Cahill Gordon Sees Declines Amid Junk Bond Market Slowdown
After a down year, Cahill Gordon's chairman said the firm is considering steps to diversify and expand its footprint.
April 15, 2019 at 04:06 PM
4 minute read
The original version of this story was published on New York Law Journal
A tough year in the high-yield bond market pushed down Cahill Gordon & Reindel's revenue and profits in an otherwise upbeat legal market.
Gross revenue, profits per equity partner and revenue per lawyer at the New York firm each declined about 7 percent last year. Revenue sank to $360.5 million, profits per equity partner lowered to $3.43 million, and revenue per lawyer dropped to $1.24 million. Total lawyer head count, at about 291 lawyers, and equity partner ranks, at 62 partners, stayed level.
“We obviously are not satisfied,” said Cahill Gordon chairman William Hartnett about the firm's financial performance.
The financial slide was due to lower demand in leveraged finance, in particular, high-yield bond work, which the firm is “highly dependent on,” said Hartnett, noting high-yield bond issuances in the U.S. were down about 40 percent last year and there were zero high-yield bond issuances in December.
“The market in high yield had shrunk, and that basically is the entire explanation of our decline,” Hartnett said.
Cahill Gordon represents underwriters in high-yield bond offerings, also known as junk bonds, including in analyzing risks and structuring issuances and covenant packages.
According to 2019 first quarter league tables by Bloomberg, Cahill Gordon has overwhelming market share in representing underwriters in U.S. high-yield corporate bonds, with more deal volume than its next three competitors combined, including Davis Polk & Wardwell; Cravath, Swaine & Moore; and Simpson Thacher & Bartlett,
Cahill Gordon was particularly hit by the down market in high-yield bonds compared with other New York firms because of its smaller size and its focus on the area. But Hartnett said the firm has greater confidence about 2019, as the leverage finance market is stronger than last year and the firm is considering steps to diversify.
“We believe last year was somewhat of an anomaly in the leveraged finance market. We have seen it bounce back already in this first quarter, but you don't just write something off as an anomaly,” Hartnett said. “You make sure you're well positioned on a going-forward basis.”
“We are looking at various options to expand the footprint,” Hartnett said, declining to specify further because he said it was too early to explain. ”We're pursuing a couple of options at this point.”
Despite the down year, Hartnett said the firm did not take any cost-cutting measures, such as layoffs or hiring fewer associates. Cahill Gordon had a large summer associate class in 2018, reflecting the firm's confidence in the future, he said.
Other practice areas continued to perform well in 2018, Hartnett said, including litigation, corporate investigation, regulatory advisory work, real estate and tax.
Last year, Cahill Gordon's white-collar team represented Tesla in the SEC enforcement action stemming from CEO Elon Musk's Twitter statements. Cahill Gordon continues to represent Credit Suisse Group AG and its subsidiaries, including in civil litigations and investigations related to alleged manipulation of LIBOR and other reference rates during the financial crisis.
On the corporate side last year, Cahill Gordon advised on $27 billion offerings of new debt financing which funded Comcast's acquisition of U.K.-based Sky, one of the largest high-yield bond sales to date. Cahill was also involved in the $13 billion of financings to back The Blackstone Group's acquisition of a 55 percent stake in Refinitiv, a financial and risk business from Thomson Reuters Corp.
While Cahill Gordon's equity ranks, at 62 partners, didn't change in 2018, the firm had five nonequity partners last year, down from seven in 2017.
Hartnett said it was not a deliberate decision to keep the firm's equity partner figures flat. Associates who deserve to be a partner will be promoted, he said, adding “retirements have matched new partners coming in, it's as simple as that.”
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllAs Tech-Focused Roles in C-Suite Expand, Newcomers Embrace Big Law Opportunities
Trending Stories
- 1Infant Formula Judge Sanctions Kirkland's Jim Hurst: 'Overtly Crossed the Lines'
- 2Trump's Return to the White House: The Legal Industry Reacts
- 3Election 2024: Nationwide Judicial Races and Ballot Measures to Watch
- 4Climate Disputes, International Arbitration, and State Court Limitations for Global Issues
- 5Judicial Face-Off: Navigating the Ethical and Efficient Use of AI in Legal Practice [CLE Pending]
- 6How Much Does the Frequency of Retirement Withdrawals Matter?
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250