When Fried Frank Harris Shriver & Jacobson announced the closure of its Asia offices last year, the reaction from partners was that it would not be the last to withdraw from the region.

Last week that prophecy came true when news broke that another US firm, Cadwalader Wickersham & Taft, is set to withdraw from the region, closing its offices in Beijing and Hong Kong. However, the fact it was Cadwalader that made the call caught many in the market off guard.

Legal Week understands lawyers in the firm's Hong Kong office were only told a day earlier about the closures, which are expected to be finalised before the end of the year. The decision means all 25 of the firm's Asia-based lawyers are being made redundant as a result of the closure, including its nine partners in the region.

The news came less than two years after the firm made a high profile team hire from Latham & Watkins and laid out an Asia strategy focusing on outbound China M&A, Hong Kong IPOs and regulatory-focused litigation.

In January 2015, Cadwalader brought on board what was then the bulk of Latham & Watkins' local corporate team: a seven-lawyer team led by two partners – Hong Kong managing partner Michael Liu and partner Jane Ng.

At the time, head of international practice development Gregory Petrick told Legal Week: "Our view is that China and the Asia market is just too big to ignore. Any way you look at it, China is the future for a big part of this world, so not to be there we think is shortsighted."

However, disappointing financial results and tough market conditions during the past 18 months are understood to have changed the firm's priorities.

Firm-wide profit per partner declined 6.8% to $2.06m (£1.4m) in 2015, as gross revenue fell 3.7% to $463.5m (£319.4m). Revenue per lawyer also took a hit, dropping 2.8% to $1.04m (£717,000). The firm added 11 new lateral partners last year but overall lawyer headcount decreased from 452 to 448.

In an internal statement, managing partner Pat Quinn told staff: "A committee of partners, including the management committee, has conducted a strategic analysis of our firm's direction, to take stock of what has worked and not worked for our firm over the past few years."

Addressing the office closures, Quinn said: "We have very capable attorneys and staff in these offices – great lawyers and great people. However, by refocusing resources and investments on practices that are most closely aligned with our strategy, we can grow sustainably and with a higher degree of predictable success. "

Kinney Recruiting Asia head Evan Jowers says of the forthcoming closures: "Cadwalader has always been a firm that more quickly than most other US firms will make adjustments, where profitability is concerned. It does not surprise me that they are closing their China offices and focusing their core practices in the US during a time of transition for the firm."

Some local managing partners are also sympathetic, citing the tough market conditions and fierce competition as sound reasons to reconsider.

"When you are committing firm resources to somewhere which is not in the core of what you are doing, then you need to periodically revisit that," says one Asia managing partner. "I think a firm like Cadwalader, which has been under pressure in the US, can come under pressure of internal politics to make a decision like that. It helps us – one less competitor."

Others point to a current trend of downsizing at investment banks in the region, with US banks including Goldman Sachs and Bank of America announcing cutbacks in Asia.

"Banks are all reducing staff in the region – if you are management sitting in New York you have to look for areas to cut costs," argues one US capital markets partner. "You consolidate around what is profitable and what is good, and I suppose that's what's happened."

Others, though, question the sense of taking such a short-term attitude to such a large and important market, despite its profitability issues.

"This is a firm that doesn't want to be international anymore. It is about a firm that wants to retreat to the states. The Donald Trump of law firms," says another Hong Kong-based recruiter. "If you want to be a top New York law firm, leaving Hong Kong is an awful idea.''

The question now is whether others will follow Cadwalader's lead. Partners in the region believe there will be more law firm departures but are keen to stress that it will not be a market-wide international retreat from Asia.

"It wouldn't surprise me to see more law firms exiting," says one Hong Kong managing partner. "I don't think firms are necessarily growing. I think the healthy firms who are committed to Asia will continue though."

"I would suspect in this market there are going to be very clear winners or losers," concludes one US corporate partner.  "If you don't have a seat at the top table it's going to be hard, but there is enough good work to go around for a handful of firms."