Davis Polk: Making Bank
We’ve been providing extensive coverage of the unfolding financial crisis (as have our colleagues at our sister site, Dealbreaker). In several recent posts — see, e.g., here and here — we’ve discussed the Biglaw winners and losers with respect to the Wall Street meltdown.
One evident winner: Davis Polk & Wardwell. Several DPW sources forwarded us an email that was circulated yesterday, trumpeting how busy the firm is these days and how many engagements it has landed arising out of what the memo calls “recent financial markets matters” (aka “the late unpleasantness”).
One Davis tipster writes:
[This email] went out to all lawyers. I suppose it’s their way of saying things are pretty great at the firm. Let’s hope bonus season will confirm this view!
The supposedly internal memo reads a bit like a press release. It was sent out not by a partner but by Kevin Cavanaugh, the firm’s director of business development.
We suspect that the memo is a bit of “blog bait” from Davis Polk. Naturally, we’re happy to take it.
Check out the full memo, after the jump.
The memo appears below. It provides further support to the theory of this commenter:
“There will be a continued flight to quality by this now smaller field of NY players. So, S&C, WLRK, CS&M and the other elites will be fine (with lower PPPs, to be sure). Downstream firms… not so much. This is bad news for corporate lawyers. Agree - worse than ‘02.”I’m in the middle of this, and the above is 100% right. Go read the book “The Winner Take all Society.” This is where S&C and Cravath and WLRK take over and the TTTs die hard. The top firms have strong inst’l relationships and will be fine (e.g., S&C w/ Goldman Sachs, which isn’t doing pretty well). And the firms with strong int’l exposure will excel especially (Skadden, S&C, DPW).
This is actually a good oppty for law students who can get CSM, S&C, DPW, Skadden, etc. These firms aren’t going anywhere, and might, ironically, do BETTER in bad times than in good, b/c now they’re not competing w/ all the TTTs like Cadwalader.
DAVIS POLK & WARDWELL — MEMORANDUM — RECENT FINANCIAL MARKETS MATTERS
From: Kevin A. Cavanaugh On Behalf Of Management Committee
Sent: Wednesday, September 17, 2008 5:44 PM
To: all.dpw
Subject: Recent Financial Markets Matters
The ongoing events within the financial services industry and the broader economic markets are truly unprecedented. As would be expected, the firm has been at the center of all of these events. We thought it would be useful to provide a brief summary of our roles in some of the largest and most notable recent matters:
· Lead counsel to the Treasury Department and the Federal Reserve Bank of New York in the $85 billion transaction with AIG
· Primary outside counsel to Citi in matters pertaining to Lehman’s bankruptcy filing and one of the principal architects of the $77 billion bank liquidity facility
· Lead counsel to Freddie Mac in the government’s conservatorship of the company and commitment to provide it with up to $100 billion of direct financial assistance
· The firm is also advising numerous clients on related non-public matters
While all of these historic events have been transpiring, we have also maintained our usual high level of activity on the most important “non-credit-crisis-related” work for our clients, such as Roche’s $44 billion bid to acquire Genentech, CVS Caremark’s contested $2.9 billion acquisition of Longs Drug Stores and Morgan Stanley’s repurchase of up to approximately $4.5 billion of auction rate securities. In addition to this activity on corporate matters, our litigation practice continues to handle various major and multifaceted cases, such as representing Siemens in ongoing criminal and regulatory matters relating to corruption allegations and AstraZeneca in multijurisdictional federal and state litigation involving reimbursement amounts paid by Medicare, Medicaid and private insurers.
Our appreciation goes out to all of you who have been working so tirelessly as of late. The various roles played by the firm in so many of the recent matters that have dominated the headlines are a testament to the exceptional ability and effort that Davis Polk lawyers bring to such complex and high-stakes situations. They also reflect how well positioned the firm is across our practice areas to assist traditional clients, as well as other leading companies and financial institutions, as they address these momentous issues. Wherever market events head we expect our strong and diversified practice to continue to be at the center of these matters and we thank all of you for your efforts in making this happen.
The Management Committee
(100) 
Comments
"Lead counsel to the Treasury Department and the Federal Reserve Bank of New York in the $85 billion transaction with AIG."
Do the feds get a discount when they hire a pricey firm like Davis Polk?
stupid law firms with their elitist hiring practices
stupid LSAT forcing me to a T2 school.
One evident winner...
DPW's profits per partner have been outside the top 5 NYC firms for a few years running.
Maybe this is the year that they rejoin the top five (where they were for many years).
I feel sorry for #2. If you do really well in law school you may have a shot. (DPW is one of the few who do look beyond a handful of top schools.)
#2 here, sadly they do not hire from mine.
Skadden looks beyond the top schools too (but you need to be at or near the top of your class).
Cleary should send one of these out. We're:
Counsel to the Treasury's special advisor for Fannie/Freddie
Counsel to NY Fed
Counsel to Barclay's in Lehman acquisition
Counsel to TPG (which owns a lot of WaMu)
etc
3 beat me to it. Lat, stop letting Elie post under your name.
Skadden is a "top" firm, but I turned it down b/c there were too many TTTs. I didn't want my HY degrees diluted by Cardozo, Brooklyn Law, Fordham types.
Smart PR move by DPW.
They couldn't do this as a news release and post on their website because it would look tacky. People are losing their jobs, their homes, etc.
But DPW can certainly put the news in an "internal" memo, knowing that half a dozen people will send it to ATL for posting - at the height of fall recruiting season, when many law students are weighing callbacks / offers.
is DPW hiring????
"Wherever market events head we expect our strong AND DIVERSIFIED practice to continue to be at the center of these matters...."
Read: we are not Cadwalader.
DPW has beautiful offices.
And beautiful associates. I was not attractive enough to get a job there (despite being on law review at a top 10 school).
This is a very good recruiting move. I suspect the true audience for this memo is the junior associates at DPW and those considering offers from DPW for next summer. The crystal clear point (which will be backed up by nice but not huge bonuses at the best firms, while lesser firms struggle to pay anything at all) is that, even when times are bad and everyone is telling you we're in the midst of a horrible crisis, DPW will still be doing work and your job will be secure.
I suspect othre V10 firms will follow suit; this is a great time to provide evidence to all the young folks who can't tell the difference between Sullivan and Sonnenschein where the true power (and security) lies.
#10, don't forget Georgetown Law, Vanderbilt, Texas, and UCLA. I certainly wouldn't want my HY degree to be diluted by the likes of GULC, Vandy, UCLA, and Texas
DPW offices suck worse than SkaTTTen's commie red offices.
Smug assholes . . .
indeed, it's great to be ELITE. Because in times of crisis, we the members of the ELITE stand to profit off the suffering of TTTs and other common folk.
Yep, when the financial apocalypse comes, we the members of the ELITE will become even MORE RICH, POWERFUL, AND ELITE.
17: DPW has great offices - was just there last week and was duly impressed.
10 & 16 - did you die inside all at once, or did it gradually happen while locked in a basement doing doc review?
Mystal/Lat - Please get rid of the audio ads. I open ATL and get this blaring "Congratulations. You've been selected ... " message. That is not safe for work, and not acceptable for a site that caters to law firm associates. Please be selective or I will opt not to visit the site.
10:19 - I don't get those ads, but maybe that's because I downloaded the Google toolbar, which blocks most annoying ads.
Agree 17 -- Skadden's offices are very unappealing and give a terrible impression to the casual passer by.
10 & 16 -- So True.
Why does this come as a surprise? Many funds for a long time have been able to do could business picking up assets of distressed businesses. Bankruptcy creates transaction work; it is inteded to give a fresh start to assets, though it may end the corporate structure. Law firms that represent either the liquidators, or entities that are looking to purchase assets will see a fair amount of bankruptcy and transactional work.
The fall in the market hurts more for law firms that represent clients who are completely reliant on leverage. If a fund or a business has the cash, or can group with people that have the cash (like part of the Bain - Clear Channel deal with Bain working with a strategic), they will be able to business even in the down market.
And the earlier comments are right -- if you don't have the clients that can make these sorts of deals, you are left in the dust. However, note there are lower ranked law firms that represent a great deal of private wealth in PE or hedge fund or hybrid funds. So while Davis Polk, S&C, S&S, Simpson, Skadden may get many of the headline, I imagine that firms like Schulte or Seward or Cleary will see a decent amount of work. Then, a firm like Jones Day who does good B'ruptcy and some PE work may also get good work in this market.
-marketwatcher
elite blah blah TTT blah blah... who cares about that routine bickering. i want to know what the deal is with bonus season? Weil, DPW, and a bunch of V15s. are all going to have banner years. will they pay up, or keep the $$ for themselves under the pretext of "hard times".
Skadden's been hiring from Penn State in Philly too.
25 - nice to see you took the bait.
Sincerely,
10 & 16
Law, like other service industries, is completely parasitic on business. Due to the presence of numerous, overlapping regulatory regimes, the finance industry provides a disproportionately high level of legal business because every action a bank takes has legal import.
Make no mistake about it, just as great banking firms have folded, it is absolutely the case that many great law firms will do the same. There is a 100% chance that current 2Ls are holding summer offers from firms that will no be there when they graduate.
There will be a lag-time of several months while everyone waits for the dust to settle, but expect massive consolidation among firms and armies of well-qualified, highly-educated workers in the unemployment line. If you're a 1L, now is your last chance to rethink that $120K federal loan.
19 - drinking crazy juice?
What do people know about DPW's hiring?
Had a callback last week, and no word yet--I've heard they take longer than average to respond. Any truth to that, or am I deluding myself?
29 - You too.
Augh! Echo 22. Like I am going to click through a ton of crap and apply for a couple credit cards and do more credit-ruining horsesh*t to get what... a WalMarTTT gift card?!? WTF Get rid of that nonsense.
DPW's "beautiful" office space, who gives a shit? WLRK and BSF have shitty offices compared to the big firms, but they're doling out big dough to their associates.
30 - Take the LSAT again. It's not that hard.
hello - bonuses?
Elie, do NOT put audio ads on this page or I cannot visit anymore, and I bet lots of people feel the same way. Have you any regard for your audience? We are lawyers. You are retarded. If that audio ad is not down by this afternoon I'm deleting the bookmark to this page.
35 -- No one cares about what your mother thinks.
UVA2L
Atlanta to $35k!
32: I heard in exactly 7 days. Good luck.
So, in these times, do I go to CSM or DPW? Feeling pretty good either way.
i once made love to a hot DPW associate. frankly, the experience with her was overrated...like the firm. although, i did feel a tad bit smarter after insertion.
-TTT grad
28, do you know if DPW hires from Penn State (or any other Philly school for that matter)?
39 -- Shut your mouth when you are commenting to me!
35 -- Should I go to a firm with nicer offices (DPW, PWRWG), or better pay (WLRK, BSF)?
45 -- Work at Cravath and TTT associates from other firms will wipe your ass for life!
What's a WLRK and a BSF?
TTT?
What is a GULC? Is it like a GULP?
Looks like Milbank got the committee position.
Nice work for now but in the long term, less banks and less credit means less billings for everybody, DPW included.
"These firms aren't going anywhere, and might, ironically, do BETTER in bad times than in good, b/c now they're not competing w/ all the TTTs like Cadwalader."
The comment makes no sense. If their profits per partner go down, it isn't some great consolation that PPP went down at peer firms too. This economy is bad for everyone, top firms included. They might be hurting a little less, but it is still definitely not something positive for any firm (except those specializing in bankrupcy perhaps).
43, I don't know about hiring from Penn State law, but degrees from its Wharton business school have basically just become worthless.
Anyone that thinks boni will be good this year, no matter how busy certain firms are, is an idiot. First, the firms don't have to pay big boni from a recruitment or retention perspective, exits are a disaster and perhaps most importantly, big boni would be a direct slap in the face to clients who are bleeding. It is lose lose lose for the partners so lose lose lose for the ass-ociates.
zzzzzzzzzzzzzzzzzzzzzz
so clients bust, big law works around the clock to save what's left, and partners pocket the cash and associates have no exits. sweet. sounds like lose, lose, lose for the associates and clients. the only thing partners are losing is the market value of their third homes.
55: And this is a surprise to you? If it is, you really need to reconsider what it is exactly you're doing here.
All of the V10s (except maybe Latham and Simpson) are picking up big business from this. This isn't really differentiating DPW from its competitors.
53... you're an idiot. Not handing out bonuses equivalent to years past sends the message to recruits that "when the economy is in the shitter, so is your pay." Recruits will go where the business continues to thrive, and thus, you will continue to get paid. Those that can't afford to pay them won't, but those that can will.
As a summer at DPW this year I can confirm the place was very busy, almost surprisingly so. Great place to work too.
No, I'm not from recruiting.
MAYBE you people who constantly brag about the top 10 school you went to and the law review on which you served should realize that you're probably a socially awkward and horribly annoying person to be around and it is likely that the person interviewing you realized that and decided he didn't want to have to look at you for the following few years at the firm. Grades and such matter, but if you are totally inept at being an actual real person, people do not want to work with you. It isn't rocket science. Practicing law isn't only done well by attorneys from Harvard. So if a firm can hire someone with a JD from a school ranked 20th who can actually be a pleasant person to talk to, why wouldn't they hire that person over someone from a top three school who is an enormous tool? The fact you entertain us with your background on here leads me to believe you probably are someone not really fun to be around.
60, totally agree. But graduating from HLS and being socially mature are not mutually exclusive. On the other hand, posting that top 10 schools are the only place good lawyers come from and not being a total tool bag, are mutually exclusive.
I hope I'm hot enough to get hired by DPW! My callback totally justifies my new breast implants! :)
Oh no, some of my best friends are top 10 grads and are entirely socially acceptable. A lot of my friends do the interviewing for OCI and such and talk all the time about how amazed they are at the lack of personality so many people at top ten schools have and they could not imagine having to work alongside them day in and day out. Which might explain why some people commenting on here did not get call backs even though *gasp* they went to Harvard! Hint: have a drink, get laid, do something that might make you a more interesting person to be around. Stop being such a tool. No one cares you went to Harvard if you're BORING.
anyone else thing the DPW PR machine is a little over the top?
I feel like the GULC spin doctors are way over the top.
For those who still don't get it, again, read the book "The Winner Take All Society." It totally predicts what is happening in law. I would even take it up a notch -- there will be a clear segmentation in the legal market very soon:
1. WLRK, CRAVATH, SULLIVAN&CROMWELL (MAYBE DPW): premium, "shaper" firms that only handle the most important work and the most complex stuff. Equivalent to McKinsey, BCG, and Bain in consulting (consulting went through these shifts a long time ago -- only three or maybe four (Booz Allen) firms really survived as the elite. Yes, the PPPs at these firms might actually go UP in the long term (after the short-term adjustment) b/c competition is reduced. Trust me -- partners at WLRK/CSM/S&C/DPW are LOVING all this havoc -- they shake out the competition that had been sheltered for too long by imbalanced financial markets. Now we can go back to the days of the TRUE "white shoe firms."
2. Mid-Market elites: Skadden, Cleary, STB, Weil, Latham, Gibson, etc.: international, premium firms with broad practice areas but who handle a little more "routine" stuff (e.g., the CVS-Rite Aid merger maybe but NOT the Merrill-BOA or Bear Stearns game-changing stuff).
3. Specialists/boutiques: W&C, etc. Very profitable, good for discrete but complex issues.
4. Everyone else (you know who I'm talking about): very boring, routine, commoditized crap. Way lower pay. The stuff that makes lawyers hate their jobs and drags down the lawyer satisfaction surveys. People at CSM might hate life b/c they work a lot, but so what -- they're at least doing fascinating work. Sorta like garbage man vs. heart surgeon resident -- both hate life but for way different reasons.
The lesson: it's a winner-take-all society. If you don't go to an elite school and do well, you end up in #4. No more middle ground crap (ie, Vault 20-50).
The Sword of Damocles will smite you where you stand, GULCer TTTards!!!
66: You're more likely to be stuck in #4, but it is not unheard of or impossible for people not at an elite school to get into 1-3. I know plenty who have. And I know plenty of elites with good grades who ended up in #4 all the same. Because they are socially inept.
Does anyone know when DPW's hiring committee meets?
-2L
68 -- I agree q00%. And if it weren't for freakin USNRW, law schools, like bschools, would INTERVIEW!!!
In a client-facing business, who gives a damn if you can ID that one last obscure issue in a Tort fact patterns or type fast enough to analyze it on the exam??? Diminishing returns (or even negative returns) set in very quickly beyond a certain GPA -- law is NOT rocket science -- so law schools should happily ding the freaky yet genius guy over the very smart but balanced guy.
Unfortunately, USNWR doesn't have a metric for "social skills score."
69 - They held a special midnight meeting yesterday to discuss your candidacy. Not only did they decide not to extend an offer to you, but they contacted every other firm you applied to and told them not to hire you as well. The resume you submitted to them is on its way back to you in the mail, only it has be burned and shredded beyond recognition. They also killed your goldfish.
This says it all, from AmLaw.
Firm / # lawyers it takes to generate $10mm in profit
Wachtell 5.42
Sullivan & Cromwell 12.05
Cravath 13.89
Simpson Thacher 15.38
Davis Polk 15.87
Gibson, Dunn 16.53
Kirkland & Ellis 17.7
Latham & Watkins 17.7
Skadden 19.42
Why is Lat not reporting that Milbank -- a firm outside of the "safe v-10" -- got the creditors committee gig in the Lehman bankruptcy?
Other firms are benefiting from this, yet the way ATL describes the situation, one would think that every firm besides CSW, DPW and A&C are tanking.
This says it all, from AmLaw.
Firm / # lawyers it takes to generate $10mm in profit
Wachtell 5.42
Sullivan & Cromwell 12.05
Cravath 13.89
Simpson Thacher 15.38
Davis Polk 15.87
Gibson, Dunn 16.53
Kirkland & Ellis 17.7
Latham & Watkins 17.7
Skadden 19.42
71, 69 here. I know I sounded gunnerish or whatever, but in view of what is happening, I really would like to end up at a firm that will survive the financial crisis. My only V5 callback in NY is DPW, so I was a little concerned. Thanks for the sarcasm.
If you want to be happy, take the spot at Davis Polk. If you want money regardless of misery, go to Cravath.
76 -- where does s&c fit in here?
Is it a myth that everyone is "happiest" at dpw? S&C beat them by far on the midlevel satisfaction survey and A-list association survey, no?
If you want to be happy, work at Schulte. Nice offices, pay is competitive and associates are not dicks. If you want to make us happy, kill yourself.
76 is wrong. DPW and Cravath PAY THE SAME.
If you want to make the big bucks, go to Wachtell (or Boies Schiller if you're a litigator)
76 is wrong. DPW and Cravath PAY THE SAME. Go to DPW.
If you want to make the big bucks, go to Wachtell (or Boies Schiller if you're a litigator)
76 is wrong. DPW and Cravath PAY THE SAME. Go to DPW.
If you want to make the big bucks, go to Wachtell (or Boies Schiller if you're a litigator)
Everyone should listen to 79-81 because (s)he reads directions
66 lost all credibility by referring to Vault rankings at the end. When it comes survival of the fittest, those rankings are meaningless.
72: It's funny that you write that AmLaw "says it all," but then you don't write all of what AmLaw says.
What about Quinn and Cahill, which score higher numbers than DPW on that chart? or Milbank and Gibson, which score higher than Latham? Or McDermott Will (for God's sake), which scores higher than Skadden?
What about Weil and Cleary, who both have prominent roles in the current mess, but are a little lower on the chart?
In other words: average lawyer value, by itself, doesn't necessarily equal firm strength or prestige.
73
it's not a surprise. milbank and akin are the two 600lb gorillas when it comes to committee work
66 - "People at CSM might hate life b/c they work a lot, but so what -- they're at least doing fascinating work. "
No, they're working on fascinating deals. The work associates are doing -- emergency due diligence at 3am for a week straight -- is hardly fascinating. There's some satisfaction in being able to point to the cover of the WSJ and say, "hey, that's my deal!" But when the only people you see are also working on that deal, they're not as impressed, and the satisfaction fades quickly.
Summary: being a senior partner at Cravath, S&C, DPW, Milbank, etc.: good. Doing what it takes to get there: less good.
- Senior associate at one of the firms you mentioned
58, come bonus time we shall see who is the idiot, but I wager that my sweet joy in winning this dumb argument will be tempered by the sad state of market boni.
OHHH my GUMP, my Akin Akin Gump, I just don't you'll understand....
66, although yours was a noble attempt to summarize the fate of the legal profession, it's off the mark. I'm guessing that you are a 1L who got a little over-excited regarding these recent events.
The segmentation that you are describing has always existed, and you are vastly underestimating the depth of a legal market in a major city. A firm like Greenberg Traurig isn't in its wildest dreams trying to snatch a mandate away from Skadden; both firms target different ends of the market and charge corresponding rates. In other words, when a downturn such as the current credit crisis hits, it tends to affect firms proportionally. The mandates that we see Cravath, S&C, etc. snatching up right now are just re-affirming their positions in the marketplace. This isn't anything new.
76 lets do some simple math:
Firm / # lawyers it takes to generate $10mm in profit
Sullivan & Cromwell 12.05
Cravath 13.89
Simpson Thacher 15.38
Davis Polk 15.87
Gibson, Dunn 16.53
Kirkland & Ellis 17.7
Latham & Watkins 17.7
Skadden 19.42
All pay the same no. Which one is the real sweatshop then?
#90 -- so I guess the people at work at Jones Day are the REAL geniuses after all. All those idiotic top-law-school grads who choose CSM and S+C are just fools this whole time.
Let's do some thinking -- those figures show the # of LAWYERS required to generate $10mm in profit. The figures don't tease out which fraction of those profits are b/c of the premium that the partners charge for their expertise, It's not like the difference between S+C and Skadden is all because of the extra 2 hrs per week that S+C associates bill -- rather, the lawyers/partners at S+C can COMMAND higher rates for the same amount of hours worked.
#19: You probably make $200k per year and will never make more than $1-2m. If you think that is "elite" you are just delusional. For your own sake I hope you post in jest.
No surprise to see DPW on AIG matter. The firm is far and away the dominant shop in funky convertible debt offerings, and M&A deals involving them.
How are the partners here compare to the other biglaw?
69: DPW meets 2x weekly to discuss candidates. not sure which days, though. wed/fri?
52 douchebag doesn't know the difference between UPenn (in Philadelphia which has Wharton) and Penn STTTate which is at STTTate College.
#91, 9- here.
If the difference is due to partner premiums and possibly premiums on deal than your point is right on. However, I am not so sure of that.
My point is Skadden has the reputation of ultimate sweatshop which these numbers seem to refute. Also, Skadden probably has more partners which can bill high, and numbers equal cash. I am not including Wachtell in this as, as far as I know, Wachtell bills by the deal not hours-I may be wrong.
Anyway, I also don't understand your comment re "so I guess the people at work at Jones Day are the REAL geniuses after all. All those idiotic top-law-school grads who choose CSM and S+C are just fools this whole time." I never said anything about working at the big firm because the hours might be longer is stupid. I would still like to assume we go to these firms because we love bigger and more important deals and are even deal junkies.
96, by "Penn State," do you mean Penn's campus in State College, Pa. (i.e., "Penn-State" for short)? I think that name fools most people into thinking it's a state school.
some people are also fooled into thinking that a land grant public university with separate prices for in-state students is a state school.
http://www.collegian.psu.edu/archive/2007/10/24/penn_state_tuition_highest_in.aspx
Penn's law school is kept private, though, just as it was before Penn took it over from Dickinson College.