Shook, Hardy & Bacon’s long tenure on The Am Law 100 has ended, after two straight years of declines in gross revenue. The Kansas City, Mo., firm, which debuted on The Am Law 100 in 1997, moves onto the Second Hundred.
In 2013, Shook Hardy’s gross revenue fell 2.7 percent, to $308.5 million, while revenue per lawyer dropped 3.4 percent, to $700,000. Profits per partner took an even bigger hit, sliding 7.8 percent, to $830,000.
Shook Hardy’s ascension onto The Am Law 100 was fueled by its role in tobacco mass-tort litigation in the 1990s. It is the second key tobacco defense firm from that era to drop off The Am Law 100 in as many years: Last year, New York’s Chadbourne & Parke fell off the list after 26 years.
Despite the drops, Shook Hardy chairman John Murphy says he is pleased with the firm’s performance. “I was pretty happy for a couple of reasons” with 2013, he says, citing the addition of laterals, the continued elevation of partners into the equity tier and a “change in mindset from short-term goals based on end-of-year results to more long-term strategic planning.” Even though the 2013 numbers were down, he says, they were slightly above what the firm’s projections had been.
The lateral hires that Murphy mentions include two former Shook lawyers who returned to the firm as partners from big clients: John Fraser, a former deputy general counsel at Philip Morris International in London, and Bart Eppenauer, a longtime Microsoft Corporation lawyer who most recently served as the technology company’s chief patent counsel.
With Eppenauer’s hire, Shook Hardy established what is currently a one-lawyer office in Seattle to be closer to Microsoft, which it represents primarily in patent prosecution and intellectual property litigation, as well as other Pacific Northwest clients including Beaverton, Ore.–based athletic wear maker Nike Inc.
The firm named nine new equity partners last year, including six promoted from within Shook Hardy’s ranks. A handful of partners left the firm for competitors, with three others opening their own firms, three going in-house and five retiring.
Shook Hardy depends less on lateral hiring than some other large firms—it brought on four partners total last year—which Murphy says stems from his view that “just adding revenue doesn’t always make a lot of sense.”
Instead, the firm has been conducting an office-by-office analysis of which practice areas to emphasize in each of its 11 locations, Murphy says. In general, Shook Hardy plans to focus on complex litigation, particularly cases with a scientific, technical or medical focus.
The tobacco industry, and Philip Morris in particular, continues to be a primary source of work. In 2012 the firm stopped taking work from Philip Morris competitor Lorillard Tobacco, a decision that resulted in 17 lawyers who handled those matters moving to Hughes Hubbard & Reed.
In 2013 Shook Hardy lawyers won jury verdicts for Philip Morris USA in seven trials conducted as part of the so-called Engle progeny litigation, which grew out of a 2006 Florida Supreme Court decision that broke up a proposed class action against tobacco manufacturers into individual suits. The firm also helped Philip Morris cut down the number of smoking-related cases it faces in West Virginia state court to about 30 from a potential high of 600.
In Missouri, the firm’s lawyers won a defense verdict on behalf of Thomas Built Buses Inc. and Freightliner LLC after a jury found that a fatal bus crash in 2005 was caused by a driver, not defective products. They also helped negotiate what they characterize as a favorable settlement on behalf of about 100 third-party defendants who were sued as part of an effort to help cover the cost of remediating the contamination of a system of waterways in New Jersey.