(Courtesy photo)

Blank Rome hit the accelerator in 2016, posting big revenue gains as it added more than 100 lawyers from a failing firm and lured lateral hires from several competitors.

According to chairman Alan Hoffman, by the end of 2016 the majority of Blank Rome’s lawyers—60 percent­—had joined the firm since 2011. About two-thirds of the firm’s lawyers are now based outside Philadelphia, he said.

“We really did a lot of investing in our business and our revenue reflects that, our profits reflect that,” Hoffman said.

Blank Rome’s gross revenue reached $422.5 million in 2016, a 22.5 percent increase from $345 million in 2015. That growth accompanied an 18.2 percent increase in total head count, from 477 in 2015 to 564 in 2016.

Revenue per lawyer (RPL) increased by 3.4 percent, from $725,000 in 2015 to $750,000 in 2016. Blank Rome grew profits per equity partner (PPP) by 2.2 percent, to $910,000. The equity partnership tier grew by 17.8 percent.

Many of the additional lawyers came from Dickstein Shapiro, a now shuttered firm based in Washington, D.C. Blank Rome announced in February that it was absorbing the firm’s remaining 107 lawyers, who were spread among several offices.

Hoffman said he had expected an additional $100 million in revenue during the Dickstein Shapiro group’s first year at Blank Rome. Given that they did not start billing until March, he said, the $77 million increase in revenue was on par with that estimate.

Hoffman said he is especially happy that the growth in head count did not result in a dip in RPL.

Also contributing to Blank Rome’s revenue increase, Hoffman said, was the firm’s acquisition of IP boutique Wong Cabello in 2015. The 23 Wong Cabello lawyers joined in June of that year, so 2016 was their first full year of impact on revenue.

In 2016, the firm also absorbed Phillips Lerner, a family and matrimonial law boutique based in Los Angeles. Blank Rome hired Sophia Lee, an energy and environmental law partner in Philadelphia who had been in-house at Sunoco, as well as Ronald Frank, a corporate and M&A partner from Reed Smith, in Pittsburgh.

In New York, the firm added Samuel Levy in the corporate litigation group, Ira Herman in finance, restructuring and bankruptcy and Lisa Campisi in the insurance practice, in addition to 10 lawyers from Dickstein Shapiro.

The hiring has continued in the new year. The firm added three employee benefits partners from Pepper Hamilton. It also brought on James Barnes, a corporate and securities partner from Pepper Hamilton, who has been tasked with helping to grow the Pittsburgh office, and Brendan Delany in Washington, D.C., who joined the finance, restructuring and bankruptcy group from Cadwalader, Wickersham & Taft.

Managing Integration

Altman Weil consultant Tom Clay said Blank Rome’s growth strategy follows a common tactic in the current market.

“It’s all about getting market share in this declining demand environment,” Clay said.

As with Blank Rome and Dickstein Shapiro, Clay said the legal market is likely to see more firms adding whole groups from “fragile” or failing firms that are struggling to remain competitive and profitable. Clay noted that Blank Rome and its peers are not able to grow much more in Philadelphia unless they acquire another Philadelphia firm.

Hoffman said Blank Rome will continue to seek out opportunities to add lawyers. In particular, he said, its goal is to grow the New York and Washington, D.C., offices to match the Philadelphia office. But the firm is not quite ready for another large-scale acquisition, Hoffman said.

“The challenge that we have is to integrate all of these new lawyers who have joined us recently into the Blank Rome culture,” Hoffman said.

In order to do that, he said, the firm has created an integration committee and established a “buddy system,” designating a Blank Rome “buddy” for each of the lawyers from Dickstein Shapiro. Hoffman said he has also been traveling to meet with legacy Dickstein Shapiro clients, and established a “sister cities” program, where lawyers work out of other offices for a short time.

“If you don’t handle the integration as a priority, then the acquisition or merger or addition is going to fail,” Hoffman said. “That’s why we are so focused on making sure we devote a lot of effort, and we budget for it.”

Managing Costs and Profitability

Blank Rome’s net income in 2016 was $126.5 million, a 21.1 percent increase from 2015. While the nonequity partner tier grew by 20.8 percent, to 155 lawyers, the firm’s nonequity compensation expense grew by 19.4 percent, to $58.5 million.

Like a number of other large firms, Blank Rome announced an increase in associate salaries, but the raises did not take effect until the beginning of 2017.

Blank Rome also pulled more than usual from its 2016 profits to prepay 2017 expenses, Hoffman said.

The firm made budget for 2016, Hoffman said. Realization rates, in terms of the amount collected versus the amount billed, were between 96 and 97 percent, which is typical, he said. The percentage of hours billed versus hours recorded was about 84 percent, he said, which showed an increase from 2015.

Hoffman said the firm also raised rates by 3 to 3.5 percent.

With rates and client relationships in mind, Hoffman said, the firm has benefited from having a director of strategic pricing, which has led to expanded client relationships.

Blank Rome hit the accelerator in 2016, posting big revenue gains as it added more than 100 lawyers from a failing firm and lured lateral hires from several competitors.

According to chairman Alan Hoffman, by the end of 2016 the majority of Blank Rome ‘s lawyers—60 percent­—had joined the firm since 2011. About two-thirds of the firm’s lawyers are now based outside Philadelphia, he said.

“We really did a lot of investing in our business and our revenue reflects that, our profits reflect that,” Hoffman said.

Blank Rome ‘s gross revenue reached $422.5 million in 2016, a 22.5 percent increase from $345 million in 2015. That growth accompanied an 18.2 percent increase in total head count, from 477 in 2015 to 564 in 2016.

Revenue per lawyer (RPL) increased by 3.4 percent, from $725,000 in 2015 to $750,000 in 2016. Blank Rome grew profits per equity partner (PPP) by 2.2 percent, to $910,000. The equity partnership tier grew by 17.8 percent.

Many of the additional lawyers came from Dickstein Shapiro , a now shuttered firm based in Washington, D.C. Blank Rome announced in February that it was absorbing the firm’s remaining 107 lawyers, who were spread among several offices.

Hoffman said he had expected an additional $100 million in revenue during the Dickstein Shapiro group’s first year at Blank Rome . Given that they did not start billing until March, he said, the $77 million increase in revenue was on par with that estimate.

Hoffman said he is especially happy that the growth in head count did not result in a dip in RPL.

Also contributing to Blank Rome ‘s revenue increase, Hoffman said, was the firm’s acquisition of IP boutique Wong Cabello in 2015. The 23 Wong Cabello lawyers joined in June of that year, so 2016 was their first full year of impact on revenue.

In 2016, the firm also absorbed Phillips Lerner, a family and matrimonial law boutique based in Los Angeles. Blank Rome hired Sophia Lee, an energy and environmental law partner in Philadelphia who had been in-house at Sunoco, as well as Ronald Frank, a corporate and M&A partner from Reed Smith , in Pittsburgh.

In New York , the firm added Samuel Levy in the corporate litigation group, Ira Herman in finance, restructuring and bankruptcy and Lisa Campisi in the insurance practice, in addition to 10 lawyers from Dickstein Shapiro .

The hiring has continued in the new year. The firm added three employee benefits partners from Pepper Hamilton . It also brought on James Barnes, a corporate and securities partner from Pepper Hamilton , who has been tasked with helping to grow the Pittsburgh office, and Brendan Delany in Washington, D.C., who joined the finance, restructuring and bankruptcy group from Cadwalader, Wickersham & Taft .

Managing Integration

Altman Weil consultant Tom Clay said Blank Rome ‘s growth strategy follows a common tactic in the current market.

“It’s all about getting market share in this declining demand environment,” Clay said.

As with Blank Rome and Dickstein Shapiro , Clay said the legal market is likely to see more firms adding whole groups from “fragile” or failing firms that are struggling to remain competitive and profitable. Clay noted that Blank Rome and its peers are not able to grow much more in Philadelphia unless they acquire another Philadelphia firm.

Hoffman said Blank Rome will continue to seek out opportunities to add lawyers. In particular, he said, its goal is to grow the New York and Washington, D.C., offices to match the Philadelphia office. But the firm is not quite ready for another large-scale acquisition, Hoffman said.

“The challenge that we have is to integrate all of these new lawyers who have joined us recently into the Blank Rome culture,” Hoffman said.

In order to do that, he said, the firm has created an integration committee and established a “buddy system,” designating a Blank Rome “buddy” for each of the lawyers from Dickstein Shapiro . Hoffman said he has also been traveling to meet with legacy Dickstein Shapiro clients, and established a “sister cities” program, where lawyers work out of other offices for a short time.

“If you don’t handle the integration as a priority, then the acquisition or merger or addition is going to fail,” Hoffman said. “That’s why we are so focused on making sure we devote a lot of effort, and we budget for it.”

Managing Costs and Profitability

Blank Rome ‘s net income in 2016 was $126.5 million, a 21.1 percent increase from 2015. While the nonequity partner tier grew by 20.8 percent, to 155 lawyers, the firm’s nonequity compensation expense grew by 19.4 percent, to $58.5 million.

Like a number of other large firms, Blank Rome announced an increase in associate salaries, but the raises did not take effect until the beginning of 2017.

Blank Rome also pulled more than usual from its 2016 profits to prepay 2017 expenses, Hoffman said.

The firm made budget for 2016, Hoffman said. Realization rates, in terms of the amount collected versus the amount billed, were between 96 and 97 percent, which is typical, he said. The percentage of hours billed versus hours recorded was about 84 percent, he said, which showed an increase from 2015.

Hoffman said the firm also raised rates by 3 to 3.5 percent.

With rates and client relationships in mind, Hoffman said, the firm has benefited from having a director of strategic pricing, which has led to expanded client relationships.