A few months ago, we read theoretical articles about how the credit crunch and its lack of deals would mean less work for big New York law firms. Wednesday, we got a real-life example. Cadwalader, Wickersham & Taft fired 96 lawyers, 90 of whom worked in real-estate or securitization, which often included deals funded by mortgage-backed securities.
WSJ Law Blog: This morning [July 30], the partnership of Cadwalader, Wickersham & Taft is slated to inform 96 lawyers — a group spanning from first-year associates to counsel — that they will be laid off. 90 of the 96 cuts will come out of the real estate finance and securitization practices, said the firm’s chairman, Chris White. Most of the affected lawyers, said White, are in the New York, Charlotte and London offices, with “one or two” in Washington. The 96 layoffs are in addition to the 35 lawyers the firm laid off in January…
White said that real estate finance and securitization — areas that he referred to, alternatively, but not necessarily inconsistently, as “discrete areas of the firm” and “a large part of the practice” — grew “very rapidly” over the past five years, focusing principally in the area of commercial mortgage-backed securities. “Our finance department was involved in every major leveraged buyout last year,” said White, including Blackstone’s $23 billion acquisition of Equity Office Properties.
“All of those financings were done on mortgages on those properties, and those mortgages were turned into securities. Every major deal that was done in 2006 and 2007 was done off the back of mortgage-backed securities.” He added: “There was a frothiness that occurred as a result of the Blackstones and the Apollos using mortgage-backed securities to fund their buyouts. It was a lot like junk bonds becoming the instrument of choice in the late 80’s and early 90’s.”…
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