January 24, 2010 10:25 PM
THE AM LAW 100: Revenues, Profits Flat at Northern California's Biggest Firms
Posted by Ed Shanahan
Northern California's big-law firms saw revenues and profits remain mostly flat in 2009, reports The Recorder, a sibling publication.
The overarching theme of 2009 for all large firms was belt-tightening--firms laid off staff and associates, froze salaries, reduced partner pay, slashed summer programs, deferred first-year start dates, and drove out under-performing partners.
The tough management decisions appear to have paid off on the bottom line. Of the eight northern California firms surveyed, most saw single-digit changes in profits per equity partner (PPP). Two exceptions were Townsend and Townsend and Crew, which posted a surprising 15 percent jump in PPP even as revenue and head count fell, and Cooley Godward Kronish, which posted an 11 percent drop in PPP.
According to consultant Peter Zeughauser, law firm managers are focused on one thing: keeping profitable partners. "Partner retention is critically important,” Zeughauser told The Recorder's Amanda Royal. "Without those people, there would be no firm and none of the associates would have jobs."
Below are gross revenue and PPP figures for eight firms surveyed by The Recorder. For the full report, click here.
MORRISON & FOERSTER
Morrison & Foerster reported a 3 percent dip in revenue to $884 million and a 4 percent rise in PPP to $1.14 million. “Last year, we prepared ourselves for a much more significant drop-off in demand than we saw and were pleased and honored that our strong practices were very much in demand,” said firm chair Keith Wetmore.
ORRICK, HERRINGTON & SUTCLIFFE
The firm posted small gains in total revenue and boosted profits per partner 3 percent. But that comes after a steep drop in the prior year, when the financial crisis caused the firm’s profits to fall 21 percent. “This was the most challenging year in our history,” said chairman Ralph Baxter, Jr. "We faced uncertainty at the beginning of the year that had no precedent."
PILLSBURY WINTHROP SHAW PITTMAN
Pillsbury maintained revenue per lawyer at $805,000. Revenue shrank 7 percent while profits per equity partner dipped 2.5 percent to $950,000. “We realigned our cost structure to match our clients’ needs,” said firm chairman James Rishwain. "We focused on building a model to understand how the clients want their services delivered, and what their objectives are."
COOLEY GODWARD KRONISH
The firm's gross revenue dropped 8 percent in 2009 to $507 million. "Reduced demand means reduced revenue," said firm executive Joseph Conroy. PPP shrank 11 percent.
Littler Mendelson saw gross revenue increase 5 percent, and smaller gains in PPP. Still, the growth rate was less than last year's. "We had a lot of very loyal clients and hardworking lawyers and we combined that with real strong expense management to make a decent year out of some incredible economic times," said president and managing director Marko Mrkonich.
SEDGWICK, DETERT, MORAN & ARNOLD
Revenue dipped about 1 percent. Sedgwick's partner profits dropped 4 percent to $676,000. Head count dropped 4 percent to 360 lawyers, while equity partner ranks shrank by 5 percent.
FENWICK & WEST
The firm's PPP were flat in 2009 at $995,000, while gross revenue dipped 2 percent to $192 million.
TOWNSEND AND TOWNSEND AND CREW
Intellectual property firm Townsend and Townsend and Crew reaped the benefits of some surprise settlements in mid-2009 that brought its equity partner profits to $821,000, a 15 percent rise. Still, firm revenue slipped 2 percent to $170 million. "As we looked at our business in the first quarter of 2009, it was completely unclear where we were headed and the only thing we saw in front of us was depressed demand for our services,” said chairman James Gilliland. "Then two things happened for us: We got these good settlements in the summertime that were unexpected, and the demand on the patent and trademark side stabilized."
This report is part of The Am Law Daily's ongoing Web coverage of The Am Law 100’s 2009 financials. Results are preliminary. Final rankings and full results for The Am Law 100 will be published in The American Lawyer's May 2010 issue and on AmericanLawyer.com. The Am Law Second Hundred will be published in the June issue.
The final published results of last year's Am Law 100 rankings are available here.Make a comment