The Score

March 15, 2010 5:36 PM

THE AM LAW 100: Another Down Year at Stroock

Posted by Zach Lowe

Stroock & Stroock & Lavan's 2009 financials came in close to where the firm expected, but that level still represents a 10 percent drop in partner profits and a second consecutive dip in gross revenue, according to numbers the firm provided to The Am Law Daily. 

Stroock's profits per equity partner dropped to $1.067 million from $1.185 million in 2008 and $1.296 million the year before, according to the numbers and our prior reporting. Overall, profits have dropped about 18 percent since 2007. Gross revenue fell to $263 million in 2009, a 5 percent drop from the $277 million Stroock brought in during 2008 and a 10 percent drop from Stroock's high-water mark of $296 million in 2007, the numbers show. The $263 million Stroock earned in gross revenue is just $5 million more than its 2005 revenue figure, our numbers show.

Harvey Brown, Stroock's longtime executive director, says he is "disappointed" but not fazed by the numbers. The firm's transactional and real estate practices--with the latter being one of Stroock's historic centerpieces--both remained down in 2009, and the firm projected a dip in revenue and partner profits at the beginning of the year. The numbers "are almost exactly what we expected," Brown says. The bottom line of gross revenue isn't as crucial as some other numbers, Brown says. "Profits per partner are really all that matters," he says. 

Brown says that number took a bit of a hit because Stroock brought in 11 new lateral partners in 2009--a huge number for a firm Brown happily describes as "conservative." The lateral binge included three IP partners from Jenner & Block and two energy partners from Dewey & LeBoeuf. Those hires "had an impact on our results," Brown says. 

Stroock did cut back on expenses and laid off two dozen associates in 2009. Brown says the firm has made it clear to its lawyers that it has no plans for further layoffs. "We did that once and that's it," Brown says. "We're not going to go back to the well over and over and leave people hanging." He also says the firm--which has only one class of partners--will not force out any of its 112 partners for financial reasons. "We've taken steps to control costs without damaging the culture of the firm--which we will not do," Brown says.

The firm's pro bono hours dropped from about 27,000 in 2008 down to about 18,200 in 2009, a development linked in part to the associate layoffs, which the firm announced last March, Brown says. 

The firm does not disclose the ratio of compensation between the firm's lowest- and highest-paid partners.

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