Wachtell’s M&A Dealmakers Herald Shift in Ranks of Storied Firm

As the newest co-chairs of Wachtell’s mergers and aquistions practice, Jacob Kling and David Lam are a picture of the firm’s future.

Instead of working behind veteran dealmakers for years and then jumping to top positions at rival firms—as a number of colleagues recently did—they took an internal promotion last year. In doing so, they’ve stepped into the spotlight, with the industry watching.

The hyper-competitive Big Law talent market is pushing the storied Wall Street firm to tinker with its top ranks and add new faces. That’s a change for a firm with a notoriously flat leadership structure and few titles. It has long reserved top slots for long-tenured rainmakers such as executive committee co-chairman Ed Herlihy rather than the next cohort of lawyers, some of whom have already been at the firm for decades.

“I really couldn’t imagine myself any place else,” said Lam, who has stuck with Wachtell for nearly 25 years. “We’re very competitive externally, but we’re not competitive internally—that’s a big differentiating factor of Wachtell compared to the other major New York firms.”

Several Wachtell partners jumped to rival Latham & Watkins over the last year, while others left for Simpson Thacher, Ropes & Gray, and DLA Piper. The firm’s partnership shrank by more than 8% last year, more than any elite New York firm, according to American Lawyer figures.

Kling is cut from similar cloth as many of the lawyers that bolted from Wachtell over the last year. He’s early in his career, nearing seven years as a partner at the firm, and has worked on deals largely for clients brought in by more senior leaders, including Herlihy. Kling has managed to progress within the firm, where he was added to the executive committee as its youngest member. “I’ve been very lucky and probably ascended more quickly than most people in this industry,” said Kling, who hopes to take on more responsibility within the firm.

The addition of Kling and fellow millennial Kevin Schwartz to the top group, and Lam’s promotion, signal a sense of urgency inside the firm to recognize younger partners, according to colleagues who spoke on a condition of anonymity.

“We’re this preeminent M&A firm and want to make sure it stays that way,” Kling said. “That means making sure we’ve got people across the age spectrum within the firm who are able to lead matters and be integrally involved in the operations of the firm.”

Firms that depend on a small number of veteran lawyers are “breeding dependency” if they don’t create opportunities for newer partners, said Laura Empson, a Harvard Law School Fellow who studies professional services firms. At the same time, not all rainmakers are interested in, or well suited for, managerial and leadership postings within their law firms.

It falls to Kling and Lam to shape the scope and structure of their leadership positions.

“There’s often a leadership vacuum” at firms that don’t create the opportunities, Empson said. Partners are so used to having a parental figure for management that “they’re simply not capable or mature enough in their understanding of those issues to be able to step into the breach.”

Lam’s Deals

In promoting Lam, Wachtell rewarded a partner who is respected inside the firm and across the deal table as an unruffled and steady presence, colleagues and opposing counsel said. He’s viewed as someone who is reasonable to work with and possesses a knack for technical intricacies.

“My approach is just trying to stay calm at all times—if you aren’t calm, it can make situations worse,” he said. Lam tries to keep himself grounded with rituals such as exercising and taking a little bit of time for himself. “It pays off and allows you to work harder in the end and have a longer endurance.”

Born and raised in Houston, he’s one of two sons of Chinese immigrants. His father was a chiropractor and his mother was a certified public accountant.

“I didn’t grow up in a family that was really exposed to the type of things that I do now,” said Lam, who earned undergraduate and law degrees at Yale. He gravitated to Wachtell out of law school because of its reputation for nabbing the best students, he said.

His deal sheet includes a $55 billion take-private transaction of Electronic Arts Inc. last year, which is among the largest leveraged buyouts announced, and the blockbuster T-Mobile US Inc. combination with Sprint, which was unveiled in 2018.

One of the most important deals in his career never made it to the finish line.

In 2015, he was on a team of lawyers that steered Pfizer Inc.'s $160 billion merger with Ireland’s Allergan. The pharma giants scrapped the deal a year later in response to new Treasury Department rules designed to block US companies from moving overseas to lower their tax obligations.

Although Pfizer paid Allergan a $150 million break up fee, it was a fraction of what would be expected for a deal of this size. Pfizer’s lawyers crafted the agreement to include a much lower fee in the event that changes in tax law made the deal less viable.

“The success of our negotiating strategy protected the company quite a bit in a downside scenario,” Lam said. “It’s great to be involved in a situation where the lawyering really mattered and made a big difference as to the outcome.”

Kling’s Path

When Lam pulled in Kling to lead a Pfizer-GSK joint venture, Kling was an eighth-year associate.

“That was probably one of the turning points for me,” Kling said. “David was involved, but he really trusted me to run with the agreements—negotiating the agreements against much older lawyers on the other side—and let me be front and center with the client.”

The New York native Kling is a second-generation Big Law dealmaker. His father, Lou Kling, was a partner at Skadden who advised DuPont, Ford, and McDonnell Douglas and held firm leadership roles over three decades.

Corporate law wasn’t always the plan for the younger Kling, who also went to Yale Law School. While in college, he interned on the M&A group of an investment bank, where he found himself most interested in the legal and strategic angles of his assignments, such as looking at takeover defenses for companies.

He still prefers to get down to the nitty-gritty of legal work.

“If you went to our offices, it’s paper all over the place, and we’re really hands on partners,” he said of himself and Lam. “We both read, comment on, draft and mark up every document that that crosses our desk, so we don’t have endless time to focus on administrative stuff.”

He completed his undergraduate studies from Brown, where he met his wife with whom he has 4-year-old twins. Parenthood, he said, has shaped his work-life-balance and helped build patience.

Outside of work, “I don’t usually do things that are good for business development, like some people are members of clubs or such,” Kling said. “I spend most of my free time with my kids and family.”

Profits Machine

Wachtell partners earned more than $12 million in average profits last year, breaking an industry record, according to data from The American Lawyer. Its lawyers advised on $230 billion worth of M&A deals in the first quarter this year, representing OpenAI, Unilever Plc, and Public Storage, among others, according to Bloomberg Law’s league tables.

It has accomplished this while shunning moves widely adopted by other firms to stem the industry’s ample appetite for poaching talent. It has stuck to a single-tier partnership with a pay system based on tenure rather than strictly performance.

Rivals have pounced, taking advantage of the firm’s approach.

Kirkland & Ellis last month hired Joshua Feltman, a liability management partner who started at Wachtell one year after Lam, with a compensation package likely to top $20 million per year. M&A partner Zach Podolsky made a jump to Latham & Watkins last year, and has since led transactions alongside former Wachtell colleagues who moved to Latham months after him.

Editor’s note: This is an installment of The Big Deal, a periodic series profiling M&A lawyers.