Law Firms Benefit From Hedge Funds' Proxy Fights

Corporate lawyers are seeing a boom in business as proxy fights , primarily fueled by hedge funds, increase, according to The New York Times. “The resurgence of shareholder activism is a direct result of the growth of hedge funds,” said Marc Weingarten, a partner at Schulte Roth & Zabel. Law firms that advised hedge funds from the get-go, such as Schulte Roth, Akin Gump Strauss Hauer & Feld, and Seward & Kissel, are racking in money from the resurgence, as well as traditional corporate finance practices like Skadden, Arps, Slate, Meagher & Flom, Sidley Austin and Willkie Farr & Gallagher. “In the early days, the legal representation of hedge funds was all about organizational documentation, getting the private placement memo prepared and get the offering done,” said Kenneth Raisler of Sullivan & Cromwell. That business, he said, didn’t suit his firm’s lawyers, better known for their mergers-and-acquisitions skills, because it was a “relatively commoditized business with low margins.” But today, his firm represents a number of hedge funds. Firms are hesitant to disclose profits, but hedge fund business makes up around a third of total revenue, said Alan Waldenberg, a partner at Schulte Roth. Lawrence Barshay, a partner at Fried, Frank, Harris Shriver & Jacobson, said, “Revenues have gone from being negligible eight to 10 years ago to a very significant part of our revenue and profitability.” Some firms have looked to acquire hedge fund practices. John Tavss, a partner at Seward & Kissel, says he is “approached by firms every week or two, particularly from non-New York or international firms” looking to expand by acquiring or merging with his 150-lawyer firm. His firm has never been enticed by the offers, and will remain independent he said. The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.