Lonesome George
There are few things sadder than seeing degenerate gambler fathers using what little custody time they have with their kids playing the ponies at OTB.
So forgive us for a little schadenfreude that one of the most-depressing places on Earth has filed for bankruptcy – especially when there’s so much exciting legal news involved.
Not only is OTB’s Chapter 9 one of only a handful filed every year (it’s the public-benefit-corporation cousin (and as an aside to this aside, how is OTB a public benefit???) of the Chapter 11 reorganization), but it’s Cravath’s first foray into debtor-side bankruptcy work.
After the jump, we catch up with an animal as rare as the Yangtze River Dolphin – a Cravath lateral (for the simile we were going to go with Lonesome George (pictured), the last of the Pinta Island Tortoises, but since there are actually two Cravath laterals right now we felt the Baiji was more appropriate since they could reproduce, but George is the end of the line).
While it’s notable that this is Cravath’s first debtor-side deal, it’s not like they’ve done a lot of creditor-side bankruptcy, either. For the previous 188 years of the firm’s existence it had shied away from the “unseemly” practice, until creating a bankruptcy group in 2007.
With a lateral.
Cravath (almost) never brings in laterals.
Richard Levin joined the firm in July 2007 from Skadden, and the combination of Cravath getting into bankruptcy and bringing in a lateral was significant enough that the New York Times, which generally doesn’t care a whit about lawyers’ lateral moves, gave the news feature treatment.
That move was part of a flurry of activity in bankruptcy laterals, which has continued apace through the present day.
Mr. Levin’s move reflects the fact that bankruptcy lawyers have become a hot commodity at many large firms. The game of trading in “lateral partners” has gained steam: Harvey R. Miller, perhaps the most outsize personality in the field, made headlines when he returned to his home at the New York firm of Weil, Gotshal & Manges from the investment house Greenhill & Company, in March.
A day after Mr. Miller returned, four prominent Weil restructuring partners moved to Cadwalader, Wickersham & Taft. The New York office of O’Melveny & Myers hired five partners from Stroock & Stroock & Lavan this spring. And Steven Wilamowsky, a Willkie Farr & Gallagher partner, was persuaded to join Bingham McCutcheon’s [sic] restructuring group at the beginning of this year.
But back to Cravath.
How rare was Levin’s joining the partnership? In 2005, Cravath hired Andrew Needham from Willkie (see below for unrelated amusement) to re-stock a tax practice that was understaffed when tax lawyer Lewis Steinberg left the firm (for investment banking, but he then shunned his old firm when he re-entered the practice of law at Linklaters – that piece from earlier in the year includes more on the sordid tale of another Cravath tax lawyer).
Prior to hiring Needham, Cravath had gone 62 years without bringing in a lateral partner (as we note in that other piece, it was also a tax lawyer back then: Roswell Magill from Treasury).
Is this a crack in the dam? Nothing for 62 years, then two in two years? (Some people count Herbert Camp, ALSO a tax lawyer, as a lateral partner because he came from Donovan Leisure in 1987, but he started out as a Cravath associate, so we don’t). To be fair, there haven’t been any since Levin.
Apparently, the frustration of handing clients over to other firms outweighed the inability to trust anyone who hadn’t been raised from birth (read: graduation from law school) in “the Cravath System”:
The “Cravath System” is laid out in a musty rose-colored book, “The Cravath Firm and Its Predecessors: 1819-1947,” a 1948 work by Robert T. Swaine, given to every lawyer upon being named a partner. The book notes the wisdom of the firm’s founder, Paul Cravath, who believed that lawyers should be recruited from law schools rather than from other firms.
“Cravath men,” the book says, should be “taken to the shallow water and carefully taught strokes.”
“While recognizing the risks of too much inbreeding, Cravath insisted that new partners be chosen from within the office, unless special requirements otherwise compelled,” according to Volume II of Mr. Swaine’s tome.
So OTB doesn’t exactly have the polish we expect of Cravath clients, but as Wachtell has noted, novel work is the key.
You’ll also want to check out the Times piece for this self-effacing correction and trivia (and note that they didn’t correct the spelling of Bingham McCutchen, but maybe that’s because they hadn’t gotten it wrong 50 times yet):
Correction: August 6, 2007
An article on the Street Scene page in Business Day on Friday, about the law firm Cravath, Swaine & Moore’s entry into bankruptcy law practice, misspelled the name of another law firm that recently lost a bankruptcy specialist. It is Willkie Farr & Gallagher, not Wilkie. (The Times has misspelled the firm’s name in at least 50 articles since 1958. The “Willkie” comes from Wendell L. Willkie, who joined the firm shortly after losing the 1940 presidential election to Franklin D. Roosevelt and remained there until his death in October 1944.)
Related posts:
Probably one of the best posts ever written on this Blog and on the topic of Cravath. Never have seen Yangtze dolphin, Pinta Island tortoise, whit and Swaine in one place before – nor will we be likely to see it again.