “We’re just not willing to do that.”
- “It’ll be interesting to see whether they’ve really built something that lasts,” [the former partner] said, “or if it’s Finley Kumble in richer clothing.”
- “There’s no doubt in my mind there are people who don’t want to be a part of what they perceive our system to be,” [the litigation chair of Firm X] said.
- [The Managing Partner of Firm X] has no use for Yale Law School. “I don’t think we even recruit there anymore,” he said of the law school often regarded as the nation’s most intellectual. “They don’t seem to produce the kind of lawyer we want.”
OK, let’s not pile on; time’s up.
The first reader to email me correctly identifying the firm wins—well, wins fame and glory, at least here in the annals of "Adam Smith, Esq."
Honor system only, people.
Those wishing to email me a guess, stop reading right now.
The rest of you, plough ahead.
Cadwalader.
Founded in 1792 and reputedly the oldest firm in North America, it has gone through changes making it unrecognizable under the reign of Robert Link, who became chairman in 1994 (the quotes are drawn from this utterly splendid article in The New York Law Journal).
Link recalls that when he took charge,
“We [had fallen] asleep,” he said, describing a firm that was still focused on fading areas like maritime law and trusts and estates. He wasted no time.
I’ve written here before about corporate America’s "right-sizing" initiatives, but Cadwalader under Link took that medicine seriously, indeed launching "Project Rightsize" itself, to cut underproductive practices and partners and abruptly jettisoning the 15-lawyer Palm Beach office. The last move sparked a lawsuit by an axed partner, leading to this memorable quote:
“Such activity cannot be said to be honorable,” Palm Beach County Circuit Judge Jack Cook wrote in his 1996 decision [awarding $2.4-million to the ex-partner]. “While life in the marketplace may well be made up of fear, greed and money … life in a partnership is not so composed.”
That was then, as they say, and this is now. And according to reports, "the spirit of Project Rightsize still animates Cadwalader today."
Care to dimensionalize that? Sure:
- “We’re not going to be happy with a strong ego bringing in $1 million a year,” says Link. And
- Each equity partner should be responsible for "at least $5-million.
The discipline extends to the firm’s footprint itself: It only wants to be where there’s a critical mass of financial institutions offering premium work. Thus, no overseas expansion except for London and a beachhead in China. Domestically, its only non-New York offices are Washington, D.C., and Charlotte, N.C. (a new banking center). “All other offices are dilutive,” said Link.
So that is that.
Does Link still think they’re on the right track? I suppose, if you have to ask, it’s rhetorical only; cats with his stripes don’t, in the experience of you and me and all of us, change.
But let’s give him the last word.
“I think we’ll always have more flak and turbulence about our reputation,” he said.
But he takes credit for being an "early adopter" of some of the changes now famously roiling the landscape. “If you look at the last 10 years, you probably have more change in the legal industry than at any other time,” he said. Nor is he about to back off: Confident as he is about the firm’s positioning and prospects, he can’t forget the complacency he saw a decade ago: “Everyone should wake up in the morning and feel a little vulnerable,” he said.
Finally, this being "Adam Smith, Esq.," and not the Cadwalader website, or, for that matter, The New Y ork Law Journal, the last word is actually reserved to yours truly.
Do I endorse the Cadwalader model, or do I condemn it?
This may disappoint the Manicheans in the crowd, but the short answer is neither. I endorse it for those so inclined ("sharks," if you will, a species, we should recall, that has demonstrated tremendous evolutionary success and longevity), and I also will tell you in a heartbeat that it’s not for everyone.
One of my core beliefs about law firms is that they have to be "one-firm firms" to survive and thrive in today’s hyper-differentiated and competitive marketplace. No room at Cadwalader for dolphins? Fine; there shouldn’t be. And no room for sharks at other firms? Equally strongly, there shouldn’t be.
The NYLJ article is titled, "Does the Future Belong to Cadwalader?" My answer is: Cadwalader has distinctly earned its right to a conspicuous place in the future. But it will share that stage with many other varieties of firms, with dispositions, temperaments, and internal ecosystems of their own. Come to think of it, all of these firms will be evolving and metamorphosing over time. The constellations are not fixed in the sky.
Just ask Robert Link.
Update: 11:45 am 9 Feb:
We have a winner! The first email in over the transom correctly guessing the identity of "Firm X" arrived less than half an hour after the piece went up. (The second one, also correct, landed four minutes later.)
Here’s our winner, in his own words. Please consider yourself showered with fame and glory, Justin:
"Justin R. White is a 2005 graduate of Rutgers Law School and currently practices law in the idyllic Southern New Jersey region with the law firm of Basile & Testa. Mr. White is unsure how or when he first stubled upon AdamSmithEsq, but is an avid fan, and is currently plodding through "The Wealth of Nations" as a result."
Well done.
