Mitchell Zuklie, Orrick Herrington & Sutcliffe chairman..photo by Jason Doiy.11/2/12.058-2012
Mitchell Zuklie, Orrick Herrington & Sutcliffe chairman..photo by Jason Doiy.11/2/12.058-2012 (Jason Doiy)

SAN FRANCISCO — Revenue was flat at Orrick, Herrington & Sutcliffe in 2013, but cuts to the partner ranks let the firm boost its profitability. The firm, which last year was in merger talks with Pillsbury Winthrop Shaw Pittman, recorded gross revenue of $867.5 million, up 0.2 percent, and revenue per lawyer of $910,000, up almost 3 percent.

But average compensation for all partners was up 18 percent, as the firm focused on costs and saw the overall number of partners shrink.

“We did a good job of trying to be prudent about managing all aspects of our costs and not just one,” said Orrick Chairman Mitchell Zuklie, who took over last year.

Zuklie said the shedding of partners was in keeping with the firm’s strategic focus on the technology, energy and infrastructure, and financial service sectors, on both the litigation and transactional fronts.

“We’re aligning ourselves around those three sectors,” he said. “We’re applying a different level of focus and rigor.”

Zuklie said Orrick considers all of the firm’s partners to be equity partners, while the American Lawyer defines equity partners as those for whom at least half of their pay depends on the firm’s performance. By that definition, Orrick had 117 equity partners in 2013, compared to 173 at the end of 2008.

Meanwhile, last year the firm lost a net of 30 nonequity partners, though the ones that left were paid, on average, much more.

“In looking at the population that has left over the past three-plus years, it is fair to say that more have been at the lower end of our compensation structure than the higher end,” Zuklie said in an email.

Law firm consultant Kent Zimmerman said cuts to the nonequity partner ranks is “confidence-inspiring.”

“Many firms are shrinking in head count to grow stronger financially,” he said. “They’re valuing financial performance over size.”

The average partner paycheck at Orrick has nearly rebounded to its prerecession high—reaching $1.05 million in 2013. “We’re running a tighter ship so that’s helpful,” Zuklie said.

This report is part of ALM’s preliminary coverage of 2013 financial results for The Am Law 100 and 200. Final rankings and full results for The Am Law 100 and 200 will be published later this year.

Contact the reporter at npierrepont@alm.com.