Orrick in San Francisco
Orrick in San Francisco (Jason Doiy)

Gross revenue at Orrick, Herrington & Sutcliffe grew 1.8 percent last year, to $929 million, but revenue per lawyer and profits per partner both declined, an outcome that chairman and CEO Mitchell Zuklie attributed partly to a lateral hiring spree by the firm.

With 42 laterals—more than twice as many as in 2015—Orrick’s head count rose 2.7 percent, to 941. Revenue per lawyer dropped 1 percent, to $985,000. And partner profits fell 6.1 percent, to $1.68 million, despite an 8.6 percent decrease in the size of the firm’s equity partnership.

“Our revenue didn’t match the pace of our head count growth,” Zuklie said. “That’s a very conscious choice we made. We thought it was the right time for us to add talent.”

The firm’s most substantial investment of 2016 was its new office in Houston, which opened in January 2016 and added 21 partners from seven different firms by year’s end. Zuklie said Orrick began planning that move about three years ago, around the time that the firm decided to focus on energy and infrastructure as one of its core practice areas.

In May 2016, a four-partner finance team from Freshfields Bruckhaus Deringer joined Orrick in Paris, where the latter recently raided another Magic Circle firm. Orrick picked up a pair of prominent technology regulatory partners—Barrie VanBrackle from Manatt, Phelps & Phillips and James Tierney from the U.S. Department of Justice—in Washington, D.C. Orrick also re-hired Melinda Haag, a former partner who returned to the firm as head of its global business litigation group in San Francisco after five years as the region’s top federal prosecutor.

“The bottom line is, we saw unusual opportunities,” said Zuklie, who four years ago was tapped to succeed longtime Orrick leader Ralph Baxter Jr. “We hope it’ll lead to a really strong 2017.”

Zuklie said the results Orrick achieved for its clients in 2016 seemed to validate its pursuit of those opportunities. The firm worked on about 260 M&A deals, including representing Microsoft Corp. in its purchase of Italy’s Solair, an Internet of Things platform. The firm also advised Beijing-based Internet search provider Baidu Inc. in a $150 million joint investment with Ford Motor Co. in Velodyne LiDAR, a company that makes sensor hardware for self-driving cars.

Orrick grew more in head count on the transactional side than in litigation last year. Deal work also accounted for more of the firm’s gross revenue, Zuklie said. But 2016 wasn’t exactly a slow one for the firm’s litigators.

In July, Orrick scored a far-reaching privacy win for Microsoft when the U.S. Court of Appeals for the Second Circuit ruled that the federal government couldn’t force the company to turn over customer emails stored on servers outside the country. (Orrick worked with Covington & Burling in advising Microsoft in that matter.)

Orrick also won two victories for Apple Inc. at the U.S. Court of Appeals for the Federal Circuit, and in October, helped Elon Musk’s Space Exploration Technologies Corp. beat a sexual harassment suit in Los Angeles. Orrick employment litigation partner Lynn Hermle, who helped Orrick win the SpaceX case, was also hired by Apple to beat back a similar suit filed by a former in-house lawyer. (Hermle helped Orrick’s litigation group earn accolades for its work on behalf of Bay Area-based clients, although the practice saw IP star Neel Chatterjee jump last month to Goodwin Procter.)

The first few months of 2017 have brought more changes to Orrick’s workforce. The firm unveiled this week its opening of an office in Santa Monica, California, to serve the Silicon Beach technology scene. Orrick also lost the bulk of its capital markets team in Hong Kong when a nine-partner group decamped for Morgan, Lewis & Bockius.

Zuklie said that the work the firm had been doing in Hong Kong wasn’t closely tied to any of the three industries it had identified as its focal points, which are energy and infrastructure, finance and technology.

“It’s a valuable practice, but not a practice that fits in with the rest of our strategy,” said Zuklie, who recently spoke with sibling publication The Asian Lawyer about Orrick’s Asia strategy. “We really had honestly hoped to take a strong team and re-direct them, but that’s not what they wanted to do. That’s the nature of having a strategy.”

Orrick plans on hiring fewer lawyers in the coming year, though the firm will likely grow its international arbitration and energy regulatory teams, Zuklie said. He also expects to see financial growth more on par with 2015, when the firm boosted gross revenue by 4.1 percent and increased profits per partner by 12.2 percent. 

Gross revenue at Orrick, Herrington & Sutcliffe grew 1.8 percent last year, to $929 million, but revenue per lawyer and profits per partner both declined, an outcome that chairman and CEO Mitchell Zuklie attributed partly to a lateral hiring spree by the firm.

With 42 laterals—more than twice as many as in 2015—Orrick’s head count rose 2.7 percent, to 941. Revenue per lawyer dropped 1 percent, to $985,000. And partner profits fell 6.1 percent, to $1.68 million, despite an 8.6 percent decrease in the size of the firm’s equity partnership.

“Our revenue didn’t match the pace of our head count growth,” Zuklie said. “That’s a very conscious choice we made. We thought it was the right time for us to add talent.”

The firm’s most substantial investment of 2016 was its new office in Houston, which opened in January 2016 and added 21 partners from seven different firms by year’s end. Zuklie said Orrick began planning that move about three years ago, around the time that the firm decided to focus on energy and infrastructure as one of its core practice areas.

In May 2016, a four-partner finance team from Freshfields Bruckhaus Deringer joined Orrick in Paris, where the latter recently raided another Magic Circle firm. Orrick picked up a pair of prominent technology regulatory partners—Barrie VanBrackle from Manatt, Phelps & Phillips and James Tierney from the U.S. Department of Justice—in Washington, D.C. Orrick also re-hired Melinda Haag, a former partner who returned to the firm as head of its global business litigation group in San Francisco after five years as the region’s top federal prosecutor.

“The bottom line is, we saw unusual opportunities,” said Zuklie, who four years ago was tapped to succeed longtime Orrick leader Ralph Baxter Jr. “We hope it’ll lead to a really strong 2017.”

Zuklie said the results Orrick achieved for its clients in 2016 seemed to validate its pursuit of those opportunities. The firm worked on about 260 M&A deals, including representing Microsoft Corp. in its purchase of Italy’s Solair, an Internet of Things platform. The firm also advised Beijing-based Internet search provider Baidu Inc. in a $150 million joint investment with Ford Motor Co. in Velodyne LiDAR, a company that makes sensor hardware for self-driving cars.

Orrick grew more in head count on the transactional side than in litigation last year. Deal work also accounted for more of the firm’s gross revenue, Zuklie said. But 2016 wasn’t exactly a slow one for the firm’s litigators.

In July, Orrick scored a far-reaching privacy win for Microsoft when the U.S. Court of Appeals for the Second Circuit ruled that the federal government couldn’t force the company to turn over customer emails stored on servers outside the country. (Orrick worked with Covington & Burling in advising Microsoft in that matter.)

Orrick also won two victories for Apple Inc. at the U.S. Court of Appeals for the Federal Circuit, and in October, helped Elon Musk’s Space Exploration Technologies Corp. beat a sexual harassment suit in Los Angeles. Orrick employment litigation partner Lynn Hermle, who helped Orrick win the SpaceX case, was also hired by Apple to beat back a similar suit filed by a former in-house lawyer. (Hermle helped Orrick’s litigation group earn accolades for its work on behalf of Bay Area-based clients, although the practice saw IP star Neel Chatterjee jump last month to Goodwin Procter .)

The first few months of 2017 have brought more changes to Orrick’s workforce. The firm unveiled this week its opening of an office in Santa Monica, California, to serve the Silicon Beach technology scene. Orrick also lost the bulk of its capital markets team in Hong Kong when a nine-partner group decamped for Morgan, Lewis & Bockius .

Zuklie said that the work the firm had been doing in Hong Kong wasn’t closely tied to any of the three industries it had identified as its focal points, which are energy and infrastructure, finance and technology.

“It’s a valuable practice, but not a practice that fits in with the rest of our strategy,” said Zuklie, who recently spoke with sibling publication The Asian Lawyer about Orrick’s Asia strategy. “We really had honestly hoped to take a strong team and re-direct them, but that’s not what they wanted to do. That’s the nature of having a strategy.”

Orrick plans on hiring fewer lawyers in the coming year, though the firm will likely grow its international arbitration and energy regulatory teams, Zuklie said. He also expects to see financial growth more on par with 2015, when the firm boosted gross revenue by 4.1 percent and increased profits per partner by 12.2 percent.