A Correction About Cravath

In yesterday’s post about Cravath, Swaine & Moore starting up a bankruptcy department, to be launched by lateral hire Richard Levin (from Skadden), we wrote:

Cravath isn’t big on lateral hiring. When they hired tax lawyer Andrew Needham away from Willkie Farr & Gallagher in 2005, he was their first lateral partner in more than six decades (per Wikipedia).

Nor has Cravath been into bankruptcy work. Even though many other white-shoe firms have entered that historically “icky” practice area, CSM has stayed on the sidelines.

The statement that Cravath has avoided bankruptcy work was in error. From a knowledgeable tipster:

I want to correct your assertion that Cravath has traditionally stayed away from bankruptcy. Cravath historically has been very involved with bankruptcy and insolvency — Paul Cravath himself was the leading railroad insolvency lawyer of his generation, helping JPMorgan and the like swindle railroad bondholders out of billions.

For the bankruptcy geeks among you, our source schools us further, after the jump.

Other than railroads, however, there just weren’t a lot of large corporate bankruptcies unti lthe 1970s, and until 1978, fees in bankruptcy cases were not paid until the close of the case, so no one went into bankruptcy practice unless they had to (hence bankruptcy firms are “ethnic”–Jewish, Irish, and Italian, not “white shoe”).

In the early 1990s, Cravath started up a short-lived bankruptcy practice from internal partners. My guess is it petered out because of conflicts and inability to get premium billing.

Rich Levin is a first-rate debtors’ attorney (and a helluva nice guy), but I suspect that Cravath is looking to have a bankruptcy practice to service private equity and hedge fund clients who either have portfolio companies in trouble or are looking to buy such troubled portfolio companies.

Btw, note the uncanny resemblence Levin has to Sam Waterstone (only done up in Zegna).

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Earlier: Musical Chairs: Cravath Snags Lateral from Skadden

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