Set up in 1965, Wachtell is America’s pre-eminent boardroom adviser. Bosses tapped the firm to counsel on transactions worth $100bn in the first half of this year, and paid handsomely for the privilege
For an illustration, examine “The Partners: Inside America’s Most Powerful Law Firms”, by James Stewart, published four decades ago. With a few exceptions, the book’s starring firms remain in excellent health. Cravath, Swaine & Moore, Sullivan & Cromwell and Kirkland & Ellis are still some of Wall Street’s busiest limousine-chasers. Less fortunate firms have fizzled out, rather than blown up. One shop, Donovan, Leisure, Newton & Irvine, closed in 1998.
Supernormal profits are not the only unusual thing about Wachtell. While rivals opened up shop abroad, Wachtell’s flirtation with establishing a London outpost remained just that. The five next most profitable firms have an average of 1,700 lawyers toiling in 16 offices; Wachtell employs fewer than 300 under one roof in Manhattan. There is no formal partnership agreement. Partners are paid in “lockstep” according to seniority rather than their individual contribution. Meritocracy is prized.
Some see these innovations as shields for imperial bosses rather than brakes on the excesses of financial capitalism. And the impact of the firm’s academic standing on its bottom line is probably less than it used to be. All corporate advisers must worry about whom to advise, weighing the number of potential clients and the depth of their pockets. But in hitching itself so fully to American bosses in their most trying moments, Wachtell chose the right horse. This has proved enormously lucrative.
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