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Considering the challenges of 2008, the 25 highest-grossing Texas-based firms showed financial spark in 2008, with their combined gross revenue increasing a little compared to 2007. However, combined net income was flat.
Those not-too-shabby financial results came despite the nation's dramatic economic downturn, which worsened as the year went on, and the impact of Hurricane Ike, which slammed into the Gulf Coast in September 2008, darkening homes, offices and the economic outlook for Texas.
Combined gross revenue at the 25 firms increased by 3.8 percent in 2008 compared to 2007, while combined net income was flat. Those percentage increases are smaller than in 2007, when combined gross revenue at the 25 firms improved by 6.1 percent compared to 2006, and net income rose by 5 percent.
Dire economic conditions impacted the 2008 results for the 25 Texas-based firms included on Texas Lawyer 's Annual Report on Firm Finance. In interviews, managing partners at most of the firms say transactional work, especially real estate work, dropped in 2008 as the banking crisis put a crimp on borrowing and as consumers cut spending. However, the managing partners say some practice areas, including litigation and bankruptcy-restructuring, were strong players during 2008 and helped firms ride out the deal downturn.
Last year, the 25 highest-grossing firms produced a total of $5.4 billion in gross revenue, 3.8 percent more than the $5.2 billion the 25 firms posted in 2007. Fifteen of the firms brought in more revenue in 2008, and 10 brought in less.
Most of the 25 firms included this year on the Annual Report on Firm Finance are returning to the list from last year. The newcomers for 2008 are Thompson Coe Cousins & Irons of Dallas and McGinnis, Lochridge & Kilgore of Austin. They replace Dallas firm Hughes & Luce, which merged on Jan. 1, 2008 with K&L Gates, and Godwin Ronquillo of Dallas, which was smaller in 2008 than in 2007.
The five highest-grossing Texas operations of out-of-state firms are ranked separately.
While the 25 highest-grossing Texas-based firms did eke out an improvement in combined gross revenue in 2008, the 3.8 percent increase pales compared to the percentage increases in recent years. The increase in 2007 was 6.1 percent, the increase in 2006 was 8.9 percent, and the increases in 2005 and 2004 were 2.3 percent. The percentage increase was 4.9 percent in 2003, 7.9 percent in 2002, 15.1 percent in 2001, 13.8 percent in 2000 and 16 percent in 1999.
Combined net income, which is compensation to equity partners, was unchanged in 2008 at a total of $2.1 billion.
Average revenue per lawyer at the 25 firms came in at $654,000 in 2008, a 4.2 percent decline compared to 2007's average of $683,000.
Average profits per partner at the 25 firms were $794,000, down 5.4 percent compared to $839,000 the year before.
Related charts and other stories:
Gross Revenue
Net Income
Profits Per Partner
Revenue Per Lawyer
Profitability Index
The Texas 100
The Top-Grossing Texas Offices of Out-of-State Firms
Some Lose, Some Gain, But Overall Lawyer Count Stays the Same
Those four measures in the Annual Report on Firm Finance help describe each firm's financial performance and provide a means to compare them. Clearly, some of the firms did better than others, although as a whole the 25 highest-grossing Texas-based firms did relatively well considering the troubled economy.
For the 11th year in a row, Dallas-based Akin Gump Strauss Hauer & Feld leads the list, with gross revenue of $780.5 million, up 3.7 percent compared to 2007's $752.3 million. As it did last year, Houston's Fulbright & Jaworski took the second spot, with $694.7 million, but Baker Botts, with $613.3 million in gross revenue, passed Vinson & Elkins to take third on the list this year. Dallas-based Locke Lord Bissell & Liddell, which formed in late 2007 through the combination of Texas firm Locke Liddell & Sapp and Chicago's Lord Bissell & Brook, came in fifth, which dropped Haynes and Boone of Dallas back to No. 6 on the list, ahead of Houston's Bracewell & Giuliani. [See "Gross Revenue Up Despite Economic Slump," Texas Lawyer, April 28, 2008, page 22.]
This year marks the 22nd Annual Report on Firm Finance published by Texas Lawyer. The first was published in 1987, when it included the 10 highest-grossing firms in Texas for 1986.
The gross revenue chart is the master list for the Annual Report on Firm Finance.
Bracewell & Giuliani and Fort Worth firm Kelly Hart & Hallman posted the largest increases in gross revenue in 2008. Litigation boutique Susman Godfrey had the largest decline among the 25 firms.
Fulbright regained the top spot on the net income chart, with $287.3 million in 2008, up 3.9 percent from the previous year. Fulbright led the net income list in 2006, 2005 and 2004, but V&E took the lead last year. This year, Baker Botts comes in second place on the net income chart, with $271.3 million, while V&E is third with $247.8 million. Akin Gump, Locke Lord, and Haynes and Boone are the next three firms on the net income list this year. Fourteen of the firms improved their net income in 2008, with two firms posting double-digit percentage increases: Bracewell, where net income increased 18.7 percent, and Porter & Hedges of Houston, where net income jumped 10.6 percent in 2008. Net income declined at 11 firms, including Susman Godfrey of Houston, where net dropped 25 percent in 2008, and McGinnis, Lochridge, where net income declined 22.4 percent.
Susman Godfrey made the most in profits per partner last year, with an impressive $2,184,000, although PPP was down 28.3 percent from $3,047,000 in 2007. Partners in Akin Gump, Baker Botts, and V&E each made more than $1 million, according to the PPP chart, and partners in Locke Lord came close with $956,000.
PPP improved at 18 of the firms in 2008, and declined at seven. The largest increases in average PPP were at Locke Lord, where the $956,000 average rose 36.8 percent compared to 2007, and at Baker Botts and Bracewell & Giuliani, where average PPP improved by 16.8 percent each.
Susman Godfrey leads the revenue per lawyer chart, with $1,583,000, down 26 percent compared to $2,138,000 in 2007. In order, the next few firms on the RPL list are Akin Gump; V&E; Carrington, Coleman, Sloman & Blumenthal of Dallas; and Baker Botts. RPL improved in 2008 at 15 of the firms, stayed the same at one and declined at nine. The biggest improvement on a year-to-year basis was at Akin Gump.
The Annual Report on Firm Finance also includes a Profitability Index chart on page 31. The Profitability Index shows whether equity partners in a firm are taking home more or less than average RPL.
Texas Lawyer 's Annual Report on Firm Finance includes a firm-by-firm analysis that attempts to explain financial results from each firm in 2008. The fact that lawyers from the firms are quoted in this article is no indication of a firm's cooperation with the preparation of the Firm Finance report. Lawyers simply respond to questions about work and developments at their firms in 2008. Texas Lawyer does not identify the firms that cooperate with our reporting by providing financial information or those that do not.
Also, for the seventh year, the report includes graphs that illustrate the trend line for each firm's revenue over the past several years. The revenue numbers were collected from previous Texas Lawyer Firm Finance reports. For a few firms, numbers stretch back to the first report in 1987, while other firms are newer to the charts. The report doesn't include graphs for Thompson Coe and McGinnis, Lochridge since they are new to the charts this year. The graphs are not on the same scale, so they should not be compared side-by-side with graphs of other firms. All the revenue figures illustrated in the graphs are for the calendar year, except for Gardere Wynne Sewell, whose 2008 fiscal year ended March 31, 2009.
— BRENDA SAPINO JEFFREYS
Akin Gump Strauss Hauer & Feld
While Dallas-based Akin Gump Strauss Hauer & Feld lost about 70 attorneys, including 42 equity partners, in 2008, firm chairman Bruce McLean of Washington, D.C., says the lawyer-count drop — to 743 in 2008 from 822 in 2007 — was part of a restructuring process that improved the firm's profitability by eliminating less profitable practice areas. "The financial results that we produced in 2008 indicate, I think, the outcome of having gone through what was a very difficult and painful process for us," McLean says. In 2008, Akin Gump saw a 3.7 percent increase in gross revenue, taking in about $780.5 million, up from $752.3 million in 2007, and it topped the list of the 25 highest-grossing Texas-based firms for the 11th consecutive year. Net income for 2008 was down 7.9 percent, to $220.4 million from $239.2 million in 2007. Akin Gump's revenue per lawyer jumped 13.2 percent to $967,000 in 2008, compared to $854,000 in 2007. The firm also experienced a strong increase in profits per partner last year, up 16.8 percent to $1,404,000, compared to $1,202,000 in 2007. As of Aug. 31, 2008, Akin Gump had 807 attorneys in its 13 offices worldwide, down 8.4 percent from 881 lawyers at the same time in 2007. The head count for 2008 includes about 250 attorneys in the firm's four Texas offices. "We had a really good year in Texas," McLean says. Kenneth Menges Jr., partner in charge of Akin Gump's Dallas office, says, "In 2008, litigation in general, led by IP litigation, was the strongest area statewide for us." Steven Zager, a partner in Akin Gump's Houston office and head of the firm's intellectual property group, says the firm is representing six major cell phone companies named as defendants in Minerva Industries Inc. v. Motorola Inc., et al., a patent infringement case filed in 2007 in the U.S. District Court for the Eastern District of Texas in Marshall. "It heated up in 2008," Zager says, estimating that about a dozen Akin Gump lawyers have been working on Minerva. "There's a lot of work to be done for six different clients all at the same time," Zager says. Menges, co-head of Akin Gump's firmwide corporate practice, says the firm's transactional practice also stayed surprisingly strong in 2008. "Our transactional practice kept us busy through the end of the year, and that was especially true in Texas," Menges says. For example, the firm represented San Antonio-based Clear Channel Communications Inc., the nation's largest broadcaster, in its $24 billion sale to Bain Capital and Thomas H. Lee Partners in August 2008. That transaction, which took two years to complete, involved 70 Akin Gump lawyers at one point, with about half of them from Texas, Menges says. He says Akin Gump also represented Dallas-based First Southwest Co. in its acquisition by PlainsCapital Corp., also located in Dallas. About a dozen Texas lawyers worked on that deal, valued at $400 million, during the last quarter of 2008, says Menges, who was lead counsel on the deal.
— MARY ALICE ROBBINS
Andrews Kurth
At Andrews Kurth, gross revenue improved by 6 percent in 2008, increasing to $266 million, while net income dropped by 14.8 percent to $78.9 million because the firm reduced the number of equity partners. Gross revenue and net income were $251 million and $92.6 million respectively in 2007. Managing partner Robert Jewell says the firm began transitioning toward new requirements for equity partners in 2007, and the decline to 87 equity partners as of Aug. 31, 2008, from 107 a year before, is largely a result of that process. As of Aug. 31, 2008, Andrews Kurth had 362 lawyers in nine offices, up five lawyers from that same time in 2007. Revenue per lawyer and profits per partner improved in last year: RPL was $735,000, up 4.6 percent compared to $703,000 in 2007, and PPP came in at $907,000, up 4.9 percent from $865,000 in 2007. Jewell says 2008 was going well in all practice areas until September, when Hurricane Ike hit the Gulf Coast and the bankruptcy of Lehman Brothers — a significant client — started a "cascade" that affected transactional practices. The firm's transactional work had declined by November 2008, but fortunately, Jewell says, the firm's litigation and bankruptcy practices stayed strong throughout the year. Because of the nationwide economic uncertainty, Jewell says, the firm's board of directors approved a plan late in 2008 that called for Andrews Kurth to prepay more than $10 million in expenses for 2009, including some rent and malpractice insurance premiums. "Had we chosen to distribute that, it would have been an even better year," he says. Overall, Jewell says, 2008 was a good year for Andrews Kurth. "We had an amazing year, just because when you survive a hurricane and the decline in the capital markets — and we were still able to improve profits and yet carry some money over by prepaying expenses — that's pretty amazing," he says. Houston partner Hugh Ray, head of the firm's bankruptcy practice, says the restructuring work began rolling in the door by fall 2008. "The first six months ranked right up there with the worst thing we've had in a long time. The last six months was exciting, to put it mildly. It was overnight change," Ray says. Among many projects, the firm represents the oil and gas producers committee in the Chapter 11 filed by Tulsa oil trader SemGroup LLP, which is pending in the U.S. Bankruptcy Court for the District of Delaware, and it represents several large creditors in the Lyondell Chemical Co. Chapter 11, which is filed in the U.S. Bankruptcy Court for the Southern District of New York. Ray says in 2008 the firm also worked on bankruptcy-related litigation, including suits filed on behalf of the Mirant Corp. litigation trust stemming from Atlanta-based Mirant's 2006 plan of reorganization. The Mirant litigation, filed in U.S. District Court in the Northern District of Georgia, settled in March 2009. Houston partner Thomas Taylor, co-head of the litigation section, says the firm did a lot of intellectual properly litigation in the Eastern District of Texas, including a matter for Clear Channel Communications of San Antonio, and the medical malpractice defense group was busy with litigation for clients including Kelsey-Seybold Clinic. "Our med-mal group, I don't think they lost a single case last year," he says. Andrews Kurth is southern regional counsel for London-based BP in toxic-tort litigation, and the managed-care litigation group did work in 2008 for clients including Aetna Inc. of Hartford, Conn. Other litigation clients include the Metropolitan Transit Authority of Harris County, Taylor says.
— Brenda Sapino Jeffreys
Baker Botts
J. David Kirkland Jr., chairman of Baker Botts' corporate practice, concedes that 2008 "was a challenging year for everybody." But the Houston-based firm's "strong, institutional relationship with clients" and "good base in the energy sector" helped Baker Botts financially last year, despite the economic downturn, Kirkland says. In 2008, the 12-office firm increased its gross revenue, net income, profits per partner and revenue per lawyer but not as much as the previous year. With 745 lawyers as of Aug. 31, 2008, up 4.9 percent from 710 that same time in 2007, Baker Botts' gross revenue increased 6.2 percent to $613.3 million compared to $577.7 million in 2007. The firm's net income rose 4.6 percent to $271.3 million in 2008 compared to $259.4 million in 2007. Last year, profits per partner rose 5.2 percent to $1,365,000, up from $1,297,000 in 2007. And revenue per lawyer came in at $823,000 in 2008, up 1.1 percent from $814,000 the year before. Robb Voyles, head of the firm's litigation practice, says Baker Botts handled a number of high-profile cases in 2008: It is defending London-based AstraZeneca PLC, the manufacturer and marketer of Seroquel, against allegations that the drug was linked to diabetes, and it represents Tucson, Ariz.-based Asarco LLC, one of the leading U.S.producers of copper and nonferrous metals, in its Chapter 11 bankruptcy pending in the Southern District of Texas in Corpus Christi. The firm also defended Houston-based Halliburton Corp. in investigations by the U.S. Securities & Exchange Commission and the U.S. Department of Justice regarding alleged violations of the Foreign Corrupt Practices Act; those probes concluded in 2008 with a settlement between the company and the federal government, Voyles says. And Baker Botts defended Bermuda-based Accenture Ltd. in litigation and state legislative investigations related to the consulting and outsourcing company's contracts with Texas agencies. In 2008, the firm had "fewer cases but some big ones," Voyles says. On the corporate side, a lot of work arose from the firm's representation of Asarco in its Chapter 11 case, as well as a proposed sale of the company, says Kirkland, a Houston partner. Kirkland says Baker Botts represented longtime client Liberty Media LP of Englewood, Colo., in a number of transactions in the first half of 2008. At the beginning of last year, the firm had a regular flow of deals from its energy clients, Kirkland says, although that work slowed with the liquidity crisis in the fall. As far as cost-savings, Kirkland says, the firm doesn't plan anything drastic this year. "The message we are sending is that we are being careful about our costs but we are preserving the way we interact with each other and our clients," he says.
— MIRIAM ROZEN
Beirne, Maynard & Parsons
Litigation-only firm Beirne, Maynard & Parsons posted 2008 gross revenue of $45.6 million, down 10.9 percent from the firm's $51.2 million gross revenue in 2007. The firm reduced its lawyer count to 72 lawyers as of Aug. 31, 2008, down 14.3 percent compared to 84 lawyers the previous year. "Gross revenue is strictly a function of the number of lawyers," says managing partner Martin D. Beirne. The firm has offices in Dallas and Houston. Profits per partner increased 1.8 percent in 2008 reaching $871,000 compared to $856,000 the previous year. "We had a pretty good year last year, all things considered, with where the economy headed in the third quarter," Beirne says. 2008 marks the third year in a row that the Houston-based firm's gross revenue and lawyer count decreased. The change in Texas litigation due to tort reform adopted by Texas lawmakers during the 2003 legislative session has been the driving force behind the firm's downsizing, Beirne says. The firm's lawyer count has leveled off and may expand in 2009, he says, adding "we are seeing some wonderful opportunities for growth on the energy side, both in traditional energy and alternative energy areas." The firm's 2008 net income was $14.8 million, down 3.9 percent from $15.4 million the previous year. Revenue per lawyer was up 3.8 percent to $633,000 for 2008 from $610,000 in 2007. The firm increased its billing rates during 2008, but only for a few lawyers who made partner, Beirne says. "Rate increases were not across the board," he says. "We have hourly billing, but do a significant amount of work on fixed-fee or other alternative forms of billing." The firm handles some contingent-fee work as well as split-fee work that includes billable hours plus contingent fees, he says. Beirne, Maynard partners Brit T. Brown and Edward J. Murphy successfully handled a Houston client's overseas litigation matter last year involving hundreds of millions of dollars in business interruption claims in connection with an oil and gas terminal facility, Beirne says. He declines to name the client, but says the matter went to trial in 2008 and the firm's client was dismissed from the litigation.
— Jeanne Graham
Bracewell & Giuliani
Bracewell & Giuliani hit its stride in 2008, when gross revenue grew to $275.4 million, up 15.1 percent from the firm's 2007 gross revenue of $239.3 million. Net income improved by an even larger margin, coming in at $100.8 million, up 18.7 percent from $84.9 million in 2007. Revenue per lawyer improved to $651,000 in 2008, up 3.2 percent from 2007's $631,000, but profits per partner were $862,000 in 2008, up 16.8 percent from $738,000 the year before. Mark Evans, the Houston-based firm's managing partner, says 2008 was the "best year we've ever had." Until Hurricane Ike hit the Gulf Coast in September 2008, Evans says, the firm's lawyers were putting in above-budget hours. While Ike and the nation's financial troubles had an impact on the firm's bottom line for 2008, Evans says the firm was helped by a diversified practice mix. For instance, while traditional energy finance and mergers-and-acquisitions work declined during the fourth quarter, the firm has strong countercyclical practices, including white-collar crime defense, financial restructuring and private equity on the distressed side. Daniel Connolly, managing partner of Bracewell's New York office, says the firm has a number of private equity clients, such as Matlin Patterson, which has offices in New York, London and Hong Kong, and New York-based D.E. Shaw & Co., that were busy buying distressed properties in 2008. The white-collar criminal defense and special investigations practice group was busy in 2008, says partner Marc Mukasey of New York, who heads the practice. The group represents Frank DiPascali, a business associate of Bernie Madoff, he says, and represents Affiliated Computer Services Inc. of Dallas in connection with an investigation by the Securities and Exchange Commission into alleged stock option backdating. In late 2008, the firm helped Houston-based Dynegy Inc. negotiate an agreement with New York Attorney General Andrew Cuomo over how to disclose information to investors about climate change risks, Mukasey says. On the restructuring side, partner Evan Flaschen of New York, chairman of the financial restructuring practice, says 2008 was an exciting year because of the volume and variety of work. Flaschen says several big projects in restructuring and related litigation kept many lawyers busy representing U.S. investors in the restructuring of Centro Properties Group, an Australian shopping mall company; defending secured creditors in litigation stemming from Hollywood, Fla.-based homebuilder Tousa Inc.'s Chapter 11, which is pending in the U.S. Bankruptcy Court for the Southern District of Florida; and representing a group of bondholders in the Federal Deposit Insurance Corp.'s receivership of Washington Mutual Inc. In addition to litigation stemming from restructuring work, Glenn Ballard, a partner in Houston who heads the firm's trial section, says litigators continue to handle methyl tertiary butyl ether (MTBE) toxic-tort litigation around the country for a number of clients including San Antonio-based Valero Energy Corp. Litigators also are busy with auction-rate securities suits and an energy-pricing suit in California for Powerex Corp., California Department of Water Resources v. Powerex Corp., he says. Connolly says the firm's New York City office, which opened in 2005 when former New York City Mayor Rudy Giuliani joined the firm, was "completely profitable" in 2008. Bracewell has 10 offices. The firm grew last year, reaching 423 lawyers by Aug. 31, 2008, up 11.6 percent from 379 lawyers as of that date in 2007. Evans notes that the firm reached 475 lawyers by the end of 2008.
— Brenda Sapino Jeffreys
Brown McCarroll
Gross revenue at Austin-based Brown McCarroll dropped to $60.1 million in 2008, down 4.5 percent from the $62.9 million the firm generated the previous year. Adam Hauser, who became Brown McCarroll's managing partner in October 2008, says the decrease is the result of a diversification strategy the firm began last year and is still implementing. "We made a conscious decision to reduce the percentage of our firm that was devoted to the litigation practice," Hauser says. About 65 percent of the firm had been dedicated to litigation, he says, adding "it's now around 50 percent." Net income increased to $17.3 million last year, up 3.6 percent from $16.7 million in 2007. Revenue per lawyer grew to $489,000 in 2008, up 6.5 percent from $459,000 the year before, and profits per partner increased to $412,000, up 13.5 percent from $363,000 in 2007. The number of lawyers at Brown McCarroll decreased to 123 as of Aug. 31, 2008, compared to 137 in 2007, a 10. 2 percent drop. Hauser says most of the lawyers who left in 2008 had been in the firm's litigation practice group. Among those who left were the three lawyers in Brown McCarroll's Longview office, which Hauser says had focused on litigation. The firm closed the Longview office in April 2008. That closure left Brown McCarroll with offices in Austin, Dallas, Houston and El Paso. While Brown McCarroll lost litigation attorneys in 2008, Hauser says the firm added about 16 attorneys in other practice areas, including employment law, real estate and government affairs. Hauser says the firm also created an immigration practice group in the El Paso office. Kathleen Campbell Walker, a partner in the El Paso office and head of the immigration practice group, says she and three other attorneys moved from Kemp Smith to Brown McCarroll in April 2008. They represent clients whose work sites have been audited by the U.S. Department of Homeland Security or the U.S. Department of Labor, Walker says. She declines to identify those clients. Christopher Hughes, a partner in Brown McCarroll's Austin office, says he became head of the firm's two-attorney government affairs and administrative law section in 2008 and began expanding the section's client list. Among the new clients Brown McCarroll took on in 2008, Hughes says, are Ameresco Inc., the Boston-based energy efficiency company; The Solar Alliance, an association of solar energy equipment manufacturers; and the San Antonio Orthopedic Group.
— MARY ALICE ROBBINS
Carrington, Coleman, Sloman & Blumenthal
Gross revenue at Carrington, Coleman, Sloman & Blumenthal in Dallas grew slightly during 2008 to $68.5 million, a .3 percent increase from the $68.3 million generated by the firm in 2007. Net income also saw a small uptick of 2.2 percent to $27.9 million, compared with the firm's $27.3 million net income in 2007. The firm reduced its lawyer count, bringing its total to 80 lawyers as of Aug. 31, 2008, down 8.1 percent from 87 lawyers in 2007. Revenue per lawyer saw a 9 percent improvement, growing to $856,000 from $785,000 in 2007. 2008's profits per partner increased to $734,000, up 4.9 percent compared to $700,000 in 2007. The highest revenue-generating practice areas at the Dallas-based firm in 2008 were business litigation, securities and director and officer litigation, and bankruptcy and reorganization. Last year, the firm won victories in Dallas' 5th Court of Appeals for clients Andrews Kurth as well as the Dallas Independent School District. Other Carrington, Coleman clients include Dallas-based Southwest Airlines; Memphis, Tenn.'s Morgan Keegan & Co.; and Siemens Corp., which has its U.S. headquarters in New York. Carrington, Coleman managing partner Tim Gavin declines comment.
— JEANNE GRAHAM
Chamberlain, Hrdlicka, White, Williams & Martin
Considering the troubled economy, Chamberlain, Hrdlicka, White, Williams & Martin did pretty well in 2008, says Wayne Risoli, the Houston-based firm's managing shareholder. "Given the economic headwinds we all faced, we have to consider 2008 a very successful year," Risoli says in evaluating a year when the firm posted small increases in gross revenue, net income and revenue per lawyer and a tiny dip in profits per partner. Gross revenue came in at $58.3 million in 2008, up 3.6 percent compared to $56.3 million in 2007. Net income improved 4.8 percent, increasing to $23.9 million from $22.8 million in 2007. Last year, RPL was up .7 percent to $561,000 and PPP was down .8 percent at $646,000 compared to RPL of $557,000 and PPP of $651,000 in 2007. The firm has three offices. Risoli says the firm's tax, energy and litigation practices were busy in 2008. He saysthe firm added several clients last year and received more work from some established clients because the mid-sized firm offers billing rates that are lower than those charged by some BigTex firms. "Our competitive rates are attracting more clients," he says. The firm's shareholder billing rates range from $295 to $600 an hour, he says. That price advantage is particularly true for litigation, Risoli says, and important litigation clients in 2008 included Parker Drilling Co. of Houston and Land O'Lakes Inc. of Arden Hills, Minn. The firm's federal tax controversy practice grew significantly in 2008, he adds. Tax clients include Wells Fargo & Co. of San Francisco and The Black & Decker Corp. of Towson, Md. Also, the firm did a significant amount of energy work in 2008 for clients including Norwegian company Aker Solutions (formerly Aker Kværner). The only practice area that was down in 2008 was real estate, Risoli says. He notes that the performance of the firm's corporate section was consistent with 2007, which he considers a mark in the win column since 2008 was a challenging year. The firm grew by a net of three lawyers, up to 104 lawyers as of Aug. 31, 2008, a 3 percent increase over the same time in 2007, when the firm had 101 lawyers.
— BRENDA SAPINO JEFFREYS
Clark, Thomas & Winters
"2008 was a challenging but successful year at Clark, Thomas & Winters," Larry McNeill, president of the Austin-based firm, writes in an e-mail. "Our revenues were up, but so were some of our expenses, particularly taxes and insurance." Clark, Thomas' gross revenue totaled $48.8 million last year, up 1.9 percent from $47.9 million in 2007. Net income remained the same at $22.5 million last year and in 2007. Revenue per lawyer hit $421,000 in 2008, up 1.9 percent from $413,000 the previous year. But the firm's profits per partner dropped to $296,000 in 2008, compared to $317,000 the year before, a decrease of 6.6 percent. O'Neill notes in the e-mail that the firm's "profits per partner were down about the same percentage as the increase in our number of shareholders, meaning that we were able to achieve the same aggregate result as we did the previous year." Clark, Thomas, which has offices in Austin and San Antonio, had 116 lawyers as of Aug. 31, 2008, in 2008, the same as 2007. But the number of shareholders in the firm increased to 76 last year, five more than 2007. O'Neill writes that each practice group at Clark, Thomas hit its revenue projections in 2008 and none dramatically exceeded projections. "I will gladly settle for the same steady improvement in 2009," he writes.
— MARY ALICE ROBBINS
Cox Smith Matthews
Cox Smith Matthews managing director James "Jamie" Smith feels good about how the firm fared in 2008. "We had a solid year in the transactional, corporate transactional work. We had a solid year in energy. The bankruptcy practice certainly picked up in the second half of the year," Smith says. "We had some very solid relationships that grew nicely." Gross revenue at Cox Smith, the largest firm in San Antonio, hit $58.3 million in 2008, up 9.2 percent from $53.4 million in 2007, and net income reached $20.7 million, up 8.4 percent compared to $19.1 million the year before. Revenue per lawyer improved to $498,000, up 11.9 percent from $445,000 in 2007, while profits per shareholder were $440,000, an improvement of 3.8 percent from $424,000 in 2007. Those healthy numbers occurred without much change in the size of the firm. As of Aug. 31, 2008, Cox Smith had 117 lawyers, down 2.5 percent from 120 the year before. The firm has four offices. Smith says the firm's energy and corporate practices were pretty strong throughout 2008, intellectual property was steady, litigation was busy, the financial institutions practice did well, and bankruptcy surged in the second half of the year after a slow first half. In anticipation of a resurgence in restructuring, Cox Smith beefed up its bankruptcy section and opened a Dallas office in 2005 focused on that practice area, and that paid off in 2008, he says. Shareholder Deborah Williamson, head of the creditors' rights, corporate restructuring and bankruptcy department, says the firm is debtor's counsel for Bag'n Baggage Ltd of Denver and Dallas-based Dorado Operating Inc. in Chapter 11s filed in the U.S. Bankruptcy Court for the Northern District of Texas. The firm's lawyers are working on several other Chapter 11s on behalf of clients. It represents multiple creditors in the Chapter 11 filed by Utah energy company Flying J Inc. in the U.S. Bankruptcy Court for the District of Delaware and is involved in other bankruptcy-related litigation. On the banking side, "[W]e're just very, very busy," says Cary Kavy, a shareholder in San Antonio. "We represent all sizes of financial institutions, more than 50 banks in Texas of all different sizes, and the truth is we've been seeing . . . growth across the board in services required," she says. The firm's bank clients include the International Bank of Commerce of Laredo and Lone Star National Bancshares of Pharr, she says.
— BRENDA SAPINO JEFFREYS
Fulbright & Jaworski
Fulbright & Jaworski, which has 16 offices, posted gross revenue of $694.7 million in 2008, a 7 percent increase over the Houston-based firm's 2007 gross revenue of $649.5 million. In 2008, profits per partner increased 10.4 percent to $858,000 compared to the previous year's $777,000. "[W]e had healthy growth in all of our main practice areas," says Washington, D.C., partner Steven B. Pfeiffer, chairman of the firm's executive committee. The firm's primary practice areas include litigation, intellectual property, corporate, energy and health care, he says. Fulbright's lawyer count decreased to 916 as of Aug. 31, 2008, down 2.14 percent from 936 the previous year. Net income increased to $287.3 million, a 3.9 percent rise compared to $276.6 million in 2007. The firm's revenue per lawyer last year was $758,000, a 9.2 percent improvement compared to $694,000 in 2007. Pfeiffer says 2008 was a strong year for litigation. One of Fulbright's memorable wins in 2008 was a client's $43.8 million jury award, following a six-week trial, says Houston partner Stephen C. Dillard, chairman of the firm's litigation department. Dillard says the firm also successfully represented a client in a $400 million antitrust case. Dillard also notes that during 2008, Fulbright represented Merck in its appeal of Carol Ernst v. Merck & Co. Inc . In 2008, a three-justice panel of the 14th Court of Appeals in Houston reversed the $26.1 million judgment in Ernst — the nation's first Vioxx trial — and rendered judgment that Carol Ernst, whose husband died in 2001 after taking Vioxx for about nine months, should take nothing. Fulbright & Jaworski also was part of the trial team in Ernst for Merck, which is based in Whitehouse Station, N.J. Houston plaintiffs lawyer W. Mark Lanier, of the Lanier Law Firm, represents Carol Ernst and says he has filed a motion requesting a rehearing by the entire 14th Court. In 2008, the firm's 85 to 90 intellectual property lawyers in Texas were busy with energy and life sciences matters, says Houston partner James W. Repass, co-head of the firm's IP practice. The IP business on the energy side was driven by the industry's investment in future technologies, he says. The life sciences matters, for medical centers and universities, involved licensing issues or acquisitions. "We do a lot of technology work that involves everything from biotechnology to pharmaceutical to biomedical devices, like implants," Repass says.
— JEANNE GRAHAM
Gardere Wynne Sewell
For Dallas-based Gardere Wynne Sewell, flat numbers from 2007 to 2008 were something to celebrate, particularly given the firm's fiscal calendar. The firm ended its 2008 fiscal year on March 31, 2009, so its 2008 accounting took in three of the worst months of the country's financial crisis. "For us, we were very pleased with the results," says managing partner Steve Good of Dallas. Gardere posted gross revenue of $169.4 million in 2008, up .1 percent from $169.2 million in 2007. The firm's net income in 2008 was $64.5 million, down 7.7 percent from $69.9 million in 2007. "You know, part of it for us is we have a lot of areas that even though they've gotten slower — transactional is slower — but deals are getting done," Good says. "And even private equity clients, they might not have a $500 million deal going, but they'll have a smaller one going on to keep people busy." Good adds, "We're starting to see the normal things from a down cycle. Bankruptcy is busy, and we have some pretty good-size ones." He notes that litigation seems "to be slower than the last time this happened. And that's where we're going to see growth." While the firm's gross revenue didn't move much, neither did the four-office firm's lawyer count in 2008. The firm's lawyer count as of Aug. 31, 2008, was 256, up six lawyers — or 2.4 percent — from 250 at that same time in 2007. Revenue per lawyer dropped 2.2 percent last year to $662,000 from $677,000 in 2007. Profits per partner slid 1.2 percent in 2008 to $787,000, down from $794,000 in 2007. Good believes the worst is behind Gardere. "It seems to have bottomed out a little bit," Good says. "It's sort of good news."
— JOHN COUNCIL
Haynes and Boone
Despite the downturn in the economy in 2008, Dallas-based Haynes and Boone posted solid numbers until the final quarter, when most large firms in Texas started showing signs of financial stress. Gross revenue at the firm totaled $287.8 million in 2008, up 8.9 percent from the previous year's $264.3 million. But Haynes and Boone's revenue per lawyer dropped in 2008 to $624,000, a 1.7 percent decrease from $635,000 in 2007; profits per partner declined 5.1 percent to $763,000 from $804,000 in 2007; and net income fell to $106 million, down 4.5 percent from 2007's $111 million. The firm's transactional practice suffered toward the end of the year, "and if you dig deeper, it was primarily real estate" that lagged behind, says financial partner Rick Fijolek of Dallas, who sits on Haynes and Boone's board of directors. "Real estate is very difficult. Our exposure in real estate is probably less than most firms, but nevertheless it impacts us," Fijolek says. "But we're pretty evenly balanced between transactional and controversy." But HayBoo made up for the drop in the real estate practice by bringing other business into the firm, Fijolek says. "We've got a pretty big bankruptcy section, and they're getting busier, and so is the litigation section," he says. Haynes and Boone boosted its lawyer count in 2008 to 461, up 11 percent from the previous year's 416 attorneys. The firm has 10 offices. Fijolek says last year's increase in lawyers at the firm was due in part to its decision to bolster its presence in its New York City and Washington, D.C., offices, as well as first-year hires in Dallas. "And there was a lack of attrition that you would normally see," Fijolek notes. Even in a bad economy, the firm has to hire new lawyers. "We're conservative about the way we do business. And in the long run what we find is it's advantageous for the firm and clients . . . even during a downturn to take on lawyers to handle projects effectively," Fijolek says. "You don't want clients having a third-year doing work that a first-year should be doing."
— JOHN COUNCIL
Jackson Walker
Jackson Walker's financials continued their upward trend in 2008, rising for the third year in a row. Managing partner Mike Wilson of Dallas says in the first half of 2008, the firm was on track to have an even better year than it did in 2007 — which he describes as a record year for the firm, "almost a watershed event in the way we moved in revenues and profitability." Then the economy collapsed, and the firm "saw a decline in the fall of 2008 in pace of performance and productivity," as did most firms, "so that had a direct impact on year-end results," he says. Despite that, he notes, in 2008 the firm exceeded its 2007 performance — just not by as much as it would have liked. In 2008, Jackson Walker's gross revenue was $171.9 million, up 5.1 percent from 2007's $163.5 million. Net income in 2008 was $62 million, up 4 percent from $59.6 million the year before. Revenue per lawyer was $558,000, up 2 percent from $547,000 in 2007. And profits per partner were $660,000, up 1.9 percent from $648,000 in 2007. Wade Cooper, managing partner of the Austin office and firmwide practice group leader, says Jackson Walker's energy practice and environmental/regulatory practice were strong in 2008. Cooper says the firm represents a number of clients trying to build or acquire electric generation facilities — nuclear, wind, and traditional and clean coal. The firm, which has six offices, had 308 lawyers as of Aug. 31, 2008, compared to 299 in 2007, an increase of 3 percent. Cooper says the firm added about 30 laterals in 2008. Six of them, he says, made the move from Houston litigation boutique Boudreaux, Leonard & Curcio, headed by Glen Boudreaux and Tim Leonard. Leonard, now a Jackson Walker litigation partner in Houston, says the biggest case the group brought with them to Jackson Walker last year was a patent infringement action in the Eastern District of Texas' Marshall Division, Datatreasury Corp. v. Wells Fargo & Co., et al. The infringement suit, which the firm is defending on an hourly basis, deals with alleged patents concerning imaging checks for clearing purposes, Leonard says, and involved every major financial institution in the United States. As of April 16, 2009, the case has 1,205 docket entries on PACER, the federal courts' online filing system.
— ANNE K. McMILLAN
Kelly Hart & Hallman
While other Texas firms struggled in 2008, Kelly Hart & Hallman had a remarkably profitable year, due in part to what lies beneath the ground in Tarrant County. When energy prices shot up last year, Fort Worth-based Kelly Hart saw its business boom, representing companies drilling into the Barnett Shale, a source of natural gas that covers more than 16 North Texas counties, including Tarrant County. "There was a lot of wealth created in the Barnett Shale," says Dee Kelly Jr., managing partner of the firm. And Kelly Hart's real estate practice was not hit as hard as those at firms in other parts of the country. "We didn't have the bubble in housing prices that other places had," he says. The firm's 2008 gross revenue spiked up to $60.5 million, up 16.3 percent from $52 million in 2007; net income rose 8 percent to $33.6 million from $31.1 million the year before; revenue per lawyer increased .6 percent to $480,000 from $477,000 in 2007; and profits per partner were up 8 percent to $646,000 in 2008 from $598,000 in 2007. The three-office firm also increased its lawyer count last year to 126, up 15.6 percent from 109 lawyers in 2007. The firm follows a philosophy set by Dee Kelly Jr.'s father and firm founder Dee Kelly years ago: Never grow or expand just because you can. "We take on lawyers as our clients need them. And we're still following that practice," Dee Kelly says. "I know a lot of other firms have had layoffs. And we haven't had any of that." He adds, "The whole thing just worked well for us last year. And I hope it will be as good this year."
— JOHN COUNCIL
Locke Lord Bissell & Liddell
Locke Lord Bissell & Liddell chairwoman Jerry Clements says she is thrilled with the firm's financial results in 2008, which was the first full year of operation for the firm that was formed with the October 2007 merger of Texas firm Locke Liddell & Sapp and Chicago firm Lord, Bissell & Brook. Each firm's financial results were separate for 2007; Locke Liddell's 2007 numbers were in Texas Lawyer's Annual Report on Firm Finance and The American Lawyer reported Lord, Bissell's separately in its AmLaw 200 report. Gross revenue at Dallas-based Locke Lord was flat in 2008 at $401 million compared to consolidated gross revenue of $401.4 million in 2007 for the two firms that formed Locke Lord. Net income improved by 6.2 percent at Locke Lord to $130 million in 2008, up 6.2 percent from the consolidated numbers forthe previous year when it totaled $122.4 million for the two firms. Revenue per lawyer came in at $732,000 in 2008, compared to $669,000 in 2007 at the two firms, up 9.4 percent. However, profits per partner improved by 36.8 percent in 2008 to $956,000, compared to an average of $699,000 per partner at the two firms in 2007. In 2008, Clements says, Locke Lord lawyers focused on integrating the firms and cross-selling in an effort to make the combination a success. That was a challenge due to economic conditions, she says. "In some areas we noticed the slowdown — obviously anything affected by the credit markets, real estate and finance, and a slowdown in deal flow as well," she says. On the upside, energy work was strong during the first three months of 2008, and the firm's middle-market energy clients remained active throughout the year, says Clements, a partner in Austin. Some practice groups were very busy, including the real estate investment trust (REIT), white-collar crime defense, intellectual property, commercial litigation and reinsurance practices, she says. "Any time you do a combination as large as the one we did between Locke and Lord, you are going to have challenges . . . but I think we did a great job. You combine that with the fact 2008 was a very challenging year, and I look at our year-end, and I was very pleased to have marked improvement," Clements says. Houston partner Charles Parker says lawyers in the white-collar crime defense and internal investigations practice were very, very busy in 2008 representing clients in connection with Securities and Exchange Commission and Department of Justice investigations into allegations the clients violated the Foreign Corrupt Practices Act. The firm also represented clients before the Office of Foreign Assets Control, which was investigating allegations the clients unlawfully did business in a country that may harbor terrorists. The practice group also did a lot of securities litigation in 2008, including representing clients in suits alleging money management companies invested funds from nonprofits or corporations in risky ventures. Nick DiGiovanni, a partner in Chicago who heads the firm's reinsurance practice, says lawyers in his group who do litigation and arbitration handled some large disputes between insurance companies, including matters for Transamerica Reinsurance of Charlotte, N.C., and regulatory lawyers helped brokerage company R.K. Carvill set up the Carvill Hurricane Index now known as the CME Hurricane Index, a weather derivative sold on the Chicago Mercantile Exchange (CME). Transactional lawyers also worked on some large M&A projects in the reinsurance industry, he says. Houston energy partner Bill Swanstrom says energy transactional work was strong during the first half of 2008, dropped off during the second half but picked up again late in the year when private equity companies began to put some money into deals, including renewable energy deals. The firm, which has offices in 13 cities, opened a two-lawyer office in Boston in 2008. Locke Lord had 548 lawyers as of Aug. 31, 2008, down 8.7 percent from 600 lawyers one year earlier.
— Brenda Sapino Jeffreys
McGinnis, Lochridge & Kilgore
In 2008, Austin-based McGinnis, Lochridge & Kilgore invested heavily in a number of contingent-fee cases but did not reap the rewards from those cases before the year ended, says Tim George, the firm's administrative partner. The result was a drop in the firm's gross revenue, net income, profits per partner and revenue per lawyer. McGinnis, Lochridge's 2008 gross revenue totaled $28 million, down 9.7 percent from $31 million the year before. Net income was $13.2 million in 2008, a 22.4 percent drop from $17 million in 2007. Revenue per lawyer in 2008 was $384,000, a 5.9 percent decrease from $408,000 in 2007, and profits per partner were $249,000, an 18.1 percent decrease from $304,000 the year before. "We were taking money that otherwise would have been profit and investing it in cases," George says. McGinnis, Lochridge has offices in Austin and Houston. Having to try one contingent-fee case twice in 2008 also increased the firm's expenses, George says. McGinnis, Lochridge represents the plaintiffs in Hooks, et al. v. Samson Lone Star LP, a suit involving a dispute over oil and gas royalties. The 60th District Court in Beaumont tried the case, which was twice delayed by hurricanes. Joe Lea, head of McGinnis, Lochridge's litigation section, says the first delay in Hooks came when the Jefferson County Courthouse closed in late August 2008 when Hurricane Gustav threatened the Texas coast. Hurricane Ike, which devastated much of Texas' coastal region in mid-September 2008, interrupted the Hooks trial a second time after about a week of testimony,Lea says. The 60th District Court declared a mistrial in Hooks on Sept. 29, 2008, according to a spokeswoman for the court.Lea says the second Hooks trial resulted in a judgment for McGinnis, Lochridge's clients. On Dec. 4, 2008, Judge Gary Sanderson of the 60th District Court signed a judgment awarding the plaintiffs in Hooks more than $21 million in damages. But McGinnis, Lochridge has not collected its contingent fee in Hooks ,Lea says, because Samson appealed the judgment to the 9th Court of Appeals in Beaumont. Three partners also left McGinnis, Lochridge in 2008, dropping the number of lawyers at the firm from 76 to 73 as of Aug. 31, 2008, a 3.9 percent change from 2007.
— MARY ALICE ROBBINS
Munsch, Hardt, Kopf & Harr
At Dallas-based Munsch, Hardt, Kopf & Harr, revenue per lawyer dipped 3 percent, to $514,000 in 2008 from 2007's $530,000, and profits per partner were $535,000, down 17.3 percent in 2008 from $647,000 in 2007. But firm chairman and CEO Glenn B. Callison says this result was by choice. Indeed, the dip in take-home pay resulted from a partnership decision to give the firm's 40 associates a raise and a bonus for their performance in 2008, he says. "There's no question the equity group was generally supportive of making sure we were fairly compensating our younger attorneys," says Callison. "I think we really do understand that there are a lot of people who are nervous about job security given all the turmoil and disruption that's going on in the marketplace, and we do want to reassure our associates that we have a stable platform, and if you are working hard, you will be rewarded for that." Gross revenue at Munsch, Hardt was down 3.2 percent, to $52.4 million in 2008 from $54.1 million in 2007, and net income was down 6.2 percent, to $18.2 million in 2008 from $19.4 million in 2007. However, Callison says the decreases can be attributed to "premium recoveries in 2007 that didn't reoccur in 2008" along with "several matters where we have invested a significant amount of resources." As of Aug. 31, 2008, Munsch Hardt had 102 lawyers, unchanged from 2007. Although Callison declines to go into specifics about these matters, he says one involves a new client that brought a contingent-fee case to the firm, which has three offices. He says the firm's corporate department was busy in 2008 despite the economic downturn, thanks to clients such as financial services firm BNP Paribas of Paris, France, ORIX Capital Markets of Dallas, and new client Dallas-based i2 Technologies Inc. That said, Callison says the pace of the firm's corporate work slowed at the end of 2008 "due to the crisis in the credit market." The firm's real estate practice group, which he says had been busy for most of 2008, started to feel the economic impact of that crisis around mid-October, he says. With those areas flat, Callison says, the firm is turning its talent toward restructuring work. He notes that this type of work picked up toward the end of 2008. In March 2008, the firm welcomed senior lawyer Allen J. Dickey,whose expertise is in the now red-hot area of restructuring, and Callison says the firm is looking to hire others with similar credentials. "I think we're incredibly well positioned to take advantage of the disruption within the economy and the legal marketplace," Callison says. "We've got a very good group that's incredibly focused on understanding how we'll help our clients through this crisis."
— JENNY B. DAVIS
Porter & Hedges
Revenue growth at Porter & Hedges in 2008 was spread across the firm's practice areas, says partner Daniel K. Hedges, a member of the Houston firm's management committee. The firm's gross revenue increased to $62.1 million in 2008 from $57.3 million in 2007, a rise of 8.4 percent. Profits per partner in 2008 were $813,000, a 3.8 percent increase from $783,000 in 2007. Net income grew to $26 million, a 10.6 percent gain compared to $23.5 million in 2007. And revenue per lawyer grew last year, up 4.8 percent to $675,000 from $644,000 in 2007. The firm's lawyer count was 92 as of Aug. 31, 2008, a 3.4 percent increase from 89 lawyers the previous year. "We're a mid-sized, one office, full practice firm," Hedges says. "It's a business model that supposedly doesn't succeed. but we've been successful for 28 years." The firm had a good year despite the economic slowdown during the fourth quarter of 2008, says Robert H. Thomas, chairman of Porter & Hedges' property and finance practice group. During the first quarter of 2008, when energy prices were high, the firm's energy lawyers were busy. But by the fourth quarter, when capital became unavailable, "things came to a screeching halt," Thomas says. "We still had some cleanup work on deals, some business to do, but big deals certainly slowed." Robert G. Reedy says, "Clearly, during the first two quarters, and even the third, we saw tremendous transaction activity in the capital markets and with mergers and acquisitions." Reedy, a partner in the firm's corporate and securities group, continues, "Until the fourth-quarter slowdown, we had expected a 15 percent increase in revenue for the practice group." Noteworthy deals of 2008 included the $1.2 billion merger of firm client Houston-based Grey Wolf Inc. with Precision Drilling Trust of Calgary, Alberta, says Reedy. Also, the firm handled the Chapter 11 bankruptcy of Houston-based Superior Offshore International Inc. as well as a $105 million public offering for Synthesis Energy Systems Inc. of Houston, an alternative energy company, Reedy says.
— JEANNE GRAHAM
Strasburger & Price
Lawyers at Dallas-based Strasburger & Price learned long ago that it pays to be diversified, especially during a down economy. In 2008, the firm brought in $77.4 million in gross revenue, down 5.7 percent from $82.1 million in 2007. The firm's net income also dropped to $26.4 million, down 4.7 percent from $27.7 million in 2007. "It definitely could have been worse," managing partner Dan Butcher says. "The prior year, 2007, was extremely good for us. And for 2008 to be a little down for us was to be expected." Strasburger was a traditional insurance defense firm until about nine years ago, when it began expanding its practice areas to include real estate, energy, health care, and mergers and acquisitions — before the Texas Legislature passed its 2003 tort reform measures. With the exception of the real estate practice, those practice areas continue to sustain the firm, Butcher says. While many Texas firms experienced a financial dip during the last quarter of 2008, Strasburger didn't. He says the last quarter of '08 really wasn't that different than the rest of 2008. "We were really kind of surprised." He adds, "Our merger and acquisition practice was strong, believe it or not, in '08." And energy was a big producer for the firm, Butcher says. "I'd have to think that was a big part of it." Strasburger's revenue per lawyer in 2008 was $437,000, down 6.2 percent from $466,000 in 2007. In 2008, profits per partner fell to $377,000, down 14.3 percent from $440,000 the year before. The firm continues to keep its billing rates lower than other firms, and has reduced the number of billable hours and increased the training hours required for associates to receive bonuses. The firm made those moves two years ago in an effort to keep its mid-market clients happy — businesses with revenue between $25 million and $1 billion. "I think that's a big positive for us," Butcher says. "We're fortunate to be pretty diversified." As of Aug. 31, 2008, the firm had 177 lawyers, up less than 1 percent from 176 the same time in 2007. The firm has eight offices.
— JOHN COUNCIL
Susman Godfrey
For Susman Godfrey, a litigation-only firm, gross revenue and net income each declined 25 percent in 2008 as a result of a client failing to make a scheduled payment in a contingent-fee case, says Steve Susman, founding partner of the Houston-based firm, which has four offices. That client subsequently has agreed to break up the fee and pay it in installments over 2009, and Susman hopes for the best. The firm's gross revenue was $128.3 million in 2008 compared to $171 million in 2007, and net income was $98.3 million last year compared to $131 million in 2007. The firm had 81 lawyers as of Aug. 31, 2008, a 1.3 percent increase from 2007, when it had 80 lawyers. Profits per partner were $2,184,000 in 2008, down 28.3 percent from the $3,047,000 in 2007. And revenue per lawyer fell 26 percent to $1,583,000 from $2,138,000 in 2007. Houston partner Harry Susman says the firm defended Wal-Mart of Bentonville, Ark., in class actions brought by employees, some of which the company settled in late 2008, and represented plaintiff-student athletes in their suit against the National Collegiate Athletic Association. Intellectual property litigation also kept Susman Godfrey busy last year, Harry Susman says. He adds that the firm didn't institute new cost-savings measures in 2008 because "I don't think we appreciated what was going on with the economy until late in the year."
— MIRIAM ROZEN
Thompson & Knight
It was a good year overall for Dallas-based Thompson & Knight. Its 2008 gross revenue was up 8.8 percent to $233.4 million from $214.5 million the year before, and net income rose 2.6 percent to $83.5 million from $81.4 million in 2007. Understanding 2007 is instructive when it comes to breaking down the 2008 numbers, says managing partner Peter J. Riley, because the two years are so closely tied, income-wise. The firm "had the most amazing fourth quarter of 2007" — a quarter where "each month was a record month," he says, and the attorneys' fees generated during that boom time began arriving at the firm in 2008. "For me, that was the difference-maker for the year [2008]," he says. That said, Thompson & Knight did plenty of work in 2008, such as a $7 billion gas deal the firm's lawyers helped broker on behalf of Sonangol, Angola's state-owned oil company, which Riley says brought in "several million." Riley also singles out the firm's intellectual property litigation lawyers as revenue generators in 2008, calling them "the very busiest group in the firm," which he says helped "balance-wise when everything started to slow down," especially in corporate and real estate. That IP work largely was due to clients in the semiconductor and telecommunications areas, says Bruce S. Sostek, head of the firm's IP practice. "In 2008 we also started developing more work in the energy area, particularly in oil and gas, that created additional work for our IP lawyers," he says. "As the economy weakens in other sectors, some people may be turning to their IP portfolios as an alternative source of potential revenue — one that is not necessarily tied to the general economy. Collectively these circumstances contributed to a fairly busy year for our section." Profits per partner in 2008 reached $843,000, up 1.4 percent over 2007's $831,000. Revenue per lawyer was the same in 2008 and 2007: $589,000. Riley says in 2008, the firm opened an office in São Paulo, the largest city in Brazil and the fifth largest in the world. "That was not cheap," Riley says, noting that the new office was the reason why the firm's lawyer count increases from 363 to 396 in 2008, a year that reflected few other hires. The firm also relocated to a new Dallas headquarters over the summer, which affected the 2008 bottom line. "We paid a lot — capital 'A LOT' — of that in '08," says Riley, because the firm had the money and it didn't want to "burden future years" with the bills. In fact, Thompson & Knight had been planning more growth for 2008, such as a new office in Washington, D.C., and beefing up its New York City presence, Riley says, but the firm "just got worried about the economy" and scaled back those plans. What Riley is not worried about, however, is the firm's ability to profit despite the downturn. Over the past five years, he says, the firm has been working on its business model, reviewing its margins and conducting continual restructuring. "If a matter comes into the firm, we're able to staff it so that we provide a fair price to the client at a narrow margin," he says. "That's part of why we're able to maintain profitability even though we haven't grown much."
— JENNY B. DAVIS
Thompson Coe Cousins & Irons
With firms struggling due to the economy, merging with out-of-state firms and even closing their doors in Texas, Dallas-based Thompson Coe Cousins & Irons is making its first appearance in Texas Lawyer 'sAnnual Report on Firm Finance. In 2008, Thompson Coe stuck with a practice area that other firms have abandoned — insurance defense — for better or worse. "We have remained an insurance firm and primarily a litigation firm," says Jack Cleaveland, managing partner of the four-office firm. "And we've really made no other changes other than we've brought in some laterals from some larger firms whose rate structures weren't compatible with their clients' needs." Thompson Coe's 2008 gross revenue was $35.2 million, a 4.9 percent decrease from 2007's $37 million. Net income declined by 5.2 percent in 2008, dipping to $9.2 million from $9.7 million. "Our '08 year was not as good as our '07 year," Cleaveland says. "And our impact has been more from tort reform than the economy." The H.B. 4 tort reform bill passed by the Texas Legislature in 2003 has curtailed business at some traditional insurance defense firms. Still, such litigation continues to sustain Thompson Coe. "We have not had to lay off attorneys; business has been steady," Cleaveland says. "And we're expecting a rebound in 2009." Thompson Coe's lawyer count dropped in 2008 to 101, down 1 percent from 104 lawyers in 2007. "We've been adding lawyers but losing them too. It's been a tradeoff." The firm's revenue per lawyer declined to $349,000, down 1.7 percent from $356,000 in 2007. But profits per partner saw a modest gain, up 1.1 percent to $288,000 in 2008 from $285,000 in 2007.
— JOHN COUNCIL
Vinson & Elkins
Joseph Dilg, managing partner of Vinson & Elkins, says 2008 was a "good year considering all the changes in the economy." Houston-based V&E's financial results were flat in 2008. The firm's gross revenue was $590.5 million for the year, down .9 from $596.1 million in 2007. Net income was $247.8 million in 2008, a 12.1 percent drop from $282 million the previous year. Revenue per lawyer came in at $865,000, down .1 percent from $866,000 in 2007. But profits per partner improved to $1,311,000 in 2008, up 9.3 percent from $1,200,000 the previous year. Dilg says the firm's capital markets and corporate practices were strong through the third quarter of 2008 and litigation and restructuring work gained steam at the end of 2008. V&E, which had 683 lawyers as of Aug. 31, 2008, down from 688 the year before, has 13 offices around the world. Partner Daniel Stewart of Dallas and New York, co-leader of the firm's restructuring and reorganization practice, says the firm was busy in 2008 on restructuring, both in court and out of court, and was involved in a number of Chapter 11s, asset sales and "litigation in the workout world." Stewart says the firm represents the trustee in the Chapter 11 filed by the Virgin Islands Telephone Co., which is pending in the U.S. Bankruptcy Court for the U.S. Virgin Islands. He says it also represents Kansas City, Mo.-based Clearwater Natural Resources LP in its Chapter 11 in the U.S. Bankruptcy Court for the Eastern District of Kentucky; Crusader Energy Group Inc. of Oklahoma City in its Chapter 11 in the U.S. Bankruptcy Court for the Northern District of Texas; and Greenville, S.C.'s Bi-Lo LLC in its Chapter 11 in the U.S. Bankruptcy Court for the District of South Carolina. Partner Karl Stern, co-head of litigation in Houston, says trial lawyers consistently were busy in 2008 in the environmental, intellectual property and international arbitration areas, and commercial litigation picked up during the year. One suit that received national attention in 2008 was litigation in Delaware over the failed merger between Huntsman Corp. of The Woodlands and Hexion Specialty Chemicals Inc. of Columbus, Ohio. The firm helped Huntsman negotiate a $1 billion settlement with Hexion Specialty Chemicals and Apollo Management and certain affiliates. "That was a heroic effort," Stern says. He says V&E litigators also handled a lot of domestic arbitrations in 2008, including some professional liability disputes and some disputes between energy companies, and the firm's employment litigators were busy. On the transactional side, Marcia Backus, co-head of the corporate practice, says the capital markets practice wasn't as busy in 2008 as in previous years, but mergers-and-acquisitions work was not down much, despite the economic troubles. She says that's because of the firm's strong list of energy clients. Backus, who offices in Houston and New York, says the firm's transactional lawyers worked on a number of joint ventures during the year, for example representing Norwegian company StatoilHydro in a natural gas joint venture with Chesapeake Energy Corp. of Oklahoma City, and Australian oil and gas company Santos Ltd. in a joint venture with Petronas of Malaysia. Dilg notes that, due to a strategic planning process, the firm "focused a bit on different areas," and as a result, some lawyers left the firm during the year, including a health care regulatory group in Texas and an international trade group in Washington, D.C. "We were focused more on our opportunities in Texas in both litigation, public finance and our capital markets work on a national and international basis, and international arbitration [and] M&A work in the energy sectors," he says. However, due to lateral hiring and new associates, the firm's lawyer count changed little from 2007 to 2008.
— BRENDA SAPINO JEFFREYS
Winstead
Winstead posted mixed results in 2008, with gross revenue slipping to $144.4 million, a 7 percent decline from $155.3 million in 2007. However, net income improved to $54.7 million at the Dallas-based firm, compared to $54.4 million the previous year, a percent change of less than 1 percent. That improvement in net income comes despite a reduction in the number of equity shareholders. Revenue per lawyer was $531,000 in 2008, down 4.7 percent compared to $557,000 in 2007, but profits per partner jumped to $636,000, up 15.9 percent from $549,000 the year before. As of Aug. 31, 2008, the firm had 272 lawyers, down 3 percent from 279 the year before. Denis Braham, the firm's Houston-based chairman and chief executive officer, says the firm's litigation and appellate practices were busy throughout 2008, along with other practices such as banking, while the real estate practice suffered late in the year because of the economic downturn. "The only thing that was really down was the traditional real estate transactions side. That wasn't down until September," Braham says. Braham notes that the firm's securitization practice, which had been strong in recent years, started to trail off in late 2007, and was slow during 2008. Despite the troubled economy and the impact of Hurricane Ike, which hit the Gulf Coast in September, Braham says the firm's mergers-and-acquisitions lawyers remained busy throughout the fall of 2008 doing some mid-sized and large transactions. "Even when real estate was tanking, corporate was doing well," he says. Last year, the firm helped the Dallas Cowboys refinance corporate bonds issued by Cowboys Stadium L.P. with a $435 million senior credit facility to help fund construction of a new stadium in Arlington, and represented Frisco's Skywire Software LLC when it sold its application software business to Oracle Corp. of Redwood Shores, Calif., for an undisclosed amount. On the litigation side, the firm helped West Coast Trends Inc., a Huntington Beach, Calif., company that makes the Club Glove travel bag, settle a patent infringement suit. West Coast Trends filed the suit in the U.S. District Court for the Eastern District of Texas, naming Armor Gear LLC and its supplier, Uneka Concepts Inc. of Pleasanton, Calif., as defendants. Terms of the settlement are confidential.
— BRENDA SAPINO JEFFREYS
