The Score

March 30, 2011 8:00 PM

The Am Law 100: Detroit Firms Hang Tough in 2010

Posted by Brian Baxter

Detroit may be suffering major population losses, but the city's largest law firms managed to hold the line last year after a couple of turbulent years.

As previously reported by The Am Law Daily, many major Detroit firms--including some Am Law 200 staples--have in recent years slashed head count and expanded beyond Michigan in order to shore up their bottom lines. So how did 2010 treat the Motor City?

At Miller, Canfield, Paddock and Stone, gross revenue was flat last year at roughly $147 million. Michael Hartmann, CEO of the 335-lawyer firm, says that the firm saw an increase in commercial and labor litigation last year, and that its foreclosure practice did "gangbusters." The firm's public finance group also had a good year, Hartmann says.

Though the U.S. auto industry has begun to rebound, Miller Canfield has in recent years looked abroad to land work on inbound foreign investments in the sector as domestic carmakers struggled. For instance, the firm advised China's Pacific Century Motors on its $450 million acquisition of General Motors's Nexteer Automotive unit late last year.

Leading the Miller Canfield team on that deal was former GM in-house lawyer Shusheng Wang, who became codirector of the firm's international business group in February 2010 after jumping over from cross-town rival Butzel Long. Hartmann says he hopes that the firm will continue to handle such deals. (Pacific Century, an affiliate of Beijing's municipal government, is reportedly eyeing more U.S. takeovers.)

"Two years ago the question was whether the U.S. auto industry would have survived at all," Hartmann says. "If it had failed completely, the Detroit market would have been wiped out. There would still be some business, but it would look nothing like it does today."

Hartmann says that all three of Detroit's Big Three automakers--GM, Ford, and Chrysler--are in better financial shape that they were two years ago. He hopes that will bolster Michigan's broader economy, despite recent indicators pointing to a brain drain that could hit the state hard.

That's a major reason why--despite the aggressive economic plan put forth by Michigan's newly elected governor, lawyer and accountant Rick Snyder--many large Detroit firms have looked beyond the state's borders.

Late last year, 230-lawyer Dickinson Wright expanded into Canada through a merger with 25-lawyer Toronto firm Aylesworth. Firm CEO William Burgess says the move gives Dickinson Wright a full-service corporate, real estate finance, and litigation presence north of the border. (Miller Canfield's Hartmann says he's also looking at bolstering his firm's strength in Toronto--a five-hour drive from Detroit's Ambassador Bridge.)

Before expanding in Toronto, Dickinson Wright opened in Las Vegas last summer via its acquisition of three-partner firm Gibson Lowry Burris. Burgess says that gaming was one practice group that was up for Dickinson Wright in 2010--along with IP and municipal finance--making the moves into Las Vegas and Canada important ones for the firm.

Burgess says the costs related to both moves were one reason why the firm's PPP and RPL decreased from $449,000 and $470,000, respectively in 2009, to $430,000 and $454,000 last year. Like Miller Canfield, Dickinson Wright saw gross revenue stay flat at $104 million last year. Dickinson Wright predicted demand would be flat in 2010, says Burgess, noting that the partnership grew through the firm's acquisitions elsewhere.

Another Detroit-based firm that has pursued growth opportunities outside of Michigan is Dykema Gossett. The firm, which brought on the bulk of Chicago's Schwartz Cooper three years ago, also saw its gross revenue remain flat at $175 million in 2010. (Dykema CEO Rex Schlaybaugh did not respond to a request for comment.)

Results are not yet available for another leading Detroit firm, Honigman Miller Schwartz and Cohn. Unlike its rivals, Honigman, which has a close client relationship with GM, has confined its operations to Michigan, forming a global auto team with Faegre & Benson to cater to international clients.

Other Detroit-area firms that have chosen to stick within the state of Michigan generally remain outside the realm of The Am Law 200. Clark Hill hopes to buck that trend. Firm CEO John Hern, who was not immediately available for comment Wednesday, told Crain's Detroit Business in early March that internal growth and new hires had boosted head count from 195 lawyers in 2009 to 210 last year.

Hern told Crain's that Clark Hill, which grew out of a merger between two local firms in 1996, would compare "favorably" with firms that finished at the bottom of The Am Law Second Hundred last year. (The lowest firm on our 2010 list had gross revenues of $83 million in 2009.)

One Detroit firm that has been hit hard over the past year is Butzel Long. According to data compiled by sibling publication The National Law Journal, the firm lost nearly 40 lawyers in 2010 as head count fell from 220 to 181. Among those departing: former chairman Philip Kessler, who stepped down last August and set up a solo practice in Franklin, Mich., before joining Thompson & Knight earlier this month.

Crain's reported in February that despite the loss of one-third of its lawyers, the 157-year-old Butzel Long turned a profit in 2010. Firm president Justin Klimko, who did not immediately respond to a request for comment, told Crain's that the firm's current head count stands at 164 and that the firm is not seeking a merger partner. Klimko declined to provide specific financial data to Crain's, but said the firm was rebounding from its "worst year ever" in 2009.

Other top Michigan firms continue to be Motor City players, albeit to a lesser degree. They include: Jaffe Raitt Heuer & Weiss, a 100-lawyer shop based in suburban Southfield, Mich., and formed 40 years ago by lawyers from Miller Canfield. Bodman, a 140-lawyer firm that has long represented the Ford family, specializes in litigation, banking, and other corporate work.

Grand Rapids-based Warner Norcross & Judd is a highly regarded 220-lawyer firm with about 40 attorneys in Detroit. In its story on Butzel Long last month, Crain's reported that Warner Norcross might make a potential merger partner, given both firms' representation of auto suppliers. (Warner Norcross denied to Crain's that it had any interest in such a union.)

Conflicts between the Big Three automakers and other auto industry clients are one major reason why major law firms operating out of Detroit have been unable to consolidate operations in recent years.


Click here for all our ongoing coverage.

This report is part of The Am Law Daily's ongoing Web coverage of 2010 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 2011 issue and on The Am Law Second Hundred will be published in the June issue.

Results for the 2010 fiscal year reflect a change in the survey methodology. Per-lawyer and per-partner results for 2010 are based on a full calendar year average FTE head count, while published results for previous years were, in most cases, based on an August 31 FTE head count. When possible, we have recalculated fiscal year 2009 numbers to reflect the change in head count and based percentages on those adjusted numbers.

The final published results of last year's Am Law 100 rankings are available here; Second Hundred results are available here.

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