The Score

January 22, 2009 7:35 PM

The AM LAW 100: Revenue Up, Profits Down at Reed Smith

Posted by Michael D. Goldhaber

Reed Smith preliminarily reports a ten percent increase in gross revenue to $980 million in 2008, on the back of significant lateral expansion. But economic headwinds knocked profits per equity partner down to $935,000, 6.5 percent below the $1 million milestone reached in 2007, roughly back to the level recorded in 2006. Revenue per lawyer fell a comparatively modest 3.5 percent, to $660,000.

"We had hoped to cross the billion-dollar-revenue mark, but the global slowdown set us back a bit," says managing partner Gregory Jordan. "We feel relatively good. This was a year when our expansion and our diversification proved its worth."

Roughly a third of the firm's 1,700 lawyers practice overseas, Jordan says. A majority specialize in litigation or restructuring firmwide, and the same is true within the 200-lawyer Financial Industry Group. Furthermore, according to Jordan, no client generated more than 1.5 percent of the firm's business in 2008. Although Merrill Lynch and Wachovia used to be sizable clients, Reed Smith also represents the two banks that acquired them, Bank of America and Wells Fargo, respectively.

While geographic balance is a strategic objective, the presence of Reed Smith's largest office in London, with roughly 350 lawyers, hurt revenues this year because of the weaker British pound. In the absence of currency fluctuations, Jordan says, the firm would have joined the billion-dollar club.

The surge in revenue reflects a number of noteworthy expansions. In January 2008, 110 Richards Butler lawyers in Hong Kong and Beijing joined Reed Smith, mainly in transactional specialties. That same month, 55 New York lawyers joined from Anderson Kill, predominantly in restructuring and insurance litigation. At year-end, Reed Smith also picked up a clutch of lawyers from the corpse of Thelen for its offices around the country, including its newly opened office in Silicon Valley.

"We’re well-positioned for 2009," says Jordan. "We’re going to grind our way through what we expect will be another challenging year for our clients."

Click here
for The Am Law 100 -- A Work in Progress, a chart tracking the numbers. The final published results of last year's Am Law 100 ranking are available here.

This report is part of The Am Law Daily's ongoing Web coverage of The Am Law 100s 2008 financials, bringing you our own reports and those from our sibling publications at Incisive Media. Results are preliminary. In keeping with past practices, we do not reveal which firms cooperate in providing financial information and which do not.

Final rankings and full results for The Am Law 100 will be published in The American Lawyer's May issue and on The Am Law Second Hundred will be published in the June issue.

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