Our year was basically a year of two halves," says Fried, Frank, Harris, Shriver & Jacobson chair Valerie Ford Jacob. "We had great momentum in the second half of the year, but a slower period in the first half, so we ended up essentially flat on time value and billings year-over-year."
But when it came to The Am Law 100′s key financial metrics, the first-half slowdown had more sway: Fried Frank’s gross revenue slid 6.3 percent in 2012, to $444 million, while revenue per lawyer dipped 2.6 percent, to $935,000.Profits per partner plunged 16.8 percent, to $1.315 million—the steepest dive in that metric of any Am Law 100 firm. Meanwhile, the firm’s profit margin tumbled from 45 percent to 40 percent.
The declines came as Fried Frank’s head count dropped 3.8 percent, to 476 lawyers. At 134 attorneys, the size of the equity partnership was unchanged. The size of the firm’s nonequity tier also remained steady, at seven.
In explaining the slumps in both the top and bottom lines, Jacob notes that a handful of major litigation matters the firm handled in 2011 settled or otherwise went dormant early in 2012. For example, Fried Frank was representing Wells Fargo & Co. in several matters that settled around the beginning of 2012, including shareholder suits stemming from the mortgage operations of Wachovia Corp., which was merged into Wells Fargo in 2008. Some insider trading cases the firm had been handling also settled early in 2012, she says.
Jacob says that litigation picked up as 2012 wore on, with the firm adding several new matters, including representation of Wells Fargo Bank N.A. in a False Claims Act case related to alleged home mortgage abuses. In addition the firm is representing The Bank of New York Mellon Trust Company in a case against the U.S. subsidiary of Banco Santander SA involving the coupon rate of certain convertible securities.
On the transactions side, Fried Frank represented Houghton International Inc., a provider of industrial fluids, in its acquisition by a U.K. subsidiary of Gulf Oil Corp. for $1.045 billion. The firm also represented London-based private equity firm Permira in connection with the acquisition of publicly traded genealogy website Ancestry.com in a deal valued at $1.6 billion. Fried Frank also served as counsel to Deutsche Bank in its role as financial adviser to Dole Food Company on the sale of its packaged foods and Asia fresh produce business to Itochu Corp. for $1.6 billion.
In The American Lawyer‘s Corporate Scorecard rankings for 2012, Fried Frank ranked 13th by value in M&A investment adviser representations, with $25.0 million in deals. That was a drop from the firm’s eighth-place ranking for 2011, when it advised on $71.8 million in deals, and from 2010, when it finished in second place, with $69.7 million in deals. In the rankings for 2010, Fried Frank finished in second place. (The firm did not place in the top 20 in representations of M&A principals by value in 2012, 2011, or 2010.)
Looking ahead, Jacob—who also heads the firm’s global capital markets group—says that the early part of 2013 is mirroring the latter half of last year. One major ongoing engagement, she says, is the firm’s role representing Virgin Media Inc. in its acquisition by cable company Liberty Global Inc. for $23.3 billion. "Our 2012 numbers aren’t as good as we would have liked," she says, "but we feel very good about the positive direction of our current momentum."