As Its Chair Leaves for Big GC Role, Davis Polk Posts Best Year Ever
As Thomas Reid readies to leave for a GC role at Comcast, Davis Polk is left in strong financial health.
March 01, 2019 at 03:19 PM
5 minute read
Davis Polk & Wardwell chairman and managing partner Thomas Reid might be leaving the Wall Street firm next month for a gig with a major client, but he's leaving the firm on top.
“I love this place and I've given my everything to it. It's in great shape and it's going to get even stronger,” said Reid, who's led the firm since 2011.
Gross revenue at the firm jumped 12 percent in 2018 to just under $1.4 billion, a record-high for the Wall Street firm. Profits per equity partner climbed 19 percent to $4.4 million while revenue per lawyer jumped 9 percent to $1.43 million.
On Friday, Reid's longtime client Comcast Corp. announced that in April he would become its next senior executive vice president, general counsel and secretary, following the retirement of its longtime general counsel Arthur Block.
“It's been really overwhelming, it makes it even more of a bittersweet moment for me,” Reid said of the responses he's received since announcing his impending departure.
But even as the firm prepares for its future without Reid, he's proud that he's left it in perhaps the best financial shape of its 170-year history.
“I would never leave Davis Polk if I thought I had left anything undone, but I don't think I have,” Reid said.
He said he's been working closely with Comcast's CEO Brian Roberts and his team pretty intensely over the last four years handling the company's deals involving DreamWorks Animation LLC and British media company Sky. When Block announced last year that he would step down from the GC role, Reid said they started conversations about whether Reid would take the position. As he reviewed the firm's position in the market, Reid said he felt comfortable enough to step away.
Davis Polk's M&A, leveraged finance, capital markets and restructuring practices all had strong years, as did its litigation and financial institutions group, Reid said. It's offices overseas were also extremely busy, largely driven by its strong capital markets practice in Asia and a strong M&A performance in Europe, he said.
“We just had a terrific performance across all our practices around all our offices,” said Reid, noting that the firm's operating performance was even better, finishing the year with higher levels of inventory than it began.
Davis Polk led the Mergermarket legal advisory rankings by deal value, having advised on 138 deals globally last year totaling more than $507 billion, up 24 percent from the year prior.
The firm advised on the largest deal of the year, representing global specialty biopharmaceutical company Shire Plc in its $62 billion sale to Takeda Pharmaceutical Co. Ltd. Davis Polk, and Reid, also represented longstanding client Comcast in its $39 billion acquisition of Sky.
“I think what we saw last year were synergies flowing from the strategy of the last several years of focusing on core New York strengths, but making sure for key clients, on their most important transactions, we have the capability to help them in Europe and Asia,” Reid said.
In a rare lateral addition, Davis Polk added Shearman & Sterling M&A partner Kenneth Lebrun in its Tokyo office. It also saw Tatiana Martins, who as chief of the public corruption unit at the U.S. attorney's office in Manhattan oversaw the investigation of Michael Cohen, rejoin the firm as a partner last year.
The number of attorneys at the firm grew 1.6 percent to 982 last year, up from 967 the year prior, while the number of equity partners dropped by one partner to 157.
And with Reid's exit, Davis Polk will see it's partnership ranks drop by one more.
Reid first joined the firm as an associate in 1987 and became partner in 1995 in its New York and London offices. In 2000, he left the firm to become a managing director in the investment banking division of Morgan Stanley in London before rejoining the firm three years later. In 2011, Reid was elected managing partner, succeeding John R. Ettinger who led the firm for over a decade.
“I've been doing it for eight years and I'm a great believer, both for individuals and institutions that change is good, no one person has all the right ideas,” Reid said.
“And change is good, particularly when you've got bench strength and leadership like we have here across our different practices and offices. We have young men and women in their forties who are ready to run this great firm and I can't wait to see who the partnership chooses,” he added.
While there are no immediate names for potential successors, Reid said he expects the firm to announce its new leadership team by the end of the month.
In the meantime, he'll work with clients and management in the transition and, he said, “saying a lot of very tearful and joyful farewells.”
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