Duane Morris saw all-time highs in its gross revenue, profits per equity partner (PPP) and revenue per lawyer (RPL) metrics in 2011, according to firm CEO and Chairman John J. Soroko.
The firm grew its revenue by about 1.1 percent, from $411.1 million in 2010 to $415.6 million in 2011.
Soroko said that despite a year that remained “quite gloomy” for many law firms, Duane Morris was “lucky enough to have some practice areas that have been extremely active.”
According to Soroko, the firm continued to grow its “very broad-based” intellectual property practice, which includes IP litigation, patent, trademark, copyright and abbreviated new drug application work.
The firm was also busy in general litigation, which — including IP litigation — accounts for about 41 percent of its annual revenue, as well as in bankruptcy and restructuring, which Soroko called a “great countercyclical practice.”
While the bulk of the firm’s annual revenue is generated by litigation, the firm estimates that 17 percent of its revenue comes from transactional work, which Soroko said was also a growth area for Duane Morris in 2011, thanks in large part to the firm’s focus on mid-market private equity.
Although many firms’ corporate practices have been struggling as of late, the middle market has not been nearly as volatile as the higher-end market has, according to Soroko, so Duane Morris has not been forced to deal with the feast-or-famine cycle of big ticket transactional work.
Still, Soroko said his firm’s definition of a “mid-market” client is probably more in line with what most Philadelphia firms would consider a high-end client.
A 600-plus-attorney firm like Duane Morris is a value alternative to megafirms like Skadden Arps Slate Meagher & Flom and Weil Gotshal & Manges in New York, Soroko said.
In 2011, the firm’s transactional attorneys represented members of the investor groups in Zynga Game Network’s $500 million venture capital raise and Groupon’s $950 million stock offering.
The firm also represented Sunoco in the $350 million sale of its polypropylene subsidiary to Brazil-based Braskem SA.
Duane Morris saw its profit margin rise from 27 percent in 2010 to 28 percent in 2011 and its net income grow 4 percent from $113.1 million to $117.6 million.
According to Soroko, the firm did make “modest” rate increases in the range of 3-4 percent in 2011, but noted that the firm’s increase in PPP was not achieved by shuffling partners between its equity and non-equity partner tiers.
The firm went from 136 equity partners in 2010 to 137 in 2011 for a 0.7 percent increase and from 217 non-equity partners in 2010 to 219 in 2011 for an increase of 0.9 percent.
Total compensation for non-equity partners remained flat at about $77.4 million in 2011, after having fallen 4.7 percent from $81.2 million to $77.4 million between 2009 and 2010.
The firm’s PPP rose about 3.2 percent from $832,000 in 2010 to $859,000 in 2011 and its revenue per lawyer (RPL) rose 2.6 percent from $654,000 in 2010 to $671,000 in 2011.
Meanwhile, its overall headcount dropped 1.6 percent to 619 lawyers in 2011, down from 629 lawyers in 2010.
Soroko said the firm lost some partners but added some associates over the course of the year, which he views as a “healthy trade-off” moving forward.
One of the firm’s biggest successes of 2011, according to Soroko, was its joint venture with Singapore-based firm Selvam LLC, which it entered into in late 2010. According to the firm, it was the first joint venture to be approved by Singapore since the liberalization of the country’s legal services market in 2008.
The partnership has progressed “exceedingly well,” Soroko said, adding that the firm’s headcount in Asia is now pushing 30 lawyers, including its two Vietnam locations.
Soroko said he believes an international focus for Duane Morris is “inevitable” and the firm is interested in continuing to expand throughout Asia, though not necessarily in China.
Instead, it will likely focus on countries such as Indonesia, Malaysia and Sri Lanka, which view Singapore as their “commercial crossroads.”
Meanwhile, the firm will also look to grow its presence in Latin America.
In May, Duane Morris formed an affiliation with Mexico City firm Miranda & Estavillo.
Unlike Singapore, where there is a joint practice, the Mexico City alliance includes sharing fees on common clients, publishing information about the other firm on each firm’s website and having partners of the two firms join together for firm meetings and events, Soroko told The Legal in June.
Soroko told The Legal on March 9 that the affiliation is currently a “work-in-progress” but that “Latin America has a lot of potential for us.”
The firm has already done a lot of work in Brazil, he said.
Looking ahead, Soroko said the goal for Duane Morris is “to continue to try to add talent and to execute a careful strategy for international expansion.”
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This report is part of The Legal Intelligencer’s early coverage of the 2011 financial results of local firms as part of the Am Law 100 and Second Hundred reports. Full results for The Am Law 100 will be published in The American Lawyer and online in May. The Am Law Second Hundred will be published in June. View our interactive chart, which will be updated as additional law firm financial data is reported.