Cadwalader, Wickersham & Taft
Cadwalader, Wickersham & Taft
Sales: $175 million (1998 est.)
NAIC: 54111 Offices of Lawyers
Cadwalader, Wickersham & Taft claims the distinction of being the United States’ oldest law firm, tracing its roots to 1792. For decades it was one of the top New York City law firms, but in the late 20th century it slipped as many other law firms aggressively gained more clients. However, in the 1990s Cadwalader updated its business practices and regained a position as one of the city’s top 25 law firms. Like other law firms, its practice in the 1990s involved traditional corporate clients, such as banks, insurance companies, and utility firms, but also has expanded into relatively new areas such as environmental, intellectual property, and healthcare law.
The Early Decades: 1792–1878
When the United States back in 1792 consisted of just four million persons and New York had about 33,000 residents, the New York Supreme Court admitted 22-year-old John Wells as an attorney. Wells had graduated from Princeton and then moved to the city. His early practice probably involved real estate, debt collections, and other commercial claims. In 1804 he represented James Cheetham, the editor of the American Citizen, in Cheetham v. Smith. Although his client lost the case, Wells soon became well-known among his fellow attorneys.
In 1818 Wells organized a partnership with George Washington Strong, who graduated from Yale and in 1805 began his legal career. Unlike Wells, Strong early in his career was quite busy with at least 100 cases of commercial and maritime law every year. After the 1807 Embargo Act shut down the port, Strong worked on many cases to collect debts from those who had lost their jobs or on real estate foreclosures. His business clients included Union Bank, the New York Sugar Refining Company, and the Columbian, American, and New York Fire Insurance Companies. In 1816 Strong helped found the Bank for Savings in the City of New York. He also served prominent families and individuals, such as the Vanderbilts and John Jacob Astor.
When Wells died in 1823, Strong brought George Griffin, another Yale graduate, into the partnership that continued to prosper as New York City expanded, especially after the 1825 completion of the Erie Canal that connected the heartland to the nation’s largest port. The partnership moved in 1830 to Wall Street, where it remained until 1985.
In 1835 Strong replaced Griffin with Marshall S. Bidwell, his new partner and former member of the Canadian Parliament. Bidwell became a well-known litigator, representing clients such as author James Fenimore Cooper in a libel suit. Strong’s son George Templeton Strong joined the law firm in 1838. The Strong, Bidwell & Strong partnership served business clients such as the Bank of America, the Merchants’ Exchange Company, the Seamen’s Bank for Savings, and the Neptune Insurance Company, and gained more real estate and mortgage work as the city grew. For example, Manhattan’s first tenements were built in the 1840s as more Irish and other European immigrants poured into the city. The firm also represented bankruptcy clients following the panics of 1837 and 1857.
In 1855 George Washington Strong died. Although the partnership was renamed Bidwell & Strong, George Templeton Strong became the most prominent partner through the 1860s, especially due to his extensive civic involvement. Strong was an officer or leader of the Philharmonic Society, Trinity Church, and the U.S. Sanitary Commission, which had been established to improve the health of Union soldiers during the Civil War. In the 1850s Strong helped create Columbia College’s law school, recognizing that the apprenticeship system was outdated.
In the 1870s Strong died and Charles E. Strong, his first cousin, kept the firm going. New clients in that decade included Wells Fargo, Western Union Telegraph Company, the founders of the New York Medical College & Hospital for Women and Children, and also Steinway & Sons, New York’s famous piano maker. In the law firm’s bicentennial history, Charles E. Strong was said to “represent the transition [from small generalist law firms to large specialized firms]: he was concerned with ‘family law’ in the management and advice he provided to his trusts and estates clients, but also undertook the legal work for the firm’s major business clients”
New Era of Corporate Law Starting in the Late 1800s
With corporate America booming after the Civil War, the law firm in 1878 hired John L. Cadwalader, who previously had graduated from Princeton College and Harvard Law School and served as the nation’s Assistant Secretary of State. In 1878 Strong & Cadwalader with its six lawyers and four staff members was one of the nation’s larger law firms. They used the newly invented typewriter (1868) and telephone (1876) to run their business and also adopted the “Cravath system” in which law firms hired top law school graduates as associates, instead of training unpaid law clerks in the apprenticeship system. About the same time, the law firm gained new clients, such as the Title Guaranty & Trust Company, Manhattan Trust Company, the Real Estate Exchange, and the Real Estate Trust.
In the years before World War I, the law firm represented other corporate clients, including United States Steel; the Aluminum Company of America; Allis-Chalmers Company; Phelps, Dodge; London’s S. Pearson & Son; National Railways of Mexico; Seattle Lighting Company; Chase National Bank; and the Mutual Life Insurance Company of New York. Some of the firm’s clients literally built New York City’s infrastructure, including its subways, railroad tunnels, and the Grand Central Terminal.
In the Progressive Era, the law firm represented not only corporate clients, but also those not so prosperous. Since its formation in 1848, the New York Association for Improving the Condition of the Poor had used the law firm’s assistance.
In 1914 George Wickersham and Henry W. Taft joined the law firm that adopted its permanent name of Cadwalader, Wickersham & Taft, with a total of eight partners, 15 associates, and 29 other staff employees. President Taft’s former attorney general, Wickersham chaired President Hoover’s commission on law enforcement that advised continuing Prohibition. He also chaired the Council on Foreign Relations founded in 1921. Taft, an expert in antitrust law, represented several railroads, including the New York, New Haven & Hartford Railroad and the St. Louis & San Francisco Railroad.
During the Great Depression, Cadwalader held its own, largely due to foreclosure and bankruptcy work. It also gained media attention when it represented a member of the famous Vanderbilt family and also helped Margaret Mitchell successfully defend herself in a landmark copyright lawsuit that had accused her of plagiarizing when she wrote Gone with the Wind.
During World War II, Cadwalader lost 35 lawyers and staff when they joined the military, a typical development for many law firms at that time. To compensate, the firm hired more women, including in 1942 its first woman partner, Catherine Noyes Lee, “the first woman to hold such a position in a major Wall Street law firm,” according to the firm’s history.
Post-World War II Developments
With the U.S. economy growing after the war, Cadwalader also recovered. By 1952 the firm had 47 lawyers, and in 1965 that number had grown to 76 lawyers. From the 1950s through the 1970s Cadwalader was one of the nation’s major law firms involved in financing transactions for the shipping industry. In the 1970s, for example, the firm helped write a $1 billion contract for constructing liquid natural gas ships and also wrote a unique lease that allowed ships to be built with private funding that were then leased to the government’s Military Sealift Command. During the heyday of the firm’s shipping practice, it represented clients’ interests in Europe, Asia, and the Middle East. But the industry declined in the early 1980s, so Cadwalader represented creditors that foreclosed on 12 ships of the United States Lines, the largest shipping bankruptcy in U.S. history.
In the 1970s and 1980s Cadwalader participated in the litigation explosion in U.S. society. In the 1970s it won court cases against the Internal Revenue Service that “established the principle that the government, ‘the Sovereign,’ could be sued and held liable for lease contracts,” according to its 1994 history. In the early 1980s Cadwalader represented William Tavoulareas in his defamation lawsuit against the Washington Post, a case that helped expand the firm’s practice in media, communications, and First Amendment law.
Cadwalader also defended Diamond Shamrock, a manufacturer of Agent Orange, when it was sued by over two million Vietnam veterans in a class-action lawsuit settled out of court in 1984. The firm’s work in this case led it into toxic waste lawsuits involving asbestos and chromium producers. In 1989 the law firm gained a $2.5 billion settlement for 300,000 women who had sued for damages from the Dalkon Shield birth control device made by the A.H. Robins Company.
- John Wells begins practicing law in New York.
- The partnership of Wells & Strong is formed.
- Charles E. Strong begins a solo practice.
- Strong & Cadwalader is formed.
- Cadwalader, Wickersham & Taft is organized.
- The firm starts practices in consumer products, healthcare, and environmental law.
- Los Angeles office opens.
- Firm starts its branch office in Charlotte, North Carolina.
- London office opens.
- Firm closes its Los Angeles office.
In the 1980s Cadwalader also won a major case against Arthur Anderson & Company in what was the largest judgment against an accounting firm. Other Cadwalader financial litigation concerned the Hunt brothers’ silver market scheme, the Lombard Wall bankruptcy, and Ivan Boesky’s involvement with Drexel Burnham.
Practice in the 1990s
In the early 1990s Cadwalader suffered an economic decline, as did many other law firms as part of an overall national downturn. Consequently, in 1994 a firm committee voted to end the unprofitable Palm Beach office and terminate some of its partners. James W. Beasley, Jr., then sued the firm. A Florida judge in 1996 ruled in Beasley’s favor, awarding him $2.5 million, based on the fact that Cadwalader’s outdated partnership agreement lacked a means to expel a partner.
This case represented some general trends. For example, Leslie Corwin, an attorney specializing in partnership law, estimated that about half the firms he had worked with had obsolete charters, the basic reason several terminated partners have sued their former law firms. It seemed ironic that some law firms helped their clients in the fast-paced Information Age yet neglected their own operating rules.
It should be emphasized that Cadwalader in the 1990s became more business-oriented, a step necessary to survive as a firm. In the process it adopted methods unheard of in earlier decades, such as using direct mail to gain clients, as reported in the book Malice Aforethought.
Cadwalader represented some major clients involved in Latin American project finance deals in the late 1990s. Several involved privatization of formerly state-controlled facilities. For example, the firm advised the Puerto Rican government in the $365 million privatization of the North Coast Super Aqueduct; Doe Run Resources in the $1 billion privatization of a Peruvian mine; the government of Paraguay in the $8 billion privatization of the Yacyreta hydroelectric facility owned jointly by Paraguay and Argentina; UBS Securities in the $1.5 billion privatization of the Argentina Airport System; and the Bank of America in the $500 million privatization of a Guatemalan distribution firm called EEGSA. The law firm also counseled NationsBank in two transactions, one to finance a $1 billion Mexican fiber optic system run by Alestra and also to privatize Light Rio, a distribution company in Rio de Janeiro.
In 1996 Cadwalader opened a new branch office in Charlotte, North Carolina with eight attorneys. By late August 1998, the office had grown to 30 attorneys and was relocating to a larger office in the city’s Carillon Building. According to a firm press release on August 31, 1998, Cadwalader was the “first major Wall Street law firm to open a North Carolina office,” and Charlotte was described as “the country’s second largest financial center.”
By March 1999 Cadwalader had added about 100 lawyers in little over a year. With a total of 400 lawyers, it was ranked as the 22nd largest law firm based in New York City. The firm in early 1999 received considerable attention in the legal press when it gave its first-year associates a huge pay raise after lagging behind rival firms in years past. Starting January 1, 1999, the first-year associates had a salary and guaranteed bonus totaling $107,000. With many associates leaving their initial law firms for greener pastures, Cadwalader also began offering associates paid one-month sabbaticals after their fifth year.
Rival firms often grew from mergers with other law firms. According to the National Law Journal’s 1998 survey of the nation’s 250 largest firms, 29 law firm mergers in 1998 added 840 attorneys, compared with 20 firms that added 387 lawyers through mergers in 1997. However, Cadwalader’s managing partner Robert O. Link, Jr., in the National Law Journal of November 16, 1998 said, “We’ve never merged with a firm, and I don’t see it happening within the foreseeable future.” Cadwalader relied on recruiting associates and lateral hires (i.e., organic growth) to expand.
In spite of Cadwalader’s overall growth, it closed its Los Angeles branch office in late 1998, since the firm and its clients concluded that Los Angeles had not become a major financial center. The Los Angeles branch had reached a total of 30 lawyers, but some partners there either returned to New York City or joined other Los Angeles law firms.
In its third century of practice, Cadwalader faced new challenges and opportunities, from the introduction of the “euro,” the new currency of the European Community, to the North American Free Trade Agreement approved during the Clinton administration, to the booming frontiers of the new electronic economy.
Baker & McKenzie; Skadden, Arps, Slate, Meagher & Flom; Stroock & Stroock.
Barrett, Paul M., “A Once-Stodgy Firm Makes a Flashy Return, But at What Cost?” Wall Street Journal, August 17, 1998, p. A1.
Cherovsky, Erwin, “Cadwalader, Wickersham & Taft,” The Guide to New York Law Firms, New York: St. Martin’s Press, 1991, pp. 41–44.
Friedman, Thomas L., The Lexus and the Olive Tree, New York: Farrar, Straus and Giroux, 1999.
Gardner, Deborah S., Cadwalader, Wickersham & Taft: A Bicentennial History 1792–1992, New York: Cadwalader, Wickersham & Taft, 1994.
Shepherd, Ritchenya, “Firms Get Urge to Merge,” National Law Journal, November 16, 1998, p. A1.
Snider, Anna, “Cadwalader Leapfrogs Firms in Setting Associate Salaries,” New York Law Journal, March 18, 1999, pp. 1, 8.
Starkman, Dean, “New York Firm’s Expelled Partner Is Awarded $2.5 Million by Judge,” Wall Street Journal, July 26, 1996, p. B2 (eastern edition).
—David M. Walden