Originally Published - November 5, 2015 | By Andrew Strickler
Law360, New York (January 20, 2015, 8:57 PM ET) -- The decision of Cadwalader Wickersham & Taft LLP's chair-elect to leave the firm and start an investment fund shows how BigLaw is struggling to compete with the massive paydays and deal-making power of hedge funds, experts say.
Just a year after the firm named Jim Woolery as its next chairman, Cadwalader leaders announced his sudden resignation and Patrick Quinn’s election by the board over the weekend as managing partner.
Woolery, who joined Cadwalader in 2013 from JPMorgan Chase & Co., left the firm to co-found a new investment firm with Douglas Braunstein, who himself recently left JPMorgan as a vice chairman.
Woolery told Law360 that his resignation from Cadwalader was prompted by an opportunity to employ his deal-making experience as a leader of a new investment business focused on shareholder advocacy.
“We have a point of view that the shareholder base is going to be more active and more critical in the ways transactions occur, with more of a convergence of shareholder ideas and company ideas,” he told Law360. “We can be a bridge in that space in organizing and driving a particular thesis that I think will also allow us to align with directors.”
The founding members of the new investment fund include 14 CEOs, the fund said in its launch announcement, and they have committed about $250 million in capital.
Hedge fund compensation last year increased between 5 and 10 percent over 2013 as capital invested in hedge funds reached new records, according to the 2015 Glocap Hedge Fund Compensation Report released in November. The average compensation for a portfolio manager of a large fund with performance near industry average increased by nearly 8 percent.
Woolery declined to comment on his Cadwalader compensation but said the potential financial rewards were not his primary motivation.
“Cadwalader is on the right track; it’s a great firm and an innovative one,” he said. “I never thought I’d have the opportunity to start my own company, and it just so happens this seam has opened in the universe for me.”
But beyond the cash, said The Foster Group Legal Search principle Michelle Foster, is the opportunity hedge funds and other financial firms can give deal-making lawyers to execute complex deals rather than just service them as lawyers for others.
“Lawyers are typically excited to go to the business side and do the deal instead of just papering it, so to speak,” she said. “We hear this constantly from top corporate lawyers.”
On Tuesday, another well-known mergers and acquisitions attorney, Stephen Fraidin of Kirkland & Ellis LLP, announced his departure from the firm to Bill Ackman's Pershing Square Capital Management LP hedge fund, where Fraidin will be vice chairman.
A Wall Street law firm losing a prominent attorney to a hedge fund or other financial firm at least has the benefit of an established relationship with a figure of influence at a potentially profitable new client, according to Bloom.
Quinn predicted the change-up would not disrupt clients, and he wished Woolery well.
“Jim’s departure was unexpected, but he had this exciting opportunity to do something entrepreneurial, and he’s leaving the practice of law for the business world,” Quinn said. “We have been the lawyers providing counsel on the fund formation for the new venture, and we hope and expect to continue to work with Jim and his partners.”
Woolery told the firm he was leaving about 10 days ago, and since then, his resignation has prompted a quick reshuffle in the Cadwalader leadership, with Quinn taking over Woolery’s more client-facing role as lone firm leader.
Chris Cox, who had shared with Woolery a role as co-leader of the firm’s corporate practice, was also named the head of that group. The chairman role is being scrapped, Quinn said.
Woolery joined JPMorgan in 2011 after 16 years at Cravath Swaine & Moore LLP. He resigned as co-head of the bank’s North American M&A group to join Cadwalader and within less than a year was tapped to take over from former chairman Chris White at the end of 2014.