February 26, 2010 6:00 AM
THE AM LAW 100: Debevoise Sees Profits, Revenue Slide
Posted by Nate Raymond
Debevoise & Plimpton on Friday revealed that gross revenue dropped 12 percent and profits per equity partner suffered an even steeper fall last year as the recession caught up with the New York-based firm.
Revenue declined to $667.9 million in 2009, while profits per partner fell 16 percent to $1.87 million. The declines came amid a downturn in corporate work and the completion of some large matters in its litigation practices, namely the internal investigation of Siemens AG.
"Frankly we did see some of the slow down this year," says Martin Frederic Evans, Debevoise's presiding partner.
In 2008, the firm's gross revenue increased 7 percent to $760.8 million, while its profits per partner fell 3 percent to $2.2 million.
Evans says a slowdown in deal work, particularly in the first quarter of 2009, was responsible for some of the decline. The firm has since seen demand pick up, and Evans says he has a “pretty good degree of optimism” for 2010.
Debevoise has been representing Verizon Communications in the $8.6 billion sale of its wireline businesses to Frontier Communications Corporation that was announced in May. The firm advised General Electric Company in the $5.8 billion repurchase of Vivendi's stock of NBC Universal in December. It also represented private equity client Clayton Dubilier & Rice, LLC in its $2.6 billion equity investment and recapitalization of JohnsonDiversey, Inc., announced in October.
American International Group, Inc. kept lawyers at Debevoise busy throughout the year. Debevoise advised the troubled insurer in a deal with the Federal Reserve Bank of New York to reduce the debt AIG owed the bank by $25 billion. In October, Debevoise represented AIG as it sold off its Taiwanese life insurance business to a consortium including Primus Financial Holdings Limited for $2.15 billion.
Last year's decline in revenue is due, in part, to several matters coming to an end, Evans says. Among them was the two-year internal investigation of corruption at Siemens AG, which resulted in hundreds of millions of dollars in legal fees before ending December 2008.
The firm has been gearing up for what it anticipates to be increased demand for its white collar practices. Debevoise launched an international corporate investigations and defense practice in February 2009. And partner Mary Jo White, the chair of the litigation practice, continued to be brought in on high-profile investigations, representing the Carlyle Group in the New York attorney general's probe into pension fund pay-to-play and former Bank of America Corporation CEO Kenneth Lewis in various investigations.
On the litigation front, the firm continued to represent MetLife in litigation over its 2000 demutualization. The case settled in November for $50 million after the Second Circuit reversed a decision to disqualify the firm on the eve of trial. Debevoise also represented American Airlines in defending 9/11-related property damage and personal injury claims.
Unlike many firms, Debevoise did not cut headcount last year, a decision that would set it apart from some competitors. "The firm in this business cycle and in others has always taken a long-term view in investing in talent," Evans says.
That decision appears to have contributed to the firm's drop in profits, as its headcount climbed 8.7 percent to 686 lawyers. Other New York-based firms such as Shearman & Sterling and Cadwalader, Wickersham & Taft have likewise reported drops in gross revenue but saw profits climb after moving to temporarily or permanentl reduce their headcount.
Debevoise last year made a few strategic lateral hires. Former attorney general Michael Mukasey joined as a litigation partner in February 2009. In July, the firm hired two finance and bank regulatory partners from Goodwin Procter, Gregory Lyons and Satish Kini, in response to the changing bank regulatory landscape.
The number of partners overall at the firm remained relatively flat, with only one new one in 2009.
This report is part of The Am Law Daily's ongoing Web coverage of 2009 financial results of The Am Law 100/200. 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.Make a comment