After several months of discussions, Cadwalader Wickersham & Taft will shutter two offices in China — in Hong Kong and Beijing — and with it, lay off 25 lawyers, the firm’s managing partner Pat Quinn told Big Law Business in an interview this week.
The two offices, which staff four equity partners, will close by Dec. 31, he said.
“It’s a very difficult decision because these are good people,” said Quinn, at a 40th floor conference room table in Cadwalader’s downtown Manhattan office. “…but it’s something we have to do to fit a more focused strategy.”
The decision, being announced to partners today, was made by a special 13-member management team who huddled up over the past three months and discussed a variety of changes the firm could make to ensure its success in the face of partner exits.
Although many departures have occurred over the past year-and-a-half, the past two months have been especially active. In August, the firm saw four top antitrust partners depart to Paul Weiss Rifkind Wharton & Garrison in Washington, D.C. Earlier this month, the head of its executive compensation practice, Steve Eckhaus, joined McDermott Will & Emery, and later, the head of its corporate litigation department, Martin Seidel, joined Willkie Farr & Gallagher.
Of management discussions to revamp firm strategy, Quinn said: “The process has been – I think – a healthy process. We have been coming to the conclusion of this planning process and are ready to roll that out to partners now – it involves growth, but it also does involve… pulling back in some places.”
Quinn explained that the firm’s re-focused strategy also consisted of taking a harder look at hiring decisions and honing in on the 450-lawyer firm’s core clients, which he described as large financial institutions, large-cap corporations and private equity funds.
“The strategy really is, at a high level, about stepping back and understanding who the firm is, and what our best efforts are, and what that is if you look at our clients,” he said. “It tells us something about us, which is something we already knew: we are a quintessential Wall Street law firm.”
(Recent clients include The Procter & Gamble Company, Pershing Square Capital Management and The Medicines Company.)
Quinn said the lawyers in Hong Kong and Beijing are “hard working” but “don’t fit with this vision; they don’t fit with the clients we described, and they don’t fit with the kinds of work we do in other areas.”
The firm declined to provide the identities of lawyers affected by the closures, but according to Cadwalader’s website, the offices staff Rocky T. Lee, Asia managing partner and head of Cadwalader’s greater China practice, corporate partners Jane Ng, Stephen Chan, and Rose Zhu, among others.
“We’ll be as supportive as we can be,” said Quinn of the transition. “Obviously we want to see people land on their feet.”
The decision came after Cadwalader formed a special management team, called the Planning Committee, consisting of the firm’s eight-member management committee and five other selected partners: Richard Brand, Michael Mascia, William McInerney, Yushan Ng and Ray Shirazi.
Two of those partners, Brand and Ng, will see promotions as part of a new management structure: Brand, a 36-year-old M&A partner who joined Cadwalader from Kirkland & Ellis last summer, is being promoted to co-chair of Cadwalader’s corporate department, alongside William Mills. Yushan Ng, another partner who is 39, will become co-chair of the financial restructuring department, alongside Gregory Petrick and Mark Ellenberg.
The firm also intends to promote its youth as a strength and encourage the sharing of client credit throughout the remaining partnership through financial and social incentives. Quinn said 44 percent of firm revenue comes from partners 50 or under, while 68 percent comes from partners 55 and under. Although the firm has chosen to do away with its summer associate program in Washington, D.C. in 2017, Quinn stressed that the firm remained committed to law school recruiting and the firm should not expect to see any changes in entry level hiring elsewhere.
“The plan is very much to grow,” he said.
As for China, it’s well-known in the legal industry that China law offices for foreign law firms face financial pressures, partly because of a crowded local market and also because of restrictions on practicing law. But all-out exits from the mainland are relatively rare. In 2015, Chadbourne & Parke closed its Beijing office, and, the same year, Fried, Frank, Harris, Shriver & Jacobson, announced the closure of its offices in Hong Kong and Shanghai.
A 2015 study by a professor at U.C. Berkeley found that 25 international law firms exited the mainland China market between 1992 and 2012.
Cadwalader entered China in 2005 with a Beijing office, and then expanded in 2010 with a Hong Kong office. It currently has six other offices, in New York, Washington, D.C., Houston, Charlotte, London and Brussels.
Does the firm have plans to merge in the future?
“We are not managing for some combination,” said Quinn. “We are focused on what our firm’s opportunities are and the things we can do with what we have, and we think there are tremendous opportunities for us.”
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