Hays attributed the firm's good outcome to its ability to secure "more than our share of work" and not cost-cutting.
He said King & Spalding's continuing metamorphosis from a regional firm to one competing with top-priced national and international firms meant it could offer more cost-effective services to companies in the market for such firms. "We're able to compete against the expensive London firms," he explained.
Cost-cutting did not offset a revenue decline at Kilpatrick Stockton, where profit per partner dropped almost 13 percent, to $613,691. The firm's co-managing partner, William E. Dorris, said Kilpatrick budgeted for a revenue decline of 4 percent to 5 percent—but revenue actually dropped 11 percent.
The firm had anticipated that intellectual property and litigation work would increase and make up for declines in corporate and real estate work, as in past recessions, said Dorris.
"It didn't actually rise this time as much as stay flat," he said, adding that litigation and IP work did pick up, but not until later in the year.
Morris, Manning & Martin also budgeted for a drop in demand. Revenue dropped 16 percent. Profit per partner dropped almost 9 percent, to $760,134.
The firm's managing partner, Louise M. Wells, said the numbers came in within the projected range, perhaps slightly better. "There is not a lawyer I have talked to who said their practice was equal in 2009 to what it was in 2008," she said.
"Everyone was holding on to their money," said the firm's executive director Jane Schnetzer. "They weren't doing deals. The market was stunned by the economy."
Morris Manning, which has large real estate and corporate practices, reported that litigation expanded from 32 percent to almost 43 percent of the firm's revenue last year.
The firm had planned to cut associate pay by 15 percent for those in the real estate, lending and tax practices and 10 percent for those in other groups—then ended up cutting pay across the board by 10 percent because "things were picking up," said Schnetzer.
Flat litigation and a big drop in deal work caused Arnall Golden Gregory's revenue to drop 11.5 percent, said firm managing partner Glenn P. Hendrix. Profit per partner was down 11.7 percent. Hendrix said transactional work has picked up and that AGG lawyers' average billable hours-per-day for the first two months of the year are back to October 2008 levels. "The first two months are a very limited sample, obviously. But so far, so good," he said.
Unsurprisingly in a year of widespread layoffs, lawyer head count was down or flat at most of Atlanta's large general practice firms. The only firms that reported notable head count increases, Troutman and Alston & Bird, also made sizeable acquisitions.
Troutman netted 30 lawyers, increasing head count to 650 lawyers, after absorbing the roughly 100-lawyer Ross, Dixon & Bell on Jan. 1, which had offices in Washington, Chicago and California. In 2008, Ross Dixon posted revenue of $56 million and Troutman reported $350.4 million. In a normal year, the Ross Dixon revenue would have boosted Troutman's gross by 16 percent.
Last year the combined firm's revenue increased 7.39 percent—still resulting in a 17 percent increase in profit and a 13 percent bump in profit per partner.
"We were trying to do a merger in what turned out to be the worst economy of our lives," said Webb. "It could have been a disaster adding all those people and all those offices. ... None of that happened," he said, pointing out that a big merger absorbs a lot of nonbillable time.
Alston's acquisition of the 83-lawyer Weston Benshoof Rochefort Rubalcava & MacCuish in Southern California took effect Sept. 1, 2008. That plus the addition of a 11-lawyer Silicon Valley office on Aug. 31 contributed to a 6.6 percent revenue increase in 2008.
But the increase in head count did not show up in the Am Law survey until 2009, because Am Law asks firms to report head count numbers as of Aug. 31.
In 2009, the firm's head count increased by 43 lawyers. However, revenue and profit were flat, while revenue per lawyer decreased 5.5 percent.
"We felt good about the year," said Alston managing partner Richard R. Hays. "It started with a lot of uncertainty."
Managing partners are feeling cautious about 2010, although several reported an uptick in demand for the last quarter of 2009.
"I'm thrilled to see the end of 2009, but I'm not sure anyone knows what 2010 is going to look like," said Stephen M. Forte, the managing partner of Smith, Gambrell & Russell, which posted a flat year.
The credit markets are still locked up, which means no deals. Banks are failing left and right in Georgia, and the foreclosure crisis has hit the commercial real estate market.
"There are numbers out there to defend any position you want to take," Forte pointed out, "but I think there is more confidence in the marketplace. Most feel the worst is behind us."
"The areas that were completely dead, like real estate, cannot be worse, and we're seeing signs that they'll pick up," agreed Webb. "Corporate deals are picking up, primarily in the middle market."
Managing partners for Atlanta's big firms said they were not planning any more layoffs in 2010. That means this year's partner profits will have to come from either an increase in demand or other efficiencies.
At King & Spalding, Hays said the firm was still budgeting for bleak -- despite its strong finish to 2009. "We're not expecting an uptick in the broader economy, and we're not planning for one," he said. "We're planning and managing for a protracted flat economy."
"That said, we take a long-term view, and we have started off 2010, so far, strong. I hope that will continue," he added.
Staff reporters Janet L. Conley, R. Robin McDonald, Alyson M. Palmer and Andy Peters contributed reporting for this story.
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