The Score

February 21, 2012 4:20 PM

The Am Law 100, the Early Numbers: for Shook Hardy, Modest Growth in Revenue, Profits

Posted by Sara Randazzo

In any assessment of Shook, Hardy & Bacon's 123-year history, last year would not be considered a blockbuster.

The firm's gross revenue inched up 1.3 percent to $341.5 million in 2011, while revenue per lawyer and profits per equity partner both rose by under 6 percent, to $725,000 and $1.07 million, respectively, according to The American Lawyer's reporting.

But given that Kansas City–based Shook, Hardy managed to weather the recession without taking a major financial hit, last year's modest growth is just fine by firm chair John Murphy.

"We've avoided the valleys that other firms saw in the economic downturn," Murphy says. "And we've had pretty steady—I wouldn't call it spectacular growth—but steady growth over the last five or six years."

At the same time, Shook, Hardy's head count dropped in 2011, with the firm shedding 22 attorneys over the course of the year to wind up with 472. Murphy attributes the losses to a combination of eight or nine retirements, a handful of lateral defections to other firms, and the departure of some lawyers for in-house positions. 

"There wasn't anything that caused concern, just a combination of people in different categories leaving the firm," he says. The firm's equity partnership ranks, meanwhile, increased from 112 to 116, thanks to one lateral hire, intellectual property specialist John Garretson from Fish & Richardson, and the promotion of several income partners. (There was very little associate attrition, Murphy says.)

As in past years, Shook, Hardy relied almost exclusively on litigation in 2011. The firm's litigators accounted for 97 percent of its revenue and earned Shook the distinction of The American Lawyer's Product Liability Litigation Department of the Year

Tobacco and health care litigation consume much of the firm's docket, Murphy says, along with pharmaceutical, environmental, and intellectual property matters. The firm's environmental and IP groups, in particular, are gaining steam, he adds. Among the major environmental cases Shook, Hardy handled last year was its defense of the Tennessee Valley Authority, which is accused of being liable for a major 2008 spill of toxic-laden coal ash at one of its plants. Several damages suits related to the litigation went to trial last fall, and the litigation is ongoing.

On the product liability front, the firm's work last year included successfully defending Philip Morris in a case brought in a remote Alaska city by the widow of a man who died of lung cancer (a November trial  produced a complete defense verdict.) Shook, Hardy also continued its work on the so-called Engle progeny cases, which stem from a 2006 Florida Supreme Court decision breaking up a proposed class action against tobacco manufacturers into individual cases. The firm has represented Philip Morris and Lorillard Tobacco Company in those cases, achieving a clear defense verdict in 11 trials over the past two years. 

Shook, Hardy's work for Lorillard, however, is coming to a close. As reported by The Am Law Daily last fall, Hughes Hubbard & Reed opened an office in Kansas City in January with 16 Shook, Hardy lawyers, including six partners, to take on Lorillard assignments previously handled by Shook. The move was spurred by the way regulatory changes are creating conflicting agendas within Big Tobacco and causing cigarette makers to insist their outside law firms cut ties to rival companies. (Shook, Hardy will continue to represent longtime client Philip Morris.)

The loss of attorneys through retirements, defections, and the Hughes Hubbard breakoff aren't necessarily a bad thing, Murphy says. "Our revenue per lawyer shows head count reduction didn't have an adverse impact on the firm," he says. 

Going into 2012, Murphy says he expects the firm's streak of moderate growth to continue, and is working to "control the expectations" of his fellow partners when it comes to firm finances. "If [profits] go up, it'll be not by much. If they're down, it'll be not by much."

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 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.

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