Quinn Emanuel Urquhart Oliver & Hedges continued its screaming ascent in 2007 with financial results that should put a scare into the most profitable New York firms.
The Los Angeles-based litigation shop reported that profits per partner hit the $3 million mark last year -- a height surpassed by only three firms on the Am Law 100 list for 2006.
"That's Wachtell country," said Ronald Beard, a law firm consultant with the Zeughauser Group, referring to the highly profitable New York deal shop Wachtell, Lipton, Rosen & Katz.
Revenue rose sharply in 2007, going up nearly 30 percent to $385 million. Revenue per lawyer was also up 7 percent in 2007 to $1.1 million, putting Quinn near the top of most lists, but still behind top New York firms. Headcount was up by 20 percent, bringing the total to 352.
The firm thrived on a mix of intellectual property, financial services and commercial litigation in 2007, according to John Quinn, the firm's managing partner.
"I have yet to see a cyclical aspect to litigation," Quinn said. "Litigation is always a growth industry."
Quinn said that in good times, there's money to litigate, and in bad times, busted deals and companies cause plenty of litigation.
The firm won cases for Seiko Epson Corp. and Nokia Corp. before the International Trade Commission, the hours-intensive forum in Washington, D.C., for international IP disputes. Last month, Quinn won an $89 million verdict for developer Caruso Affiliated in Los Angeles after stepping into the jury trial midstream.
About a quarter of the firm's soaring revenue comes from contingency fee work each year, Quinn said -- an unusually high number for a firm that also does defense work. The firm has carved out a niche representing plaintiffs against the financial services industry by eschewing work from big investment banks, he said. That's easier for Quinn than other firms, he noted, because it has no corporate lawyers depending on banks to toss them deals.
Another factor that contributes to the firm's high profits is the ratio of more than three associates for every equity partner. Overall, the firm has 79 equity partners.
"Between their leverage and the contingency fees, that'll put their realization rate well over 100 percent," said consultant Beard.
The financial results didn't prevent some associates from complaining about their bonuses. Legal blog Above the Law reported griping that the firm unexpectedly drew the line for full year-end bonuses at 2,100 hours, 100 hours more than the previous year.
Quinn said that decisions about bonuses are made at the end of the year, not beforehand, and that 2,100 was "not necessarily" a bright line. He added that Quinn associates were given a special bonus this year on top of the normal ones, matching a move made by only a few elite New York firms.
"If [Quinn associates] are not the most highly paid, they're among the most highly paid in the country," Quinn said. "Any suggestion that the firm has done really, really well and the associates haven't shared is false."
If 2007 seems like a banner year for the firm, Quinn confidently predicts that 2008 will be better.
Adding 60 lawyers, including Wilson Sonsini Goodrich & Rosati litigator Robert Feldman in Palo Alto, as well as a new office in Tokyo meant a lot of additional costs last year, he said.
"In a way, this year was a building year for us," Quinn said. "Next year, we're going to be hitting on all eight cylinders."