March 5, 2012 6:38 PM

The Am Law 100, the Early Numbers: Revenue, Profits Dip at Kasowitz Benson

Posted by Nate Raymond

With several major matters settling on one hand and the firm investing in expansion on the other, Kasowitz Benson Torres & Friedman saw both its gross revenue and profits per partner decline in 2011, according to reporting by The American Lawyer.

The New York-based firm grossed $240.5 million last year, 2 percent less than the $245.5 million it earned in 2010. Profits per partner, meanwhile, fell 10 percent to $1.67 million.

Marc Kasowitz, the firm's founding and managing partner, says last year's revenue dip was partly the result of several significant cases settling toward the end of 2010. Those settlements, Kasowitz says, left the firm with an inventory gap of between $40 million and $50 million. By the end of the year, he says that gap was nearly filled.

"Cases settle," Kasowitz says. "That's what happens."

The settlements in question included a $175 million accord announced in September 2010 between 20 banks and the Adelphia Communications Corp trust, which Kasowitz Benson had represented for several years. Three months later, client Hilton Worldwide agreed to settle a high-profile trade secrets suit by rival Starwood Hotels & Resorts Worldwide.

Thanks in part to new work, 2012 is shaping up to be "extraordinarily busy," Kasowitz says. Recent assignments include the bankruptcy estate of MF Global Holdings Ltd. hiring the firm in October to represent the brokerage in federal investigations related to its collapse. Kasowitz Benson is also working alongside Quinn Emanuel Urquhart & Sullivan on behalf of the Federal Housing Finance Agency in connection with litigation against 18 banks that sold the government entity billions in mortgage-backed securities.

According to Kasowitz, the firm's profitability was hampered by, among other things, increased overhead related to a push to expand both physically and into new practice areas. The 355-lawyer firm added 17 attorneys in 2011, including 11 equity and nonequity partners. As a result, revenue per lawyer figure slipped 6.2 percent to $680,000.

"We're a place that has very heavily invested in the future," Kasowitz says.

In November, Kasowitz Benson opened a Silicon Valley office after hiring patent litigator Douglas Lumish from Weil, Gotshal & Manges. The firm further bolstered its IP roster by hiring a six-lawyer group of pharmaceutical patent litigators led by John North from Sutherland Asbill & Brennan in Atlanta. Kasowitz Benson last month moved into bigger offices in Atlanta to better accommodate its new hires.

The litigation-oriented firm branched into real estate in July after hiring partners Wallace Schwartz and Adam Endick from Skadden, Arps, Slate, Meagher & Flom. The move is logical, Kasowitz says, given that the firm regularly handles real estate litigation. In January, for example, Kasowitz Benson secured orders allowing an investor group it represents to pursue foreclosure on two boutique hotels owned by New York developers Simon Elias and Izak Senbahar.

"We have a large real estate litigation practice in New York and other offices, so we thought it would be a good fit," he says.

Marc Kasowitz himself is preparing for an April 2 trial in New York state court in his defense of MBIA Inc. in ongoing litigation brought by banks challenging the monoline insurer's 2009 restructuring. Regulatory filings show that MBIA Inc.'s two insurance arms paid the firm a combined $19.9 million in 2011.

In another notable 2011 assignment, Kasowitz Benson represented bookstore chain Borders Group Inc. in its Chapter 11 bankruptcy filing and eventual liquidation. The firm has earned or applied for fees of $7.29 million for work as Border's debtor's counsel from February 2011 to January 2012, according to a brief filed last month in bankruptcy court.

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 be updated as additional data is reported.

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