Euro Market Helps Lawyers in Face of Declining U.S. Issuance

Cleary Gottlieb Steen & Hamilton topped the list for legal work from high yield issuers again last year, handling junk offerings worth $7.1 billion. Simpson Thatcher & Bartlett followed in a distant second, handling offerings worth $5.9 billion, according to statistics released last week by Thomson Financial Securities Data Co. (See charts on page 11.)

While the domestic high yield market shrank considerably last year, Cleary Gottlieb held onto its leading position for the second consecutive year by venturing into more and more European deals, said Michael Ryan, an attorney at the firm. Specifically, Cleary Gottlieb was propelled by a number of deals led by Doughty Hanson, a British buyout firm.

"High yield, this peculiarly American invention, has been adopted by Europe recently," said Ryan. "Europe is trying to piggyback on high yield - there's Europeans coming into the U.S. to do deals in the same way the U.S. is going into European markets."

Since nearly one-third of the firm's lawyers are based in Europe, Ryan expects Clearly Gottlieb to hold on to a significant portion of the European high yield business. And, the firm expects to carry the same expertise into Latin American high yield, as the junk market there continues to grow.

"Europe was made for high yield this year, but Latin America found it a tougher market. Looking ahead, both European and Latin American activity is going to pick up," he said.

Cleary Gottlieb served as legal counsel on 25 domestic issues this year, a 6.9% market share. Last year, the firm led 23 issues, a 6.6% market share. The number of deals the firm was able to cash in on grew, said Ryan, because it is not tied to a specific investment bank. So, while issuers like Donaldson, Lufkin & Jenrette brought fewer deals to market, Cleary Gottlieb was able to partner with other firms like Goldman, Sachs & Co., Salomon Smith Barney and First Union.

Texas Pacific Group, another buyout firm, also helped bolster Cleary Gottlieb's high yield business.

Rounding out the top five law firms for issuers were Skadden, Arps, Slate, Meagher & Flom, with $4.4 billion in proceeds for a 4.3% market share; Paul, Hastings, Janofsky & Walker, with $3.2 billion in proceeds for a 3.1% market share; and Baker & Botts, with $2.8 billion in proceeds for a 2.7% market share.

On the other side of the business - legal work done for the managers - Cahill, Gordon & Reindel topped the list, according to Thomson Financial Securities.

It worked on high yield deals totaling $14.6 billion in proceeds for a 14.2% market share. The firm saw an enormous boost in market share over last year, when it ranked fourth, with $5.0 billion in proceeds and a 3.4% market share.

Cravath, Swaine & Moore placed second last year, with nearly $9.0 billion in proceeds and an 8.7% market share. Last year, Cravath ranked first, with $14.4 billion in proceeds and a 9.8% market share.

Completing the list of top five legal counsels for high yield managers were Sullivan & Cromwell, with $6.6 billion in proceeds for a 6.5% market share; Latham & Watkins, with $5.4 billion in proceeds for a 5.3% market share; and Davis, Polk & Wardwell, with $5.2 billion in proceeds for a 5.1% market share.