The Score

August 17, 2011 6:00 AM

At Baker & McKenzie, Profits and Revenues Up in 2011

Posted by Drew Combs

Baker & McKenzie announced Wednesday that gross revenue and average profits per partner rose in fiscal 2011, a turnaround from 2010 and the first time since the financial crisis began in 2008 that the firm has seen both key financial metrics increase.

Baker's gross revenue jumped 8 percent to a record $2.27 billion in the fiscal year just ended, and profits per partner rose 7 percent to $1.2 million. In fiscal 2010, gross revenue dropped 0.4 percent, while the firm's 13 percent increase in profits per partner was almost entirely the result of significant cost-cutting measures. 

It was a surge in demand for the firm's services—not cost-cutting—that fueled this year's healthy financial performance, according to Baker management. In an interview with The Am Law Daily, executive committee chairman Eduardo Leite pointed specifically to a rise in transactions connected to natural resource–rich and emerging markets as fertile territory for the firm.

"Our global platform is one reason why we had a strong year," says Leite, who joined Baker in 1975 and became chairman last November. "We benefited from our long-established presence in emerging markets like Brazil, China, and the [Persian] Gulf and economies that are rich in natural resources like Australia and Canada."

In fiscal 2011, slightly more than two-thirds of fees billed by the firm were tied to matters in Europe, the Middle East, or Asia. Work connected to North and South America accounted for the balance, according to the firm.

Among the high-profile assignments that support Leite's point: Baker's representation earlier this year of  offshore-drilling service company Ensco plc in its $7.3 billion acquisition of Pride International Inc., a Houston-based oil-drilling outfit with operations in Brazil and West Africa.

Recent events suggest that Baker—which was founded in Chicago in 1949—is already off to a strong 2012, both at home and abroad. As The Am Law Daily has previously reported, the firm is advising Ecolab Inc. on its recently announced $8.1 billion acquisition of Nalco Holding Co., as well as Fresenius Medical Care AG & Co. on its $1.7 billion acquisition of Liberty Dialysis Holdings, Inc. And in a deal announced Monday, Baker is representing Cargill, Inc., in its $2.1 billion acquisition of Dutch animal-feed company Provimi.

The firm, Leite says, also benefited in 2011 from an uptick in demand for services related to tax structuring, compliance, private banking, and wealth management. Aiming to building on those strengths, Baker announced the addition of former federal prosecutor Marc Litt, who led the government's prosecution of convicted Ponzi schemer Bernard Madoff, to its global compliance practice in December. In June, the firm announced plans to bolster its global tax practice with the future addition of two partners from the Organisation for Economic Cooperation and Development. Mary Bennett will rejoin the firm as a partner in Washington, D.C., and Caroline Silberztein will join the firm as a partner in Paris.

In addition to expanding its roster of attorneys, the firm also added new offices in fiscal 2011, opening outposts in Luxembourg in October, and Doha, Qatar, in May. The firm now has some 3,800 lawyers spread across 69 offices in 41 countries.

For Leite, the year's biggest challenge was the temporary closing of offices in Japan (in the wake of the earthquake, tsunami, and nuclear plant emergency) and the Mideast (amid popular uprisings across the Arab world).

"We have a disaster recovery plan but you are never quite prepared for events like that. Luckily everyone was safe," Leite says. "Those events actually became an incredible moment of solidarity for the firm."

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