Cozen O’Connor had a strong financial showing in 2011, bringing in historic highs for the firm when it came to gross revenue, revenue per lawyer (RPL) and profits per equity partner (PPP), according to preliminary numbers from the firm.
Gross revenue jumped 6 percent from $277.5 million in 2010 to $294 million in 2011. Last year’s revenue was higher than in 2009, when the firm’s revenue soared 22 percent to nearly $291 million thanks to a contingency fee.
Cozen O’Connor equity partners made 8.3 percent more on average, with PPP increasing from $605,000 in 2010 to $655,000 in 2011. The firm’s RPL grew 6.4 percent from $550,000 to $585,000. Average compensation for all partners rose 14.6 percent from $445,000 to $510,000.
The firm saw its profit margin jump three percentage points to 33 percent as its net income spiked 15.7 percent to $96 million.
The firm was able to increase revenue and profits while keeping headcount and billable hours relatively static and increasing equity partners. CEO Tad Decker said rates were increased “a little bit” but are still very competitive. He said there was no large-scale contingency fee that would have affected 2011′s numbers as there has been in the past. The firm also didn’t spend the entire contingency fee from 2009, putting it toward expenses last year. He said the growth is consistent with the firm’s 6 to 10 percent revenue increases in years without contingency fees. That is attributable, he said, to the mix of practices at Cozen O’Connor.
Its historic strength in insurance and recovery work shows steady improvement year over year, while the firm’s corporate and commercial litigation practices are growing at even larger rates, firm President Michael Heller said.
Cozen O’Connor’s headcount went almost unchanged at 503 attorneys despite bringing on a group of 19 intellectual property attorneys in New York in June and 14 lawyers in Houston in May. Decker said those attorneys did not count as full-time lawyers for the full year under The American Lawyer ‘s full-time equivalent calculation. He said the firm’s headcount is up “a bit” from that 503 number now.
The equity partner tier increased by 5.8 percent to 146 equity partners while the non-equity partner tier plummeted 16.7 percent from 120 to 100 non-equity lawyers. The pay for non-equity attorneys decreased by just 4.8 percent from $31 million to $29.5 million.
Heller said a number of non-equity partners chose to take counsel or of counsel status. Decker said other attorneys chose to retire and there were a few people across attorney levels who were asked to leave for performance reasons, but no more than in any other year.
The firm’s financial success, Decker said, is really part of a five-year plan that the firm stuck to along with some opportunities that presented themselves along the way. The 60-plus lawyers that joined from Wolf Block in 2009, for example, were a “gamechanger” for the firm, Decker said.
Intellectual property has also been a big focus of Cozen O’Connor, which led the firm to add the 19 attorneys from 27-lawyer intellectual property boutique Cohen Pontani Lieberman & Pavane. The 14 lawyers in Houston from Epstein Becker & Green focus on labor and employment, energy and environmental law along with litigation capabilities in all of those practices.
Decker said the firm’s corporate and real estate practices had a strong year, as did its private client group. Real estate and private client work were two areas heavily bolstered by the addition of the Wolf Block attorneys. Decker said the bankruptcy and labor and employment groups were doing well, too. The Houston additions bolstered the labor and employment practice, he said.
Heller said there was a “meaningful uptick” in deal flow in the past year. There was a “significant” growth in revenue for the IP group last year, a growth area nationally for the firm in 2011 along with commercial litigation and labor and employment, he said.
Heller said the firm is still looking to grow and that could be through small acquisitions of a few attorneys or 30 or 40 lawyers at a time depending on the situation. Decker said growth targets for Cozen O’Connor moving forward are Washington, New York, Chicago, Texas and possibly California. London is another area that may be a growth target, Decker said, and an opening in Asia may be on the horizon as well. Heller added Miami to the list.
Heller took over as president of the firm in October as part of its continued succession planning in turning over leadership from the firm’s founders, Stephen Cozen and Patrick O’Connor. Decker, who had been president and CEO, maintained just the CEO title while the chief administrative partner, Vincent McGuinness, took over as managing partner of the firm.
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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.