Biglaw Firm Bucks Tradition To Try And Reverse 20 Percent Revenue Slump
Attention Lateral Market: Cahill is here to play.
The last three years haven’t been great for Cahill, Gordon & Reindel. The New York mainstay saw its revenue take a 20% dive over that period, thanks to the decline in the high-yield and leveraged loans markets. But the problem went deeper than a decline in billables — they also lost ~12 partners to the lateral market. And as managing partner Herbert Washer told Bloomberg Law, that “woke us up to the realities of the legal market.”
Historically, Cahill is on the smaller side of a Biglaw firm — 300+ attorneys — and eschews the lateral market. That strategy paid off with sky-high profits per partner and a reputation for sharing the wealth with associates via generous special bonuses. But in the year of our lord 2024, would the tried and true (105 years strong!) strategy still work?
Well, Cahill decided it was time to mix it up — adding 17 lateral partners and expanding into the private credit, bankruptcy, M&A, project finance, white-collar, cryptocurrency, congressional investigations, and intellectual property litigation practice areas. As Washer said, “If the lateral market is going to try to pull people from Cahill, well, we can go ahead and look to see if there are opportunities for us to pull partners from other law firms.”
That required tweaking the firm’s compensation system. And it sure sounds like younger attorneys are the beneficiaries.
“We have very high profit margins, which effectively means that we can pay our partners a greater percentage of our revenue than many, if not most, of our peers,” Washer said. “That allows us to offer competitive compensation to lateral partners because we have the profit margins.”
The firm also tweaked its compensation system to allow for more rapid ascension, so lawyers don’t necessarily have to wait until they’re a partner in their 50s to get paid top dollar, Washer said.
Washer noted, “It’s important to pay people what they’re worth when they’re worth it.”
And the new outlook is already paying off. “By all metrics — demand, value of time, billing, revenue — I think the firm is up substantially over 2023,” said Washer. “We’ve not just sustained the business — we’ve grown the business.” Plus it doesn’t hurt that the syndicated loan market is rebounding.
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But the firm’s expansion doesn’t mean it’s trying to be all things to all people. They still want a focused — and elite — practice. “We want to be top tier in the things that we do,” Washer said. “History suggests that being very profitable and being targeted are not mutually exclusive.”
Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter @Kathryn1 or Mastodon @[email protected].
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