Small is lucrative for Wachtell, corporate America's legal defense force

Thu Jun 8, 2017 4:45am EDT
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By Greg Roumeliotis

NEW YORK (Reuters) - Every Tuesday, partners and associates at Wachtell, Lipton, Rosen & Katz gather for a communal lunch in the dining room of the law firm's Manhattan offices.

Food ordered from top New York restaurants is served, but the real attraction is Martin Lipton, one of the firm's co-founders and corporate America's most famous consigliere.

The father of the 'poison pill' – a key defense strategy used against hostile takeovers – Lipton has helped build the firm into the most lucrative legal outfit in the world, a go-to shop for companies seeking to seal complex deals or repel suitors and activist investors.

The weekly lunch is just one of the ways the 85-year-old stays in touch with new associates and reinforces the firm's close-knit culture, where young law graduates are often paired with senior partners to work on big deals.

Partners say a flat structure and relatively small size - Wachtell's lawyer headcount of about 260 is roughly half of its closest rival Cravath, Swaine & Moore – is key to the firm's success.

The firm's concentrated business model contrasts with the strategy of many law firms to become one-stop shops for deals, from navigating niche regulatory processes to sorting through labyrinthine tax affairs.

Lipton is confident that his strategy of concentrating on high-stakes corporate situations will persist, according to interviews with several senior partners at the firm. This is because corporate America continues to turn to Wachtell as its top legal gun for hire.

"Wachtell's business model is to be the firm you go to when you are not willing to take any risk at all," said Stephen Gillers, a New York University School of Law professor. "They know that in the big M&A cases, legal fees, no matter how big they are, are insignificant to the value of concluding the deal."   Continued...

The logo for the Wachtell, Lipton, Rosen & Katz law firm is seen at their office in New York, U.S., June 7, 2017. REUTERS/Shannon Stapleton