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Buchanan Ingersoll Revenue Up 4 Percent, Profits Per Equity Partner 9 Percent
The Legal Intelligencer
February 21, 2008
After two years of large-scale mergers, Buchanan Ingersoll & Rooney took it easy in 2007, focusing on integration, cost savings and creating the right practice mix.
The firm's gross revenue grew by nearly 4 percent from $271.3 million in 2006 to $282.1 million in 2007 and its revenue per lawyer increased by 3.1 percent from $537,000 in 2006 to $554,000 in 2007. Average compensation per partner rose by 6.8 percent from about $416,000 in 2006 to $445,000 in 2007. Buchanan Ingersoll adds a new shareholder.
Buchanan Ingersoll saw a larger percentage point jump in its profits per equity partner, moving 9.1 percent from $522,000 in 2006 to $570,000 in 2007. A significant part of that increase, Chief Executive Officer Thomas L. VanKirk said, was because of an overall drop in the number of both equity and nonequity partners in the firm.
The partnership decreased by 7.2 percent from 208 in 2006 to 193 in 2007. The equity tier dropped 7.7 percent from 117 to 108 equity partners and the nonequity tier decreased 6.6 percent from 91 to 85 nonequity partners.
"Leverage like that will always have some impact on profits per equity partner," VanKirk said.
He said he was surprised at how many of Buchanan Ingersoll's peer firms in the Am Law 100 had higher PPP than RPL, indicating higher leverage.
De-equitizations did not play a role in the dip in partner ranks, VanKirk said. The firm lost some groups, mainly in the bankruptcy and creditors' rights practice, either by choice or departures, he said. The firm also added seven-attorney San Diego firm Alhadeff & Solar and brought on 27 new associates in September, he said.
The overall head count in 2007, in terms of full-time equivalent attorneys, rose by just under 1 percent to 509 attorneys. VanKirk said Buchanan Ingersoll currently has about 530 attorneys with plans to add more in the coming days. Some of the bankruptcy lawyers who left may also come back, he said, without specifying which group.
The firm could have given out more to its equity partners in terms of profits, VanKirk said, but chose to take a more cautious approach and invest in the firm's future. He said the economic concerns for 2008 could have an impact on some firms, but not as much on the ones that are prepared and have the right practice mix.
VanKirk said Buchanan Ingersoll certainly isn't recession-proof. The firm, however, doesn't hit the high peaks that others do in a positive economy and, similarly, doesn't hit the low lows, he said.
He said the mergers and acquisition and real estate finance attorneys would just shift to workouts and bankruptcy work. The only difference is that creditors' rights work doesn't bring in rates as high as a mergers and acquisitions practice, VanKirk said.
In order to pare down after two mergers and prepare for the next year, Buchanan Ingersoll focused on cost savings in 2007. The firm consolidated offices that still belonged to the former Klett Rooney Lieber & Schorling and prepared for new, more efficient space in the coming year or two.
VanKirk said the firm cut its malpractice insurance rates by increasing its deductibles and considerably cut down on its risk management claims.
Although the firm made no concerted effort to rid itself of staff redundancies after the July 2006 merger with Klett Rooney, VanKirk said the firm did not fill several positions left vacant in 2007 by retirements. He said about 35 staff positions firmwide went unfilled.
Buchanan Ingersoll is certainly hiring attorneys so far in 2008. The firm brought on three Saul Ewing partners this week between its Princeton and Philadelphia offices.
William W. Uchimoto, the co-chairman of Saul Ewing's securities litigation practice and former general counsel to the Philadelphia Stock Exchange, joined the firm as a shareholder in Philadelphia. Saul Ewing associate James M. Connolly also made the move.
Saul Ewing real estate partners Stuart Dember and Henry Kent-Smith also recently joined Buchanan Ingersoll's Princeton office as shareholders.
2007'S STRENGTHS, 2008'S GOALS
Litigation remained strong for Buchanan Ingersoll in 2007, VanKirk said, comprising 35 percent of its practice. VanKirk said major complex litigation in Philadelphia was particularly busy under the leadership of shareholders Steven E. Bizar, Howard Scher and Richard M. Simins. The firm also had a big win in Pittsburgh with a $220 million verdict award for client Wheeling-Pittsburgh Steel.
The real estate practice was also busy with its representation of Turnberry Associates. VanKirk said the firm would probably soon have to have a significant presence in Las Vegas if for nothing else but its work with Turnberry.
Buchanan Ingersoll's health care, intellectual property and government relations practices were also strong in 2007, he said. The financial institutions practice was flat and the bankruptcy work started picking up at the end of 2007, VanKirk said.
Although he said the firm doesn't really break down its financial performance by office, he said the Philadelphia; Alexandria, Va.; and Pittsburgh offices had strong years.
"Harrisburg, interestingly, is one of our most profitable practices," VanKirk said.
Buchanan Ingersoll still has a strong focus on the Pennsylvania market. He said the firm is looking to grow in Philadelphia to about 125 to 150 lawyers within three years and has leased new space for 2009 to help meet that goal.
Despite 2007 being an integration year, expect more mergers or large-scale acquisitions in the future for Buchanan Ingersoll. VanKirk said he expects to be at 700 to 750 attorneys within three years.
"For a firm like ours, if we were at 530 attorneys three years from now, we would be in the same position the 200- to 300-lawyer firms are in right now," he said.
Part of the firm's expansion may come overseas. VanKirk said he is looking into the possibility of opening a European office, particularly because of Bizar's international litigation practice. The office probably wouldn't be in England but possibly Germany or Brussels, VanKirk said.
The office wouldn't be large but should be opened through a merger, he said. Fortunately, VanKirk said, there are several 10- to 15-attorney shops in Europe that would make strong merger candidates.
