{"text":[[{"start":7.65,"text":"The trophy cabinet that stands in Marty Lipton’s 31st-floor office in Midtown Manhattan, stacked with mementoes presented by grateful clients, is a monument to six decades of dealmaking success at Wachtell, Lipton, Rosen and Katz."}],[{"start":23,"text":"During his long career, the 94-year-old co-founder, who still ventures into the office almost every day, built Wachtell into a corporate law powerhouse that helped fashion today’s business world. "}],[{"start":35.15,"text":"The firm’s small size — it employs fewer than 300 lawyers and has just one office, in New York — belies its brand, power and influence. It has advised on era-defining deals such as Bank of America’s takeover of Merrill Lynch and the pending sale of Warner Bros Discovery to Paramount Skydance. It invented the so-called poison pill defence against hostile acquisitions. "}],[{"start":60.15,"text":"In 2025, as it does most years, it achieved the highest profits per partner of any major American firm and advised on nine of the 20 biggest US takeover transactions, according to LSEG data."}],[{"start":74.55,"text":"But the model pioneered by Lipton is now being challenged as rival law firms run more like investment banks or hedge funds become more powerful, focusing more on financial targets and rewarding stars handsomely rather than emphasising partnership and teamwork."}],[{"start":null,"text":"

"}],[{"start":90.3,"text":"“Finally the superstar era of Big Law is catching up with Wachtell,” says John Morley, a professor at Yale Law School."}],[{"start":97.95,"text":"Seniority counts for almost everything at Wachtell, where the driving force is Lipton’s 79-year-old protégé Edward Herlihy, power is concentrated between a few veterans among its roughly 80 partners, and pay has generally moved in lockstep with time at the firm. "}],[{"start":115.75,"text":"Many of its rivals are less inhibited, tempting younger partners away from Wachtell with packages stretching into the tens of millions of dollars."}],[{"start":124.35,"text":"In an unprecedented exodus, eight partners have left since the start of last year for other firms. One, Josh Feltman, previously head of Wachtell’s corporate restructuring practice, has signed up to an $80mn package over three years at arch-rival Kirkland & Ellis, while four other younger stars joined Latham & Watkins."}],[{"start":144.79999999999998,"text":"Such signings are the result of larger shifts. Fuelled by income from private equity dealmaking, Kirkland, which with more than 4,000 lawyers worldwide is over 10 times the size of Wachtell, has vied for the title as the most profitable US law firm while racking up a record-setting $10bn in annual revenues."}],[{"start":164.95,"text":"Many other law firms have also grown much wealthier and more aggressive in an era marked by the rapid growth of private capital and are willing to pay huge salaries and bonuses. Many lawyers no longer want to stay at a single employer for a lifetime."}],[{"start":null,"text":""}],[{"start":179.64999999999998,"text":"“When you are a young person who has a lot of market value, you are being asked to take a discount to market at Wachtell, to subsidise a business model that does not fit anymore,” says one former partner who recently quit to join a rival firm. “Wachtell hasn’t changed in a long time . . . but the world has changed around it.”"}],[{"start":200.29999999999998,"text":"Wachtell’s leaders say they are unperturbed by fears the defections will hurt business."}],[{"start":205.6,"text":"They are altering the firm’s remuneration and leadership system all the same, providing more compensation for deal lawyers in an adjustment to the lockstep system, boosting the status of high-flying younger partners."}],[{"start":218.04999999999998,"text":"But there are limits to the changes Wachtell is willing to make. In a test of how far Big Law can resist following the path of its Wall Street clients, it says it is protecting its most important traditions. "}],[{"start":229.7,"text":"Wachtell median pay remains well above the standard for Wall Street lawyers, but because of the lockstep system, hungry rivals can easily outbid it for individuals."}],[{"start":238.79999999999998,"text":"A senior partner — one of more than a dozen current and former Wachtell lawyers who spoke to the FT — says: “My core belief is that if we start going person-by-person on pay, we won’t be the same firm.”"}],[{"start":null,"text":"

---

"}],[{"start":249.95,"text":"Wachtell started life as an outsider. The firm was created in 1965 — through a handshake deal rather than a formal partner agreement — by Lipton, Herbert Wachtell, Leonard Rosen and George Katz. All four were Jewish graduates from New York University Law School who felt unwelcome at old-school “white shoe” New York firms. "}],[{"start":272.05,"text":"They found a niche in advising on mergers and acquisitions, in particular defending companies against hostile bids — a practice that many established law firms, focused mainly on securities underwriting and taxation, found unseemly. "}],[{"start":287.75,"text":"The timing proved perfect, as the era of corporate empire-building in the 1970s was followed in the 1980s by the emergence of corporate raiders like Carl Icahn and T Boone Pickens agitating for bloated conglomerates to be broken up. Wachtell both advised on pre-emptive poison pills and then defended clients in court, helping shape modern corporate governance standards in the process."}],[{"start":312,"text":"“Its secret sauce is the complementary set of principles that have guided it from its early days,” says John Coates, a one-time partner who left to become a professor at Harvard Law School. "}],[{"start":null,"text":""}],[{"start":323.65,"text":"Coates once outlined one such principle using a simile that has long been part of legal folklore, comparing entering the Wachtell partnership after years of effort to winning a pie-eating contest. “The prize is that you get to eat more pie” — meaning more work, more pressure and more money."}],[{"start":340.4,"text":"Coates adds that Wachtell’s fundamental tenets include “small size, one office, a core strategy focused on bet-the-company, cutting-edge, cross-disciplinary work, extremely selective hiring [and] lockstep compensation”."}],[{"start":354.34999999999997,"text":"Lipton helped devise many of these ground rules. When Wachtell celebrated its 25th anniversary in 1990, he declared in a list of 35 principles that “the firm is not a business”. "}],[{"start":367.24999999999994,"text":"For him, lockstep remuneration and one-partner, one-vote governance avoided divisive internal competition and allowed partners to focus their energies on winning clients and carrying out work for them."}],[{"start":379.94999999999993,"text":"Deal teams are staffed by a thin layer of partners and associates, all of whom are available around the clock, unlike larger competitors who deploy large numbers of junior lawyers to help get deals over the line."}],[{"start":392.94999999999993,"text":"The firm, which did not respond to a request for comment, even lacks a press office."}],[{"start":397.8999999999999,"text":"Wachtell typically does not bill by the hour but by the project, and charges its clients large “success” fees, as an investment bank would. "}],[{"start":406.24999999999994,"text":"Twitter, which hired Wachtell in 2022 to help compel Elon Musk to proceed with a takeover bid that he had sought to abandon, paid the firm $90mn for work that time sheets suggested would cost less than $30mn. "}],[{"start":421.29999999999995,"text":"The figure came to light as part of a lawsuit that X, as Musk rebranded Twitter, filed to recover the fee from Wachtell after the billionaire finally took control — a case he abandoned last year."}],[{"start":433.24999999999994,"text":"Wachtell’s success fees are distributed across lawyers and across practices — a principal reason why median salaries and bonuses are well above industry benchmarks."}],[{"start":null,"text":""}],[{"start":443.09999999999997,"text":"Over the years, Wachtell has helped redefine the role of corporate lawyers on Wall Street, in the wider US and beyond."}],[{"start":449.65,"text":"Rather than simply drafting hundreds of pages of merger documentation, partners would also advise chief executives on their industries’ future, design innovative transaction structures, and explain how to communicate with shareholders — in the way that investment banks or management consultants would. "}],[{"start":467.04999999999995,"text":"Many of its lawyers are former judges, judicial clerks, academics or journalists. The writings of Lipton and his colleagues on corporations’ role in the wider economy are influential enough to be archived at the University of Pennsylvania. Wachtell has also been the subject of flattering commentary in Malcolm Gladwell’s 2008 book Outliers and a recent Harvard Business School case study."}],[{"start":489.74999999999994,"text":"But the rise of law firms that Wachtell helped pioneer has long made its junior partners and associates targets for challengers looking to make their own splash. In recent years, Wachtell lawyers have found such approaches harder to resist. "}],[{"start":503.59999999999997,"text":"“There’s a premium on Wachtell partners at other firms looking to hire — no client is going to complain if you put a Wachtell-trained lawyer in front of them,” says Sabina Lippman, the co-founder of legal recruiting firm CenterPeak, which has helped place former partners from the firm elsewhere. "}],[{"start":519.15,"text":"“The attraction of a new firm isn’t just pay today,” she adds. “But where that practice might be in five years’ time.”"}],[{"start":null,"text":"

---

"}],[{"start":526.65,"text":"The New York legal world was shaken in 2016 by the news that Paul, Weiss had lured the star M&A lawyer Scott Barshay from the venerable Cravath, Swaine & Moore. The swoop marked the start of an era in which lawyers could be paid like bankers and length of service and loyalty to a firm counted for less."}],[{"start":546.9499999999999,"text":"In the decade since, practices such as Kirkland and Latham have ended the dominance of the law firms that had long been part of Wall Street’s establishment. They did so by offering management power and massive salaries to star lawyers with expertise in areas such as M&A, private equity and distressed debt."}],[{"start":null,"text":""}],[{"start":567.3,"text":"In what one senior Wachtell partner dubs the “Kirklandisation” of the industry, a handful of lawyers at such groups can now command annual pay above $30mn, while many of their colleagues are deemed disposable. "}],[{"start":581.1999999999999,"text":"Managers at such firms gently push lawyers to retire by their mid-sixties to make way for younger talent, while underperforming partners, historically in position for life, are routinely shown the door. Size is also a central part of the modern-day Wall Street law firm: thousands of lawyers also ensure that Fortune 500 and multinational clients can get representation for almost any legal issue in almost any jurisdiction. "}],[{"start":609.2499999999999,"text":"Wachtell was not part of the old country club legal establishment. But six years ago, it suffered the first defection of one of its M&A partners to another firm, when Ed Lee left for Kirkland. He has since gone on to advise on some of the juggernaut’s largest deals."}],[{"start":625.7999999999998,"text":"As Wachtell has sought to cope with the push by other firms to poach its partners, it has recently been forced to change its practices on remuneration, insiders say."}],[{"start":635.1999999999998,"text":"Instead of its traditional transparency, it has switched to a system more like its rivals’, in which partners are no longer so well informed about each other’s compensation."}],[{"start":645.1499999999999,"text":"It has also altered the “points” system that determines how much equity in the firm partners are awarded, so that it is less generous to newly-minted partners and allows greater discretion to reward those who generate more revenues."}],[{"start":658.1999999999998,"text":"People familiar with the changes say that first-year partners now receive just over half the equity they would have been allocated under the previous system. Separately, in a reallocation that has rewarded some deal lawyers, points have been snatched away from other partners, such as litigators."}],[{"start":673.4499999999998,"text":"Wachtell has also announced promotions that appear intended to reduce the risk of losing mid-career lawyers with decades of dealmaking ahead of them. "}],[{"start":681.5499999999998,"text":"Two such lawyers, Jacob Kling, a 40-year-old protégé of Herlihy, and David Lam, 50, were recently named co-heads of the flagship M&A practice. The firm has also named Kling to its executive committee, along with other younger lawyers including Kevin Schwartz, Lipton’s son-in-law, insiders say. "}],[{"start":null,"text":""}],[{"start":699.5999999999998,"text":"Since 2023, the committee has been co-chaired by Andrew Nussbaum, a deals specialist, and William Savitt, a trial lawyer who represents OpenAI in its dispute with Musk and who cross-examined the billionaire this week. Both are in their sixties."}],[{"start":712.7999999999998,"text":"But several insiders say much of the power within the firm still rests with Herlihy, who has advised on virtually every major bank-sector transaction over the past three decades. He remains Wachtell’s single biggest business generator."}],[{"start":726.7999999999998,"text":"The insiders add that senior leaders can still push through significant changes at the firm, despite its commitment to one-partner, one-vote — because of the lack of a formal partnership agreement at Wachtell."}],[{"start":null,"text":"

Wachtell worked on six of the top 10 US M&A deals last year

Buyer	Target	Value ($bn)
Paramount Skydance	Warner Bros Discovery	109.9
Union Pacific	Norfolk Southern	87.7
Kimberly-Clark	Kenvue	50.6
PIF-led consortium	Electronic Arts	48.1
GIP-led consortium	Aligned Data Centers	40
Charter Communications	Cox Communications	35.2
Alphabet	Wiz	32
SoftBank-led consortium*	OpenAI	30
Constellation Energy	Calpine Corporation	27.3
Palo Alto Networks	Cyberark	24.7
Wachtell acted as legal adviser for companies in bold. *SoftBank deal = investment, not takeover. Source: LSEG

"}],[{"start":738.3499999999998,"text":"Several lawyers told the FT that they and others had long called for pay adjustments to keep up with market practices and avoid further defections."}],[{"start":747.1499999999997,"text":"Still, the changes at Wachtell have not been universally welcomed, unnerving some associates wary of any shift in the firm’s culture. "}],[{"start":756.1499999999997,"text":"Other firms say they have been sent more CVs from Wachtell’s lawyers, particularly litigation specialists, testing the market in the wake of the recent changes to the lockstep system."}],[{"start":767.3999999999997,"text":"Senior Wachtell lawyers acknowledge the difficulty of contending with the pressures wrought by the legal industry’s transformation, although some dismiss the departures as merely “idiosyncratic”. "}],[{"start":779.5999999999998,"text":"The firm wants to remain unified and keep specialities such as litigation, antitrust, tax and executive compensation — all complementary practices to M&A. But such niches cannot consistently generate what a rainmaker deals lawyer could. "}],[{"start":794.4499999999998,"text":"“These are hard problems,” one partner says. “Everyone needs to be at the top of their game.”"}],[{"start":800.9999999999998,"text":"At present, Wachtell boasts that the top of its game is precisely where it is, and that this year will be even more profitable than 2025. But some of its partners are still voting with their feet."}],[{"start":813.7499999999998,"text":"In late February, Nussbaum, one of Wachtell’s top lawyers, emailed the whole firm to note triumphantly that it had advised on transactions worth $230bn announced in the preceding five days, and had also won a landmark corporate governance case in Delaware’s Supreme Court.  "}],[{"start":831.4999999999998,"text":"“Only our firm can do this,” Nussbaum wrote. That same week, two partners left."}],[{"start":842.3999999999999,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1777876669_8836.mp3"}