Cadwalader, Wickersham & Taft has "changed dramatically" in recent years as a result of the financial crisis, according to Gregory Markel, a member of the firm's management committee. Though it remains one of the top firms in the area of securitizations, the reduction in the volume of such work has led to a greater diversification of practices within the firm. One key mainstay of Cadwalader, however, is Markel himself, one of the nation's leading practitioners in securities, antitrust, banking and other complex commercial litigation.
Markel recently has handled mortgage-backed securities cases for Bank of America and is representing BP in its contract dispute with Argentina’s Bridas Corp. over a failed asset-sale deal, in addition to defending class actions for clients like Morgan Stanley and Deutsche Bank. Markel also serves as co-chairman of the litigation department.
Lawdragon: What are you seeing now in types of securities cases?
Gregory Markel: What has happened in securities litigation generally, as I see it, is that there has been a shift in recent years from the old stock-drop cases. There just aren’t as many as there used to be. But what have become much more prevalent are merger cases. Almost every merger is attacked by some plaintiffs’ lawyer, where the theory is often a breach of fiduciary duty.
LD: Overall, numbers of class actions might have an uptick now and then, but the Securities Class Action Clearinghouse reports show that the numbers are remaining low compared to what the reports refer to as “historic norms.” Is this more or less a permanent situation?
GM: I think so. I think that a few things have happened going back to the 1995 Private Securities Litigation Reform Act that really took a while to get sorted out. A lot of courts had to deal with these issues – the district courts and then the courts of appeal – and there were differences in how they interpreted the legislation. Then five or six years ago the Supreme Court started to come out with major rulings that for the most part have been pro-defendant, for example, Tellabs, Twombly, Stoneridge and Dura. At the same time, some of the circuit courts have come down with rulings on class certification that have made it more difficult to get classes certified. So, it is harder for plaintiffs to get past motions to dismiss and, second, to get classes certified; the hurdle is higher. As a result, plaintiffs have been more selective in bringing cases. They don’t make money if they get their cases thrown out. So the answer, I think, is that this is a pretty permanent long-term change, unless Congress changes the law.
LD: Did you always know you wanted to practice in this area of law?
GM: No, I didn’t. It was not clear what area I wanted to practice in when I was in law school. I had an undergraduate degree in economics and an MBA before law school. My thought was that I should make use of that understanding of business and economics as part of my law practice, but I was not exactly sure how I would go about it. As a matter of fact, my first year out of law school, I was working at Cravath, Swaine & Moore, and they put me in the corporate department – and that’s where I thought I would fit in. After a year or two, I hated it and thought, “Let me try some litigation,” and I loved it. I was exposed to the significant practice that Cravath has in complex cases, and it was just something that I loved and thrived on.
LD: What exactly do you like about it?
GM: I think there are at least three factors. One is that you can have a very varied practice; you learn a lot of things about companies and how businesses operate. You’re continually learning, and I think it is fair to say that I have an inquiring mind. Second, I enjoy competition. It’s not so much about financial competition, but I’ve always liked sports and to me with litigation you’re competing to win on both a micro-level – with a motion to dismiss or a discovery motion – and on the macro-level of trying to win the case. That appeals to me, given my personality, as opposed to being a corporate lawyer, where you are trying to get a document or a deal to work. I have nothing against that, it takes great skill, but it didn’t have that certain aspect of competition that I like. And third, and probably the most significant part, is that in litigation you spend your time trying to figure out a strategy to get a successful result for your client. It could be going to trial, prevailing on summary judgment or positioning for a settlement. There are lots of different ways, given the facts of a situation or case, to get a successful result. You have to come up with the right strategy, and you’re constantly revising it based on changes in facts or what you learn about the case. It’s fun and intellectually challenging.
I would name a fourth area that is different, but is similar to other legal disciplines, and that is when you see the development of younger lawyers you work with. That is a rewarding part of the practice that is not unique to litigation. When I see a young lawyer start to think about how we can accomplish something by using a certain tactic or going with a certain strategic decision, instead of simply being someone who is taking direction, that is extremely rewarding. They are truly becoming lawyers at that point.
LD: Reports of recent years have focused on increased client concerns over the costs of litigation. Do you see that with your cases?
GM: The costs of litigation are extraordinarily high and clients are very concerned about costs. You have to factor that in along with what the client wants to achieve when developing a strategy. First, lawyers are expensive, but also something that has changed is electronic discovery, which in recent years has become extremely costly and time consuming – the process of reviewing vast quantities of documents, many of which are irrelevant. If a search term appears in a document, the document may not be even close to being relevant, but it still has to be looked at by lawyers. The hope that I have is that there are on the marketplace today new computer programs that are designed to do a better job at winnowing down the total number of documents that need to be reviewed. These are more sophisticated programs that are in use in some cases but not widely used. They might get costs and wasted time down a bit.
LD: How did you get into firm management, and has it eaten up a lot of your time?
GM: Initially, because the firm asked me to. But I try to delegate what I can, and also, I really don’t want to – or have to – micromanage lawyers. If groups are working well, we’ll stay in touch periodically, but generally I don’t have to get involved unless there is a problem. Then, I think I can bring a lot to the table without spending lots of administrative time. If I see a problem, I’ll try to get involved right away and deal with it, but we don’t have that many problems in our department. I couldn’t tell you exactly, but I would guess I spend 10 to 15 percent of my time on administrative tasks.
LD: As someone involved in management, can you give us your take on how the firm got through the financial crisis that required layoffs at Cadwalader?
GM: Prior to the second half of 2007, the firm’s largest practice was in securitization and real estate finance related to securitizations. Litigation was a big department, but we were smaller than those transactional areas. Those two practices were hit very hard in late 2007 and 2008 and carrying on into 2009 with the economic downturn and the credit crisis; it was very difficult to do a securitization.
What do you do about that? And how do you do it in the context of a partnership? What we did was very difficult. We had a couple of rounds of layoffs in those departments. And it was the view of the management committee that we needed to reorient the mix of practices we had at the firm. Chris White did a fantastic job of leading the firm through this period in order to do what was best for the firm and everybody employed by it. In order to stay a top-ranked firm, we needed to reorient the firm. Unfortunately, as part of that we needed to lay off a number of attorneys. A lot of very good people were laid off in those departments. We made a very conscious decision that we were going to admit that we were laying people off. Our view was that we wanted to go out to the world and be able to say, “These are good lawyers, and if the business environment hadn’t changed dramatically they would still be with us.” It is hard to do that with disguised layoffs.
LD: What would you describe as the new state of the firm?
GM: The firm has changed dramatically, and like I said, a whole lot of the credit goes to Chris White. We had well over 200 lawyers in structured finance and over 100 in real estate finance at the end of 2006. Today there are 90 to 100 top lawyers working in securitization. On the other hand, we have expanded many practices from late 2007 to today. We added a great energy practice, significantly increased our antitrust group in Washington – they’re exceptional – and we have top white-collar lawyers in litigation. We also brought in people in areas of structured finance we didn’t do before. We have lawyers in private equity that are outstanding and in M&A, and we have a terrific group of regulatory lawyers under the leadership of Steve Lofchie who also came in during the same period.
LD: What do you do for fun outside the law?
GM: I’m pretty much addicted to exercise. We have a gym in the first floor of the building that I use early in the morning. That helps me clear my head. I spend a great deal of time with my wife, Belinda. We’ve been married for 31 years, we are best friends and really spend a lot of time together. My kids are in their 20s and close by and that is great. When I have time I like to get out of the city, and I like driving my Corvette. I also like sports. I’m not fantastic in any one sport, I might play 10 or 15 rounds of golf a year, and my wife and I also enjoy playing tennis on a nice day.
We also are both interested in art and have a bit of an art collection. We don’t buy million-dollar paintings, but we both enjoy spending time looking at art. Most of the time we don’t buy, but it’s rewarding looking at art and occasionally finding something that we like and can afford. That’s a lot of fun.
Post updated July 27, 2012.