February 15, 2012 5:50 PM
The Am Law 100, the Early Numbers: At Bingham, Revenue Dips for First Time in 16 Years
Posted by Chris Johnson
For Bingham McCutchen, a seemingly endless growth streak has finally come to an end.
After 15 consecutive years of topline gains, Bingham's gross revenue dipped 0.5 percent to $868.5 million in 2011, according to reporting by The American Lawyer. That figure is still the second-highest in firm history and offset somewhat by record highs in revenue per lawyer, net income, and profits per partner.
Despite the drop in gross revenue, Bingham's net income rose almost 4 percent to $277.5 million last year. That helped drive a 5.5 percent increase in average profits per partner to roughly $1.72 million. Revenue per lawyer, meanwhile, grew 4.6 percent to approximately $1.02 million, while the firm's profit margin inched up from 31 to 32 percent.
"We're quite pleased with our performance," says chair Jay Zimmerman, who was elected to the post in 1994. "Revenue was flat, but we were far more efficient in terms of the execution of the business. The first half of the year was good, but there's no question that as an industry we saw a reasonably significant slowdown in the second half."
Zimmerman says Bingham's litigation and regulatory practices were extremely busy in 2011, as was as its growing financial services practice. The firm's 16-partner London office had a "very strong" year as well, according to Zimmerman. On the other hand, the bankruptcy and restructuring group—one of Bingham's core practice areas—handled less work in 2011 than it has in previous years.
The increase in profits per partner was fueled partly by "considerable" cost savings, Zimmerman says. The firm reduced real estate–related spending by subletting unused Washington, D.C., office space left over from the 2009 merger with McKee Nelson and also cut payroll sharply by trimming staff.
Partner numbers remained essentially flat at 328 last year, with 13 new partners promoted in January 2011. (During the period covered by The American Lawyer's most recent Lateral Report, 18 partners left to join other firms, including a four-partner San Francisco–based environmental team that moved to Perkins Coie in March.)
The firm's total attorney head count fell for the second straight year in 2011, dropping 5 percent to 855. Zimmerman says the reduction was down to a combination of natural attrition and reduced hiring activity, rather than any formal program aimed at thinning the ranks.
"After the first half of the year, a lot of firms determined that we were in a recovery and hired accordingly," he says. "We weren't convinced, so we took a more prudent approach. We think that paid off."
The firm did hire eight lateral partners in 2011. The new arrivals included Washington, D.C.–based tax specialist Craig Sharon, who was recruited in February after retiring as director of the Internal Revenue Service's advance pricing agreement program. Bingham also strengthened its white-collar investigations group with the addition of former assistant U.S. attorney Daniel Saunders as a partner in the 26-lawyer Santa Monica office.
Over the summer, Bingham expanded its tax practice to California with the addition of three partners experienced in transfer pricing and tax controversy: Bob Kirschenbaum from Miller & Chevalier, Beth Williams from Baker & McKenzie, and John Ryan from McDermott Will & Emery.
In September, Bingham hired former O’Melveny & Myers securitization head Dan Passage for its Los Angeles structured finance team, and boosted its London presence by hiring securities litigator Mark Dawkins from U.K. firm Simmons & Simmons. Dawkins, who previously spent almost seven years as managing partner at Simmons before suffering a surprise election defeat to litigation head Colin Passmore in April 2011, is currently working alongside London litigator Natasha Harrison on disputes resulting from the collapse of the Icelandic banking system.
Bingham closed out the year by launching an office in Beijing following the hire of capital markets partner Xiaowei Ye from Jones Day. Xiaowei was appointed as co–managing partner of the office alongside life sciences cochair Brian Beglin, who relocated from Bingham's Tokyo base. Bingham now has three offices in Asia, having established Hong Kong and Tokyo outposts in 2007.
While acknowledging that the firm's newest office may "struggle to achieve a profit" in what is a famously difficult market for international law firms, Zimmerman says China's growing importance is such that "we can't afford not to be there in the long term."
Looking ahead to 2012, Zimmerman is "cautiously optimistic" that Bingham will see a return to topline growth, but says that much will depend on the "uncertain" outlook in financial restructuring. "We’re seeing some encouraging signs in many areas but can't see a lot of activity [in financial restructuring] over this year, so things will continue to be difficult."
This report is part of The Am Law Daily's early coverage of 2011 financial results of The Am Law 100/200. Final rankings and full results for The Am Law 100 will be published in The American Lawyer's May 2012 issue and on AmericanLawyer.com. The Am Law Second Hundred will be published in the June issue. An interactive chart of the financial results reported so far is available here. The chart will updated as additional data is reported.Make a comment