Morgan, Lewis & Bockius saw declines in revenue and profits in 2009 as a general economic slowdown and a hiring spree impacted the firm's bottom line.
As of Sept. 30, the end of Morgan Lewis' fiscal year, 2009 revenue declined by nearly 5 percent to $1.07 billion from $1.12 billion in 2008. Profits per equity partner (PPP) dropped 15 percent to 2006 levels. The firm's 2009 financials contrast sharply from 2008 -- that year, Morgan Lewis saw an 8 percent boost in PPP.
"We knew we dodged the bullet [in 2008], but we knew the hit was coming later," says managing partner Thomas Sharbaugh.
Head count shrank by nearly 4 percent, from 1,363 lawyers to 1,315. The losses came mainly from the associate ranks -- Morgan Lewis' fall 2009 incoming class of 55 first-year associates was deferred until October 2010 and about 55 lawyers, mostly associates, were laid off last March. The number of partners, however, rose by nearly 6 percent.
The firm's cost-cutting measures were more than counterbalanced by significant new investments in lateral hires, says Sharbaugh. Morgan Lewis hired 55 new lawyers in the last fiscal year, nearly double the number of lateral hires made in 2008. In November 2008, it took on about 20 transactional energy lawyers from Thelen Reid. Last summer, 11 banking and leveraged-finance lawyers, including five partners, were hired from Bingham McCutchen, and 13 health care regulatory lawyers, including eight partners, joined from Sonnenschein Nath & Rosenthal.
Given the September cutoff to the firm's fiscal year-end, last year's reporting coincided with the worst part of the recession, Sharbaugh notes. Work picked up significantly in the last quarter of 2009, especially in the investment and finance area, he says.
Despite the declines, partners appear to have confidence in the firm's leadership. In April, Morgan Lewis' 486 partners re-elected Francis Milone to a third five-year term as chairman. Milone has presided over an enormous expansion of the firm which continues, despite the recession.
This report is part of The Am Law Daily's ongoing Web coverage of The Am Law 100's 2009 financials. Results are preliminary. Final rankings and full results for The Am Law 100 will be published in The American Lawyer's May 2010 issue and on AmericanLawyer.com. The Am Law Second Hundred will be published in the June issue.
The final published results of last year's Am Law 100 rankings are available here.
This article first appeared on The Am Law Daily blog on AmericanLawyer.com.