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Baker & McKenzie's Revenues Jump Past $2 Billion
The American Lawyer
August 14, 2008
During the previous fiscal year, Baker & McKenzie just missed the mark with total revenue of $1.829 billion, but for fiscal year 2008, which ended in June, the firm comfortably secured a spot in the $2 billion club with revenue of $2.19 billion.
The firm also reported that overall profits shot up 18 percent.
Management credits the strong financial performance to what is now a four-year-old effort to more strategically approach the firm's practices, geographic growth, and client development. In fact, according to the firm, profits per partner have risen 85 percent over the past four years, even as the equity partner ranks have risen.
"To say that the firm thinks and acts upon strategy now is an understatement," says John Conroy, chairman of the firm’s executive committee. "It dominates our actions."
Those actions include an effort, called the Global 200, to focus on expanding the firm's relationship with its 200 most important client relationships, trimming the firm's more than 30 practices to 11 core practices, and growing in key markets such as New York, where the firm’s office has doubled in the last three years.
These efforts represent somewhat of a break from the past for Baker & McKenzie, which has been viewed by many in the industry as a sort of confederation of fairly independent and primarily locally managed offices. This view of the firm was so prevalent, it led to the nickname Baker & McDonald's.
"They're definitely doing something different there now, and Baker & McDonald's is probably not a fair analysis of them anymore," says William Henderson, a professor at Indiana University School of Law-Bloomington. "I don’t know what the secret sauce is, but my impression is that when it comes to firm management, they have been steadily improving."
But, as management admits, the firm still has much to accomplish. Baker & McKenzie was founded in Chicago in 1949, but currently the firm is known primarily for its network of offices outside of the United States. Of the firm's revenues, 42 percent are generated in the firm’s Europe/Middle East market.
Baker & McKenize has more than 3,900 "locally qualified" lawyers working at 70 offices in 38 countries. Only nine of those offices are located in the United States, where about 20 percent of the firm's attorneys are based.
"We realize that there is considerable room for growth," says Conroy. "The Northeast, the Southeast, and West Coast are very important markets. It is a priority to grow in the United States."
According to several sources, part of the firm's stateside growth effort included a merger with San Francisco-based Heller Ehrman. But it was learned earlier this week that talks between the two firms broke down. Conroy, citing firm policy, declined to comment on the merger talks.
The firm was more successful this year when it came to individual additions. According to Conroy, Baker & McKenzie's head count increased by 320 over the past year. Prominent recent additions to the firm include former U.S. Deputy Attorney General Paul McNulty, who joined it last year.
In The American Lawyer's most recent rankings of law firms, released earlier this year, only two other law firms had revenues in excess of $2 billion: Skadden, Arps, Slate, Meagher & Flom and Latham & Watkins. Baker & McKenzie ranked third behind those two firms.
