DLA Piper turned in a solid financial performance in 2013, achieving slight gains in both revenue and average profits per partner, according to The American Lawyer’s reporting. The firm’s gross revenue increased 1.7 percent last year, to a record $2.48 billion, while its revenue per lawyer rose 3.3 percent, to $625,000.
DLA was unable to carry the top-line growth though to its bottom line, however. The firm’s net income dipped 0.3 percent, to $602 million—still well above the $563 million in net income it achieved in 2011. Offsetting that drop was a 1.7 percent decline in the firm’s equity partner head count, to 454. As a result, DLA’s average profits per partner climbed just over 1 percent in 2013, to a new high of $1.325 million, though its profit margin dipped 1 percentage point, from 25 to 24 percent.
DLA’s U.S. cochair Roger Meltzer says he is pleased with the year’s figures in what he describes as a “challenging market” characterized by a “continuing reduced demand for legal services.”
Meltzer, who is poised to become DLA’s global cochair in 2015, says the 2013 results were partly driven by “unusual growth” across the firm’s corporate and private equity practices worldwide. He adds that DLA’s litigation, regulation, intellectual property and sports practices also performed well in 2013. The firm’s U.K. and European offices had a strong year “across the board” and continue to be on a “pretty significant upswing” in the first quarter of 2014, he says. On the flip side, Meltzer says, DLA’s practice in Asia “struggled a little bit.” The firm’s U.S. business endured a challenging 2013 thanks to some difficult economic conditions, Meltzer adds, but still came “pretty close” to hitting its budget in 2013, missing the target by just a few percentage points.
For DLA, the latest figures represent a significant slowing of its rate of growth. The firm registered revenue increases of 14.6 percent and 8.6 percent in 2011 and 2012, respectively. (A significant part of the 2011 gains came from the financial integration of DLA’s Australian ally, Phillips Fox. DLA’s chairman emeritus Frank Burch told The Am Law Daily at the time that the tie-up—one of a series that helped turn DLA into the global behemoth it is today—would add roughly $300 million to the firm’s top line.)
Meltzer says he would have liked to see more revenue growth in 2013, and blames the slowdown on a “reshaping” of the firm’s practice that led to a slight reduction in attorney head count. DLA’s overall lawyer head count shrunk 1.8 percent, to 3,962. The firm’s equity partnership contracted 1.7 percent, to 454, while its nonequity partner population fell 2.9 percent, to 816.
“It’s part of the continuing evolution of a firm that is still less than 10 years old,” Meltzer says, referring to the three-way combination of San Diego–based Gray Cary Ware & Freidenrich, Chicago’s Piper Rudnick, and U.K. firm DLA in 2005. “We’re always in the process of reshaping the partnership—if you’re not [doing that], then you’re not executing a strategy to move the firm, its talent and its recognition in the market higher and higher. And if you’re a partner that has a more commoditized practice and the firm is moving away from that, you are probably going to find yourself in a pretty difficult spot and will look for a firm that better suits.”
The firm also made a “conscious decision” to slow its rate of lateral hiring in 2013, Meltzer says. DLA brought in 87 new partners in 2011—more than any other Am Law 100 firm, according to The American Lawyer’s Lateral Report that year. It was again extremely active on the recruiting front in 2012, bringing in, among others, 15 partners from the now-defunct Dewey & LeBoeuf, and former Blank Rome managing partner Carl Buchholz.
“You can’t constantly be in a position where you’re taking in huge swaths of laterals,” Meltzer says. “Every organization needs to take a deep breath and integrate the investments you’ve been making.”
That said, DLA still welcomed 34 lateral partners in 2013—the eighth-highest figure for the year among Am Law firms. DLA also continued to expand its international network by launching in Algeria with a team from French firm Lefevre Pelletier‘s local affiliate in that country. And while talks to establish offices in Calgary and Toronto by picking up between 55 and 70 attorneys from the dissolving Canadian firm Heenan Blaikie broke down, Meltzer says that the country remains a long-term target for the firm.
“We continue to be actively looking in that market, but the deal and the structure of that deal has to be right,” he says. “We won’t stretch to do a bad deal simply to be in the geography.”
Looking ahead, Meltzer says he is “bullish” about the firm’s prospects in 2014.
“We are looking at a pipeline [of work] that is far and away better than last year, and probably the best that we’ve seen in some years,” he says. “I’m very comfortable with our ability to continue to validate the proposition and drive the economic results higher.”