The Score

January 31, 2012 2:19 PM

The Am Law 100, the Early Numbers: Kaye Scholer Sees Revenue, Profits Dip

Posted by Ross Todd

Kaye Scholer saw gross revenue dip 3.4 percent last year to $420 million, while the firm's profits per equity partner slipped 6.4 percent to roughly $1.4 million and revenue per lawyer dropped 4 percent to $985,000, according to The American Lawyer's reporting. Changes in lawyer and equity partner head count were minimal. 

In a telephone interview with The Am Law Daily Tuesday, newly installed managing partner Michael Solow said that though the numbers are down from 2010, they are in line with the firm's budget targets for revenues and profits per partner—in part because of a strong first half. The second half of the year, he said, was "probably slower than we anticipated" as a result of a slowdown in the financial markets, especially in Europe. He noted that the firm added seven lateral equity partners during 2011 to fill practice gaps or replace holes left by retiring partners. Solow said the firm also laid the groundwork for the future by making "investments" in marketing infrastructure and adding staff to its financial team. 

"In spite of the fact that our numbers are down, we recognize the environment we're working in," said Solow, a Chicago-based bankruptcy partner who became Kaye Scholer's sole managing partner in January—and its first from beyond the firm's home base of New York—after leading the firm in tandem with New York litigator Barry Willner.

Litigation continues to be a strength, with more than half the year's revenue coming from that side of the firm's operations. As previously reported by sibling publication The Am Law Litigation Daily, 2011 saw Kaye Scholer score two big wins for client Pfizer Inc. In the first, a Virginia federal district court judge ruled in August following a 12-day bench trial that the branded drugmaker's patent for Viagra was valid and enforceable through 2019. The verdict stymied the planned launch of a generic challenger to the blockbuster erectile-dysfunction drug.

Two months later, Kaye Scholer, along with cocounsel at Williams & Connolly and Bassford & Remele, won a unanimous ruling in Pfizer's favor from the U.S. Court of Appeals for the Eighth Circuit. The decision barred a group of women who alleged that hormone replacement drugs had caused them to get breast cancer from refiling in Minnesota claims that a New York state court had previously dismissed over statute of limitations issues.

The same month, Kaye Scholer patent litigators won a defense jury verdict for Pier 1 Imports in a patent case in the often-plaintiff-friendly Eastern District of Texas.  The firm's litigators also represented Knauf Plasterboard Tianjin as the company settled a global class action related to defective Chinese drywall that was consolidated in a multidistrict litigation in federal district court in New Orleans.

Solow said all the firm's practice groups—with one perhaps ironic exception, given his own area of expertise—had a steady diet of work last year, a trend he expects will continue in 2012: "In spite of what happened with the economy all of the sectors were busy. Probably the slowest of our groups was bankruptcy. If you're not representing Lehman or [its] creditors' committee or American Airlines or [its] creditors' committee, your bankruptcy work is likely slowing down."

This report is part of The Am Law Daily's ongoing Web coverage of 2011 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 2012 issue and on The Am Law Second Hundred will be published in the June issue.


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