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Gross revenue at large Texas firms moved upward in 2005, but only slightly, with the 25 highest-grossing Texas-based firms posting an overall 2.3 percent increase in total revenue last year, compared to 2004. That rate of increase is identical to the increase in total gross revenue brought in by the top 25 firms included in last year’s Annual Report on Firm Finance. Some large Texas firms racked up double-digit percentage increases in gross revenue between 2004 and 2005, including Vinson & Elkins and Porter & Hedges of Houston, Thompson & Knight of Dallas, and San Antonio’s Cox Smith Matthews. While the overall rate of gross-revenue increase at the 25 firms is small, the trend is nevertheless upward. The 25 Texas-based firms included in this year’s Annual Report on Firm Finance came in with a combined total gross revenue of $4.5 billion, up 2.3 percent from the total of $4.4 billion in 2004. The 25 firms are the same as in 2004 with one exception: Cox Smith, which grew significantly in 2005, moved onto the list this year, bumping off Houston firm Chamberlain, Hrdlicka, White, Williams & Martin. The five highest-grossing Texas offices of out-of-state firms are ranked separately. [ See " Out-of-State Firms Profit From Their Texas Outposts."] Impressive gross revenue increases at several large Texas-based firms weren’t enough to boost the overall gross revenue total by much. The 2.3 percent rate of increase for 2005 and 2004 compares to 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. This is the 19th 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 in 1986. Net income � compensation to equity partners � was flat overall in 2005. The total of $1.8 billion in net income at the 25 Texas-based firms is unchanged from 2004, when net income also totaled $1.8 billion for the 25 firms on the list. Average revenue per lawyer declined. In 2005, average RPL at the 25 Texas-based firms was $621,000, which was 3.9 percent lower than in 2004, when the average RPL was $646,000. Continuing the downward trend, average profits per partner also declined in 2005, by 7.9 percent. That compares average PPP of $754,000 in 2005 to average PPP of $819,000 in 2004. Those four measures in the Annual Report on Firm Finance help describe each firm’s financial performance and provide a means to compare them. The overall flat net income and decline in RPL and PPP in 2005 can be blamed in part on a relatively large drop in gross revenue and net income posted by a couple of Texas-based firms on the list. Gross revenue at Jenkens & Gilchrist came in at $179.1 million in 2005, a decline of 30.6 percent from $258.2 million in 2004. Its net income was $46.9 million in 2005, down 31.5 percent when compared to 2004′s $68.5 million. But the firm shrank by about one-third between 2004 and 2005 � dipping to 281 lawyers compared to 434 the year before � so it posted increases in RPL and PPP in 2005. On the other hand, gross revenue at Houston litigation boutique Susman Godfrey, which had its best-ever year in 2004, declined by 16.8 percent in 2005, coming in at $168 million, compared to $202 million in 2004. The firm’s net income declined a bit as well, slipping by 10.7 percent to $134 million in 2005, compared to $150 million in 2004. And gross revenue at Dallas firm Godwin Pappas Langley Ronquillo was $55 million in 2005, down 17.9 percent from $67 million in 2004, when the firm was known as Godwin Gruber. Net income at the firm declined by 67.8 percent in 2005, slipping to $10 million compared to $31 million the previous year. (In December 2005, name partner Michael Gruber and a handful of lawyers left the firm to start their own firm in Dallas.) [ See " Goodbye Godwin Gruber,"Texas Lawyer , Jan. 2, 2006, page 1.] Susman Godfrey leads the RPL and PPP lists in this year’s Annual Report on Firm Finance, coming in at $2.2 million and $3.9 million respectively, but those heady sums were still down substantially from 2004, a shift that helped depress the average RPL and PPP in 2005. Also, significantly, PPP dropped by 71.8 percent at Godwin Pappas in 2005, coming in at $625,000, compared to $2.2 million in 2004. That decline also helped depress the average PPP for the top 25 firms in 2005. Seven-Figure RPL For the eighth year in a row, Akin Gump Strauss Hauer & Feld of Dallas tops the list of the 25 highest-grossing Texas-based firms, with gross revenue of $618 million, up 1 percent from 2004′s $612.1 million. As on last year’s list, Fulbright & Jaworski of Houston came in second, with gross revenue of $539.2 million, followed by Houston’s Vinson & Elkins, with $510.2 million in gross revenue.
Related charts:
Gross Revenue Net Income Profits Per Partner Revenue Per Lawyer The Top 100


While Baker Botts of Houston holds fourth place on this year’s gross-revenue chart and on last year’s chart, the relative order of the firms doesn’t match below that when comparing the 2005 ranking to the 2004 ranking. Cox Smith Matthews, which rounds out the bottom of the list, is the only new firm on the list. [ See " Firms of Fortune,"Texas Lawyer , June 27, 2005, page 1.] The gross revenue list is the master list for the Annual Report on Firm Finance. V&E, Thompson & Knight and Porter & Hedges posted the largest percentage increases in gross revenue in 2005. Gross revenue improved at 16 of the 25 firms and declined at nine of them. As in 2004, Fulbright is at the top of the net income chart, with $247.8 million in net income in 2005, up 12 percent from $221.2 million in 2004. V&E, Baker Botts and Akin Gump trail Fulbright, coming in with $244.1 million, $205.5 million and $190 million respectively. Net income results were somewhat spotty in 2005, with net income up at 13 of the firms, and down at 12 others. The average partner in the 25 firms made $754,000 in 2005, which sounds like a lot of money, but it’s less than in 2004, when the average partner made $819,000. While Susman Godfrey partners made $3.9 million in 2005, partners in V&E also made more than $1 million each in 2005, racking up PPP of $1.071 million, up 19.5 percent from 2004. Partners in Akin Gump and Baker Botts averaged more than $900,000. PPP improved at 18 of the firms, with V&E and Thompson & Knight posting the highest percentage increases, and PPP declined at seven of the firms. Susman Godfrey is the only firm with a seven-figure RPL, topping the list with $2.2 million. But runners up on the list are V&E, where RPL improved by 15 percent to $791,000 in 2005, Akin Gump and Baker Botts. RPL went up at 19 of the firms and declined at six of the 25 firms. Texas Lawyer’s Annual Report on Firm Finance includes a firm-by-firm report that attempts to explain each firm’s financial results for 2005. 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 at the firms simply responded to questions about work and developments at their firms in 2005. As always, Texas Lawyer does not identify the firms that cooperate with our reporting by providing financial information or those who don’t.
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Also, for the fourth year, the Annual Report on Firm Finance includes graphs that illustrate the trend line for each firm’s revenues over the past several years. The revenue numbers were collected from previous Texas Lawyer reports on firm finance. For a few firms, numbers stretch back to the first report in 1987, and others are new to the charts. The graphs are not on the same scale, so 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, which had a fiscal year ending on March 31. � Brenda Sapino Jeffreys AKIN GUMP STRAUSS HAUER & FELD With the continued increase in its gross revenues, Dallas-based Akin Gump Strauss Hauer & Feld enjoyed another record year in 2005, says Bruce McLean, the firm’s chairman. “We increased our gross revenues; we increased our profits per partner; we increased our total compensation to all partners. Every way you look at it, we had a better year in 2005 than in 2004,” he says. The firm, which has 15 offices around the world, generated $618 million in gross revenue last year, an increase of about 1 percent from 2004, and its profits per partner climbed to $964,000 in 2005, about a 4.8 percent increase from the previous year. McLean says Akin Gump’s rate of progress slowed slightly in 2005, partly because it made a big investment in its new office in Dubai in the United Arab Emirates. Akin Gump opened the Dubai office in November 2005. The number of lawyers at Akin Gump continues to decrease. The firm had 794 lawyers at the end of 2005 compared to 822 the previous year. McLean says Akin Gump experienced continued growth last year in several practice areas in Texas, including the firm’s energy transactional work, which he describes as “very, very strong.” In 2005, Akin Gump participated in more than 35 energy transactions representing almost $13 billion for the worldwide energy industry, according to information provided by Chris LaFollette, a partner in the firm’s corporate and securities energy section in Houston. LaFollette says Akin Gump represented Ocean Rig ASA in connection with its $600 million debt refinancing transaction. Also in 2005, Akin Gump represented LUKOIL, the largest producer of oil in Russia, in finalizing that company’s joint venture with ConocoPhillips for the development of future oil production in northwest Arctic Russia, LaFollette says. ConocoPhillips paid about $500 million for its 30 percent interest in the venture, according to a July 1, 2005, news release issued by the oil company. McLean says securities litigation � a relatively new practice area for Akin Gump � also was a strong producer for the firm in 2005. Paul Bessette, formerly a partner in the now defunct Brobeck, Phleger & Harrison in Austin, joined Akin Gump as a partner in the Austin office in 2003 and serves as the national chairman of the securities litigation group. Bessette says one of the firm’s biggest successes in securities litigation in 2005 came in Bell, et al. v. Ascendant Solutions Inc., et al. In that securities fraud suit, Akin Gump succeeded in persuading the trial judge to deny class certification to a group of shareholders who sued Ascendant Solutions, a diversified financial services company, and its former executives and directors for allegedly making false and misleading statements in connection with the company’s initial public offering. In August 2005, the 5th U.S. Circuit Court of Appeals upheld a decision by U.S. District Judge David Godbey of Dallas to deny class certification in Bell, becoming the first federal appeals court to affirm a finding that plaintiffs cannot use the fraud-on-the-market presumption of reliance for stock traded on the NASDAQ. � Mary Alice Robbins ANDREWS KURTH Revenue per lawyer at Andrews Kurth of Houston moved above the $600,000 mark in 2005, and profits per partner broke the $700,000 barrier, fueled by a strong transactions practice. “It was a pretty solid year,” says Howard Ayers, the firm’s managing partner. Ayers says that during 2005, Andrews Kurth fully absorbed the laterals who joined the firm in 2003 � including large groups from Brobeck, Phleger & Harrison’s Austin office and from Arter & Hadden in Dallas. The firm did slim down a bit during 2005, and Ayers says that was by design since the firm had added so many lateral attorneys recently. Andrews Kurth had 374 lawyers as of Aug. 31, 2005, which is 20 fewer than a year earlier. The slightly smaller size of the firm and the increased productivity of the lateral hires helped boost RPL and PPP, Ayers says. PPP were $706,000 in 2005, up 7.8 percent, and RPL was $602,000, a 9.3 percent increase. The firm’s gross revenue totaled $225 million last year, up 3.7 percent from the $217 million posted in 2004, and net income came in at $99.5 million, up 4.7 percent from 2004′s $95 million. Ayers links a red-hot deals market to the good financials. “Last year, we saw the rebound of the transactions practice with a vengeance. We had an average year in the litigation and bankruptcy areas,” Ayers says. Michael O’Leary, an energy transactions partner in Houston, says the firm’s energy lawyers were busy, doing equity issues and mergers and acquisitions. “We also had a lot of equity capital and hedge funds [as clients] with a lot of money to put to work in the energy industry,” he says. O’Leary says Andrews Kurth helped Houston’s El Paso Corp. with its debt restructuring; worked on the January 2006 initial public offering for Linn Energy, a natural gas producer in Pittsburgh; and represented underwriters in the August 2005 initial public offering of Houston’s Enterprise GP Holdings. Rex Van Middlesworth, a public law partner in Austin, says his group was occupied in Austin and elsewhere handling public finance work and administrative law matters, mostly representing private entities before governmental agencies. It was so busy that the section had to reach out to the litigation group for some trial lawyers to help with the administrative law work, he says. Bankruptcy work was “spotty” in 2005, says Jeffrey Spiers, a bankruptcy/restructuring partner in Houston. Spiers says the firm had some inventory of bankruptcy work and bankruptcy-related litigation, but he says it’s fair to say “there’s not a vibrant, fire-hydrant spigot of opportunities for new cases to replace that work.” Rosemarie Donnelly, co-chairwoman of the firm’s litigation section, says the strongest litigation areas are a managed-care docket for clients including Aetna Life Insurance Co. of Hartford, Conn.; a toxic-tort docket for clients including United Kingdom company BP and Zurn Industries Inc. of Erie, Pa.; and a medical-malpractice defense docket for clients including Baylor College of Medicine. � Brenda Sapino Jeffreys BAKER BOTTS At Houston’s Baker Botts, partner J. David Kirkland Jr., chairman of the firm’s corporate practice, says of 2005: “The year began with a touch of softness at the beginning.” By the time the 624-lawyer firm closed last year’s books, however, gross revenue had risen 3.5 percent from the previous year to $434.6 million and profits per partner climbed 4.5 percent to $905,000. Kirkland says the firm’s energy-related work, as well as its M&A practice and new litigation made up for the slow start in 2005. “Lawyers are busy when companies make deals,” Kirkland says. Last summer, the firm represented Pogo Producing Co. in a $1.8 billion acquisition of Northrock Resources Limited. And Baker Botts’ New York office handled multiple acquisitions for Liberty Media Corp., which made a $477 million purchase of Provide Commerce in late 2005. Litigation also accounted for last year’s rise in revenue, says Robb Voyles, a Baker Botts partner in Austin who chairs the litigation section. He believes, however, that Baker Botts can do better. “As a litigation department we have not yet reached our full potential as a national practice,” Voyles says, although the firm made strides in that direction last year. In addition to handling cases for established clients such as Halliburton Co., Reliant Energy Inc. and Centerpoint Energy Inc., Voyles says in 2005 Baker Botts became a “preferred national provider” for Pfizer Inc. and handled intellectual property litigation for Dell Inc., Verizon Inc. and Abbott Laboratories Corp. � Miriam Rozen BEIRNE, MAYNARD & PARSONS Fees earned in 2005 but not received until 2006 account for the 2.2 percent decrease in gross revenue for Beirne, Maynard & Parsons, says managing partner Martin Beirne. The firm posted gross revenue of $61.3 million, down $1.4 million from the previous year. Net income for the litigation-only firm based in Houston also dropped by 3.4 percent to $17.3 million in 2005. “Dollars that would have probably come in in December, came in in January,” Beirne says. “To me, we had a very good year last year, if you look at a two- to three-year rolling average.” Last year, the firm’s revenue per lawyer dropped .3 percent to $601,000, from $603,000 in 2004. Profits per partner dropped 3.4 percent from $895,000 in 2004 to $865,000 in 2005. The firm’s lawyer count dropped last year by two to 102 lawyers, a decrease of 2 percent from the headcount in 2004. “Our numbers, for us, are within the ballpark,” Beirne says. Even our profits per partner are within 3 percent to 4 percent” of 2004′s profits per partner, he says. In the wake of Hurricanes Katrina and Rita, the firm decided to invest in disaster planning and created mirror systems � duplicating Houston files and Houston operational abilities in the Dallas office, he says. This was an unusual technology expense in 2005. “Right now, we could switch from Houston [operations] to Dallas by flipping a switch,” Beirne says. Last year, partner Jeffrey Parsons helped save client National Union $16.5 million, says Beirne. The firm did a substantial amount of work for ConocoPhillips Co. in construction litigation during 2005, Beirne says. The firm also handled some matters for Wyeth and for Pfizer Inc., he says. Scott Marrs and Danya Blair successfully represented a broker and broker-dealer in an arbitration before the National Association of Security Dealers. � Jeanne Graham BRACEWELL & GIULIANI Bracewell & Giuliani made a splashy hire in 2005, bringing on former New York City mayor Rudolph Giuliani on March 31 to open the firm’s office in the Big Apple. “It’s doing fabulously well,” Patrick Oxford, the Houston-based firm’s managing partner, says of the East Coast outpost. But that boost to Bracewell’s reach comes at a big cost, considering the high rents in New York City, and the price of bringing on lateral hires accustomed to lofty profits per partner earned at New York firms. Oxford says the New York City office, currently with 18 lawyers, could hit the break-even mark this year, but in the meantime “you are talking about eight figures before you turn it around.” In 2005, Bracewell’s net income was $61.8 million, a 4 percent decline from $64.4 million in 2004. Gross revenue came in at $172 million in 2005, down 2.4 percent from $176.2 million the previous year. Revenue per lawyer was flat, coming in at $509,000, compared to $501,000 in 2004, and profits per partner declined by 4 percent, dipping to $594,000, compared to $619,000 the year before. Oxford says the firm’s financial performance in 2005 was affected by the New York City office on the expense side and by a slowdown in corporate bankruptcy work on the revenue side. “Everybody tells you that creditor’s rights work is down. The economy is so hot, it’s the exact reason our other practitioners were busy,” Oxford says. The energy business was good to Bracewell in 2005, says G. Alan Rafte, an energy partner in Houston. Rafte says Bracewell lawyers worked on several kinds of energy deals in 2005, including private equity investments; mergers and acquisitions in power and in oil and gas; syndicated lending; equity and financings for independent oil and gas companies; and energy trading work. Clients in the energy area include Norsk Hydro and Statoil, both Norwegian companies, Constellation Energy Group Inc. of Baltimore, Entergy Corp. of New Orleans, and Calpine Corp. of San Jose, Calif., he says. On the flip side, some areas were slow in 2005 � the reorganizations area Oxford mentioned and securities offerings, Rafte says. On the trial side, litigation partner Ileana Blanco of Houston says the firm’s lawyers were busy in 2005 with director-and-officer liability suits, intellectual property litigation � including patent infringement, trademark, trade dress and unfair competition claims � and commercial suits. Blanco says it’s interesting that 2005 was a good year for litigation at Bracewell, since trial work typically declines when the economy is doing well. � Brenda Sapino Jeffreys BROWN McCARROLL Austin-based Brown McCarroll’s gross revenue dropped to about $71.7 million in 2005. The 9.6 percent decrease in gross revenue followed a 14.8 percent increase the previous year. The firm’s net income dropped 4.2 percent to about $22.7 million in 2005. But Robert Werner, Brown McCarroll’s managing partner, says the firm expected to see the drop in 2005 revenue after losing nine products liability lawyers who represented Ford Motor Co. The nine attorneys � five partners and four associates � left Brown McCarroll in the first quarter of 2005 to join Thompson, Coe, Cousins & Irons. “We projected a revenue decline because of that,” Werner says. Ford had been a Brown McCarroll client for at least a decade. [ See "Thompson, Coe Adds Nine Laterals, Gains Ford as Client,"Texas Lawyer , Feb. 28, 2005, page 5.] The firm dropped from 198 lawyers in 2004 to 169 lawyers last year. In summing up 2005 at Brown McCarroll, Werner says, “It was a steady year for us and about all we expected.” In addition to its Austin office, Brown McCarroll has offices in Dallas, Houston, El Paso and Longview. Werner says the firm added two new practice areas in 2005. On Sept. 1, 2005, three attorneys with the Austin-based boutique of Carroll Reeder & Drews � Marianne Carroll, Elizabeth Drews and Chris Reeder � joined Brown McCarroll as partners to form the utility practice group. Brown McCarroll also added water law attorneys Kenneth R. Ramirez, a partner, and Monica Jacobs, a senior associate. Ramirez and Jacobs, formerly with Bracewell & Giuliani, joined Brown McCarroll in August 2005 as part of the environmental section. Ramirez says their duties include providing advice and counsel to their two main clients: the cities of Austin and Waco. Werner says Brown McCarroll also experienced significant growth in several practice areas in 2005, including its bankruptcy practice. Partner Patty Tomasco, head of Brown McCarroll’s bankruptcy section, says the group has grown from two attorneys in 2001 to eight full-time attorneys who handle a wide range of bankruptcy and commercial litigation. Tomasco says the section’s 2005 caseload included representation of the foreign administrator of the insolvent estate of ATS Aviation Technology Sales in Teachers Insurance and Annuity Association of America v. XL Reinsurance America Inc. � Mary Alice Robbins CARRINGTON, COLEMAN, SLOMAN & BLUMENTHAL Gross revenue at Dallas-based Carrington, Coleman, Sloman & Blumenthal totaled $62.6 million in 2005, a 7.6 percent increase over the previous year. The firm’s net income grew 6.6 percent to $25.7 million. The firm added five lawyers, representing a 5.5 percent increase to 96 attorneys. Revenue per lawyer grew by 1.9 percent to $652,000 and profits per partner grew by 1.4 percent to $643,000 in 2005. Managing partner Fletcher Yarbrough declines to comment on the firm’s 2005 numbers. Last year, the firm represented Microtune Inc. in its $5.62 million settlement with stock purchasers in Angeloni v. Microtune Inc. in the U.S. District Court for the Northern District of Texas in Sherman. Carrington, Coleman partner Bruce Collins and associate C. Shawn Cleveland continue to represent Kenneth Lay, former chairman and chief executive officer of Enron Corp., related to Lay’s indictment on charges of securities and wire fraud and conspiracy in connection with the collapse of the company. [ See " The Big Show,"Texas Lawyer , Jan. 30, 2006, page 1.] Lay denies any wrongdoing. � Jeanne Graham CLARK, THOMAS & WINTERS Clark, Thomas & Winters in Austin boosted its gross revenue to $50.2 million in 2005, a 5 percent increase over the previous year. The firm’s net income totaled about $21.4 million, a 5.4 percent increase. “It was a record year for the firm, one that I do not expect to repeat this year, but believe will occur again in the not-too-distant future,” says Larry McNeill, president of the firm. McNeill says the 2005 increases are due to a combination of factors: normal, steady growth in the energy and telecommunications practice areas; high-volume business in the products liability defense practice group; and the collection of significant outstanding receivables from 2004. Clark, Thomas experienced a slight decrease in the number of attorneys in 2005, dropping from 115 in 2004 to 109 last year. McNeill says the decrease was the result of decisions made by individual attorneys. “We are engaged in an ongoing process of evaluating our personnel needs, interviewing prospects and have, in some instances, hired replacements,” he says. Ken Ferguson, a shareholder and member of the products liability defense group at Clark, Thomas, says the practice area has grown steadily over the years and represents a number of pharmaceutical companies. � Mary Alice Robbins COX SMITH MATTHEWS A beefed-up Cox Smith Matthews of San Antonio, which added 25 lawyers between 2004 and 2005, moved onto Texas Lawyer’s Annual Report on Firm Finance this year, becoming one of the 25 Texas-based firms that had the highest revenue in 2005. San Antonio’s largest firm posted gross revenue of $43.1 million for 2005, which is 27.9 percent more than 2004′s $33.7 million. Net income took a big jump too in 2005, improving by 36.7 percent to $17.5 million, compared to $12.8 million the previous year. James B. “Jamie” Smith, the firm’s managing director, says the improved revenues are largely due to the firm’s bigger size. “That’s the bulk of it: 2005 was the first full year with our former Matthews [and Branscomb] colleagues and so we are larger. We’ve got a larger base,” says Smith. Those Matthews and Branscomb lawyers in San Antonio joined Cox Smith in September 2004. The firm had 106 lawyers as of Aug. 31, 2005, compared to 81 the year before. Smith says transactional work was steady at the firm in 2005, and the firm achieved a goal of getting more work from some key South Texas companies. The firm’s clients in San Antonio include Kinetic Concepts Inc., Valero Energy Corp., Clear Channel Communications Inc. and AT&T Corp., but he says the firm has been building a client base elsewhere in the Rio Grande Valley as well. “Energy is strong, was strong, remains strong. That’s really a foundation of our firm long ago, and far away it continues to be a key part of what we’re doing,” Smith says. He says the firm’s tax practice was “very solid,” and unlike at some other large Texas firms, the bankruptcy practice continued at a strong level in 2005. Smith says the firm’s bankruptcy practice includes work as local counsel for a committee in the Mirant Corp. bankruptcy, filed in the U.S. Bankruptcy Court for the Northern District of Texas, and as counsel for the debtor in the Avedo Brands bankruptcy, which was filed in the U.S. Bankruptcy Court for the Northern District of Georgia. Also in 2005, Cox Smith opened offices in Dallas and McAllen, in line with the firm’s expansion strategy. Because of its location in South Texas, the firm does quite a bit of cross-border work, and its public law practice grew with the addition of some Matthews and Branscomb lawyers, Smith says. George Casbeer, the firm’s chief operating officer, says the firm’s condemnation practice “exploded” in 2005, with the firm representing government entities and landowners. Profits per partner were $350,000 at Cox, Smith in 2005, up 4.2 percent from 2004. Net income slid by 2.2 percent to $407,000. � Brenda Sapino Jeffreys FULBRIGHT & JAWORSKI Houston-based Fulbright & Jaworski’s 2005 gross revenue totaled $539.2 million in 2005, up 9.7 percent from the previous year. Net income reached $247.8 million, a 12 percent increase over 2004. The firm added 27 lawyers in 2005 for an increase of 3.2 percent and a total lawyer count of 858. “We invested in areas where we think we have competitive advantage and strong tradition � litigation, disputes, corporate and anything having to do with energy,” says Steven B. Pfeiffer, chairman of the firm. The firm’s energy practice, formerly Houston-centric, is now focused on building business in London and Hong Kong, he says. In 2005, profits per partner increased 6.6 percent to $714,000 and revenue per lawyer grew by 6.1 percent to $628,000. “We have seen an increase in transnational work � litigation, arbitration and regulatory � due to cooperation between the SEC and overseas regulators,” says Lista Cannon, a partner in London and head of the firm’s European disputes section. Fulbright has acquired new clients, such as Royal Dutch Shell, due to operating a London office, which had six lawyers at the end of 2004 and 15 at the end of 2005, Cannon says. Royal Dutch Shell restated a large proportion of its reserves in 2004, which led to regulatory actions by English authorities and class-action suits pending in the United States, she says. “This is work F&J would not have obtained without a London office,” Cannon says. Following the strategic plan adopted by the firm in 2003, Fulbright has been more actively advertising its corporate/energy practice in trade journals, magazine and newspapers that reach the energy industry, says Michael Conlon, co-partner in charge of the Houston office and head of the firm’s corporate practice. Last year, the firm also bought National Public Radio advertising spots in the Houston market and has focused on conferences and speaking activities, not to other lawyers, but to industry players, Conlon says. And Fulbright has been more active in international bar association programs, he says. An important strategic move for the firm in 2005 was the acquisition of a group of lawyers in the Middle East with three lawyers in Dubai, United Arab Emirates, and three in Riyadh, Saudi Arabia. “2005 was a good year, but from a corporate perspective a moderate year,” Conlon says. Some noteworthy deals included the reorganization of Clear Channel Communications, which was a new client in 2005, including the initial public offering of Clear Channel’s billboard operations, he says. A Fulbright team in Houston handled the IPO while a team in New York handled the spin-off of the entertainment business, he says. The firm also did significant work for Yellow Roadways of Overland Park, Kan., which has started selling distribution services in mainland China. Fulbright, through its Hong Kong office, also represented monster.com in its move into China last year. � Jeanne Graham GARDERE WYNNE SEWELL Gardere Wynne Sewell’s business is much like a temperature gauge for its home city of Dallas’ economic climate: When business warms up, so does the firm’s income. And 2005 was definitely a warm � but not blistering � year for the firm as Gardere saw 3 percent growth in its gross revenue and net income. The firm posted $153.1 million in gross revenue in 2005, up from $149.3 million in 2004. And the net income, which is compensation to equity partners, was $63.2 million, up from $61.2 million in 2004. Gardere was busiest in business litigation, IP litigation and transactional business, says Stephen Good, the firm’s managing partner. “It’s like lots of areas, when you see the economy pick up, you’ll see the transactional business pick up,” Good says. The same was true for business litigation, as the firm brought in two big cases, he says. “One was a products liability case. And the other one was an insurance-related case.” The firm’s energy business in Houston was also busy last year, and real estate, such as work on behalf of hotel companies, did well, Good says. Profits per partner went up 7.7 percent to $672,000 in 2005 from $624,000 in 2004. The revenue per lawyer also saw a boost, up 5.3 percent to $593,000 in 2005 from $563,000 in 2004. � John Council GODWIN PAPPAS LANGLEY RONQUILLO Godwin Gruber, now known as Godwin Pappas Langley Ronquillo, experienced more than a name change last year. The Dallas-based firm underwent tremendous flux, as former name partner Mike Gruber defected in December 2005, along with three partners and three associates. The firm’s finances last year reflected the tumult. Its gross revenue declined from $67 million in 2004 to $55 million in 2005. Similarly profits per partner dropped from $2.21 million in 2004 to $625,000 in 2005. In September 2005, the firm lost most of its intellectual property group. Six lawyers, all members of the firm’s IP department, defected to join Greenberg Traurig’s Dallas office. Eric Buether, who had been chairman of the Godwin firm’s IP department, was one of the attorneys who left for Greenberg Traurig. In September 2005, he told Texas Lawyer, “Greenberg offered a much more substantial platform.” Buether added that his group of lawyers took with them “seven figures” worth of annual business. [ See "Six IP Lawyers Move On,"Texas Lawyer , Sept. 19, 2005, page 3.] Since starting the firm in 1999, Gruber and name partner Don Godwin expanded their firm from 22 to 150 attorneys by late 2004. The firm had 138 lawyers in August 2005 and roughly 130 today. In 2003 and 2004, Godwin Gruber ranked as one of the top two firms in terms of profits per partner on Texas Lawyer’s Annual Report on Firm Finance. But in 2003, Halliburton Co., one of Godwin Gruber’s major clients, entered into a $4 billion cash and stock global settlement of some 300,000 asbestos-related claims, thereby reducing the Houston energy company’s need for the firm’s litigation services. In the aftermath, six associates who worked on asbestos litigation left the firm. In May 2004, despite the reduction in Halliburton work, Godwin Gruber opened a Houston office. In November 2005, Austin-based Forgent Networks, a Godwin Gruber client, announced it was taking an IP case the firm had been litigating on the software and services company’s behalf to Houston’s Susman Godfrey. At the beginning of 2005, Gruber left the managing partner post, and partner Darrell Jordan took over. In December 2005, Jordan stepped down and partner Marcos Ronquillo took the reins at the firm. Ronquillo declines to comment about the firm’s finances. � Miriam Rozen HAYNES AND BOONE Cost containment, conservative hiring and diversity in its practice areas all helped Dallas’ Haynes and Boone in 2005. The firm saw a 2.9 percent growth in its gross revenue, up to $216.8 million from $210.7 million in 2004. The firm’s net income was 8.7 percent higher in 2005, up to $95.2 million from $87.6 million in 2004. “The income number was very good,” says partner Michael Boone. The reason for the steady income was due in part to some practice areas speeding up while others slowed down, he says. “There’s less bankruptcy work, but corporate helped offset that, because it came back,” Boone says. “Bankruptcy was huge the prior two years. But our corporate group certainly did better.” There wasn’t one big case or transaction that impacted the firm’s revenue, Boone says. “We had no one thing that just dominated our revenue stream,” he says. “We have a very diverse business. Nothing dominates.” Last year, partner George Bramblett, who sits on the firm’s board of directors, shepherded Haynes and Boone’s biggest case, Shirley Neeley, et al. v. West Orange-Cove Consolidated Independent School District, et al. But the suit � in which the Texas Supreme Court eventually forced the Legislature to reconsider its school finance laws � was not a profitable one even though it raised the firm’s profile. “We’re not getting paid currently,” Bramblett says. “We did not charge for the appeal in West Orange Cove 1, mainly because we’d lost twice.” Boone says the firm expanded its Washington, D.C., office from 12 to 16 lawyers last year. And the firm is waiting for its investment in a New York City office, which opened in 2004, to start paying off. He believes it will be five years before the NYC office becomes profitable. Much like in 2004, the firm hired conservatively last year. The firm had 419 attorneys in 2004 but dropped to 396 in 2005. Haynes and Boone’s revenue per lawyer rose from $503,000 in 2004 to $548,000 in 2005, a 8.9 percent increase. Profits per partner also rose from $644,000 in 2004 to $675,000 in 2005. � John Council HUGHES & LUCE Despite the loss of several equity partners in Hughes & Luce’s corporate practice group, the Dallas-based firm showed a minimal increase in its 2005 gross revenue, up 2.4 percent in 2005 to $68.9 million. “We had to make some adjustments but thought we had a pretty good year overall,” says managing partner Bob Mow. “It just takes time for new attorneys to get up to speed.” Because those adjustments included giving full partnership rights to some with non-equity status, the net loss of equity partners was only seven, dipping from 52 in 2004 to 45 in 2005. The firm then went on something of a non-equity-partner hiring spree, turning to lateral hires and promotions within the firm to increase the number of non-equity partners from 16 in 2004 to 30 in 2005. “Traditionally, it is our policy to hire new partners as non-equity until they get more familiar with our system,” Mow says. “They also don’t have to share the risk, and that is worth something to them.” With fewer equity partners, the firm reflected a dip in net income, down from $27.3 million in 2004 to $25 million in 2005. But with fewer partners to split up that income, its profits per partner picture rose to $556,000, an increase of 5.9 percent over 2004. The jump in non-equity partners caused a boost in compensation to non-equity partners, which was up by 61.5 percent over 2004. The firm’s revenue per lawyer figure also increased to $492,000, up 5.4 percent over 2004. The firm’s hires reflect its desire to have a balanced practice. “We are split right down the center in terms of income generated from litigation and transactions,” Mow says. “We think it’s a healthy thing, because historically when one is down, the other is booming.” Last year, the firm reported growth in its litigation practice, and that still remains steady, says Mow. Yet because of tort reform, there are fewer plaintiffs filing cases, and that might impact the firm’s defense practice, which is “down somewhat,” says Mow. But the transactional side, which has been slow since Sept. 11, 2001, seems to be on the rebound. “Real estate land use particularly has become a hot area, Mow says, and the firm has developed quite a niche practice in representing clients who operate hedge funds. With this upward trend in transactions, the firm is back in balance again, says Mow. “I think if we can continue along this path, 2006 should be a fun year.” � Mark Donald JACKSON WALKER It’s not as though Jackson Walker managing partner Mike Wilson regrets that his firm takes contingent-fee cases, but they sure didn’t help with 2005′s bottom line. Wilson points to his firm’s investment in several labor-intensive contingent-fee cases that have yet to hit pay dirt, as the reason that the firm’s five-year growth in gross revenue and net income has come to a halt. 2005 “wasn’t a bad year for us by any definition but it could have been better,” Wilson says. Gross revenue reached $133 million in 2005, down 3.5 percent from the firm’s banner year in 2004. Net income was off by 5.9 percent, down from $50.5 million in 2004 to $47.5 million in 2005. “We just had three times as much contingency time invested in 2005 than in 2004,” says Wilson, who adds that these arrangements do not mark any sea change in the nature of the litigation they intend to pursue. “Generally speaking I think more large firms are looking at contingency-fee cases, but we will continue to rely on noncontingency-fee work as our primary source of revenue.” Jackson Walker’s revenue per lawyer decreased in 2005 to $463,000, down 1.5 percent from 2004. Profits per partner were hit even harder, declining to $528,000, off 5.9 percent from a 2004 high. Although the number of equity partners remained the same at 90, the firm shrank a bit in 2005, decreasing in size from 293 lawyers to 287. “Even though in head count we are slightly smaller,” Wilson says, “I wouldn’t confuse size with strength. We are a much stronger firm today than we were three years ago.” With solid growth in practice areas such as transactional work and intellectual property litigation, Wilson says he is not the least concerned about his firm’s 2005 numbers. “It’s the bigger picture that’s important.” Although, he says, “it would be nice if one or two of those [contingent-fee cases] reached fruition.” � Mark Donald JENKENS & GILCHRIST Jenkens & Gilchrist’s gross revenue, net income and lawyer count plunged by about one-third during 2005. Total lawyers at the firm declined 35.3 percent, to 281 from 434. Gross revenue fell 30.6 percent, to $179.1 million in 2005 from $258.2 million in 2004. Net income dipped 31.5 percent, to $46.9 million from $68.5 million. Ninety-nine lawyers left Jenkens’ New York office, says Thomas Cantrill, chairman and president of the firm. On April 1, 2005, the majority of those attorneys became the New York office of Atlanta-based Troutman Sanders. [ See "Jenkens Loses New York Office to Atlanta Firm,"Texas Lawyer , March 7, 2005, page 1.] Cantrill points to the firm’s success in 2005 in raising its revenue per lawyer 7.2 percent, to $637,000 from $594,000 in 2004. That jump of $46,000 dwarfs the $5,000 rise in RPL from 2003 to 2004. Profits per partner rose 1.1 percent, to $558,000 in 2005 from $552,000 in 2004. “Overall, the firm’s financial performance, not withstanding the attrition . . . I think it’s been an amazing story,” he says. While the firm is not happy about the defections or the cost of ongoing litigation over the firm’s tax-shelter advice, he points to an upward trend line of RPL and PPP. “You look at who’s here today in the equity shareholder ranks, roughly two-thirds of them are producing revenue of more than $1 million per year,” Cantrill says, noting the firm’s litigation, banking and immigration practices have done well. Peter G. Weinstock, who heads the financial institutions section, says, for the eighth straight year, Jenkens did more bank mergers and acquisitions in 2005 than any other U.S. firm. He says Jenkens did 20 M&A deals involving banks, chartered six banks around the country, and was involved in three bank initial public offerings and a host of bank security offerings. Jenkens handled the purchase of First American Bank by Citigroup Inc., which closed in the first quarter of 2005 at a value estimated at $750 million. On the cost side of the ledger, the firm has reduced expenses by slimming staff and getting out of its $75 million New York office lease. But the real story is still in the departures. As a baseline, during 2002, the firm lost 11.8 percent of its lawyers. In July 2003, former clients filed class-action litigation, Denney, et al. v. Jenkens & Gilchrist, et al., over tax-shelter strategies allegedly devised by Jenkens that the Internal Revenue Service subsequently declared improper. In 2003, the firm’s attrition rate improved slightly, with Jenkens losing 11 percent of its lawyers. In 2004, retention was significantly better, with 5.1 percent of lawyers leaving. But 2005′s departures � 35.3 percent of the firm’s lawyers � left the firm that housed 589 lawyers in 2001 with only 281 attorneys in 2005. Without the loss of 99 lawyers in New York, head count would have dropped 12.6 percent. And what of the tax-shelter litigation? On March 31, the 2nd U.S. Circuit Court of Appeals in Denney, et al. v. Deutsche Bank AG, et al. affirmed the U.S. District Court for the Southern District of New York’s final judgment and order certifying a settlement class, approving the $81 million settlement fund, and dismissing all claims against Jenkens. Cantrill says the firm is 95 percent done with the tax-shelter litigation. He says he believes the firm will reach a settlement with virtually all the plaintiffs who did not settle earlier, using remaining coverage under the firm’s insurance policy. The 2nd Circuit opinion noted that the settlement provides an additional $24.9 million for Jenkens to defend or resolve the opt-outs’ claims and possibly another $25 million in insurance coverage. � Anne K. McMillan KELLY HART & HALLMAN Fort Worth’s Kelly Hart & Hallman had a good 2005 � which looks more like a great year when considering that the firm only counted 11 months on its balance sheet. The firm converted from a corporation to a partnership last year, which means it changed from a fiscal year to a calendar year, closing its books at the end of December 2005 instead of January 2006, says Dee Kelly Sr., chairman of the firm’s executive committee. Kelly says there were two reasons for the change. “We thought this was a better structure for us in the long term. And there were some personal tax considerations for the partners.” Even with the shortened year, Kelly Hart saw a 5 percent increase in its gross revenue, up to $45.5 million in 2005 from $42.9 million in 2004. “We had the best year we ever had last year,” Kelly says. A big part of the boost was due to the firm’s energy law practice, he says. “We had a solid year in energy, it picked up,” Kelly says. “Litigation, real estate and corporate were strong. And all areas of the firm did well.” Traditionally, Kelly Hart does not hire many new lawyers during the course of a year. And 2005 was no exception, as the firm increased its ranks by only three lawyers, up to a total of 95. However, Kelly Hart soon plans to break from tradition by opening an office in another city. The firm has an Austin office, but has long resisted expanding its business base from Tarrant County. “We’re looking to move to another city, no question about it,” Kelly says, who declines to name the city. “I’m conservative and don’t like to jump around. We’ve been doing well over here, why dilute it?” Kelly asks. But “we’ve had studies [done] and I think we know where our chances are. But we’re not there yet.” The firm posted modest gains in revenue per lawyer, up 2 percent to $479,000 in 2005 from $466,000 in 2004. The firm also had an increase in profits per partner, up 1.1 percent to $555,000 in 2005 from $494,000 in 2004. � John Council LOCKE LIDDELL & SAPP Locke Liddell & Sapp had a record year in 2005, posting gross revenue of $207.8 million, up 7.7 percent from 2004. Profits per partner improved by 10.3 percent to $716,000, which is the highest ever for the firm that is based in Houston and Dallas. “It was far and away our best year, a record performance in terms of gross revenue and profits per partner,” says Bryan Goolsby, the firm’s Dallas-based managing partner. The firm’s strongest practice area in 2005 was litigation, Goolsby says, and he says the firm’s lobbying/Federal Energy Regulatory Commission work took a leap with the opening of a new office in Washington, D.C., in October 2005. But Marc Watts, head of the firm’s corporate section, says the firm’s transactional side was so busy in 2005 that Locke Liddell hired some lateral corporate partners and associates. That’s unusual because the firm typically does most of its hiring through its summer associates program, Watts, a partner in Houston, notes. Because the energy business has been so robust, Watts says the firm added some lawyers with expertise in master limited partnerships and LNG (liquefied natural gas) transactions. In addition to work for energy companies and banks, Watts says the firm’s deals lawyers did considerable work for private equity and hedge funds. “With few exceptions, it’s hard to think of an area that has not been busy. Our energy practice, both on the transactional side and the litigation side, has been very busy,” Watts says. Locke Liddell did a lot of work for midstream companies, such as representing Kinder Morgan Inc. of Houston in a joint venture pipeline project with San Diego’s Sempra Energy, he says. Another major deals client is Merrill Lynch Commodities, he says. Jerry Clements, a partner in Dallas who heads the firm’s litigation section, says the trial lawyers were “really busy” in 2005. The work includes a silica defense docket for Pulmosan Safety Equipment Corp. and mortgage practices litigation for Countrywide Financial Corp. of Calabasas, Calif. A number of lawyers are handling litigation for pharmaceutical companies, including a number of pricing practices suits filed by attorneys general around the country, she says. Clements says Locke Liddell lawyers successfully defended Schering-Plough Corp. of Kenilworth, N.J., from a wholesale pricing practice suit that went to trial in West Virginia in 2005. Locke Liddell trial lawyers are also doing a lot of counseling and pre-litigation work for corporate clients over provisions in the Foreign Corrupt Practices Act and the Sarbanes-Oxley Act of 2002. While gross revenue improved, Locke Liddell’s net income slipped 5.2 percent to $65.2 million last year, compared to $68.8 million in 2004. Net income is compensation to equity partners, and the firm had 15 fewer equity partners as of Aug. 31, 2005, compared to the previous year. Goolsby says several equity partners moved to non-equity status due to their pending retirement. “Every year we kind of evaluate the performance of the firm, and we had some people moving toward retirement and winding down their practice,” he says. The firm had 86 non-equity partners on the snapshot date, compared to 80 the year before. In Goolsby’s view, revenue per lawyer is the most important indicator of the firm’s success, and RPL at Locke Liddell advanced to $662,000 on average in 2005, up 6.4 percent from 2004. � Brenda Sapino Jeffreys MUNSCH, HARDT, KOPF & HARR Some two decades ago, six lawyers formed Dallas’ Munsch, Hardt, Kopf & Harr. The firm has consistently grown since then and continued to do so last year, adding six lawyers for a total head count of 104. Despite those increases to the attorney roster, however, the firm’s finances slipped slightly in 2005. Gross revenue fell from the previous year by 4.7 percent to $44.8 million. Munsch, Hardt also saw net income drop 11.6 percent to $14.5 million. Profits per partner dropped for a second year in a row. In 2005, PPP fell to $454,000, a 14.2 percent decrease from the previous year. Glenn B. Callison, the chairman and chief executive officer of the firm, says the declines reflect the firm’s “great year in 2004″ as well as the costs of hiring senior lateral partners in late 2004 to launch a Houston office. On Aug. 1, 2004, Munsch, Hardt merged with Houston’s Floyd, Jones, Rios & Wahrlich. Callison says the firm also added lateral partners to the Dallas office in 2005, who increased costs and took time to significantly impact the firm’s bottom line. He’s not worried about the initial disparities between cost increases and revenue declines. “We made a key investment and it will pay off,” Callison says. “Whenever you bring in someone at the senior level it takes some time to adjust.” The decline in revenue and income also could be attributable to a downturn in Munsch, Hardt’s bankruptcy practice, a trend driven by the improving economy in 2005, Callison says. Some deals last year generated significant revenue for the firm, he says. Specifically, he mentions a $1.2 billion restructuring of an electrical plant for client Banque BNP Paribas, and Dallas-based client Koll Development Co.’s acquisition of properties from Plano-based Electronic Data Systems Corp. � Miriam Rozen PORTER & HEDGES Corporate work and commercial litigation saw strong growth at Houston-based Porter & Hedges in 2005, resulting in healthy increases in gross revenue and net income. Last year, firm revenue reached $47.8 million, up 13.3 percent from 2004, and net income reached $20.3 million, up 18 percent from the previous year. The firm added two attorneys in 2005 for an increase of 2.5 percent and a total lawyer count of 81. Profits per partner grew by 7.8 percent to $580,000 and revenue per lawyer increased by 10.5 percent to $590,000. Corporate and securities and business litigation were the primary engines of growth in 2005, says managing partner William Porter. “Corporate originations were up almost 20 percent and department revenue was up almost 15 [percent],” Porter says. Litigation originations were up substantially, with business litigation alone up almost 30 percent for the year, he says. “I don’t think any of this is attributable to any single deal, client or case,” Porter says. The firm did absorb the nonrecurring expense of moving from its former offices in the Bank of America building to the new Reliant Center building in April, he says. “We also took a one-time hit from a contingent case that did not come out the way we wanted,” Porter says. Continued high energy prices are driving corporate and securities activities, says partner Richard Wynne, chairman of the firm’s corporate and securities group. Since the higher energy prices seem to be sustainable, people are investing in energy as a hedge to balance their portfolios, Wynne says. “In 2004 we saw the beginning of the turnaround in corporate and securities business, and that continued and accelerated in 2005,” Wynne says. Institutions and wealthy individuals are looking for alternative investments to the stock market, and they are finding private equity groups investing in various industries, including energy, which creates mergers and acquisitions work for the firm, he says. Revenue generated by the commercial litigation group was up about 40 percent in 2005 compared with the previous year, says partner David Burgert, who heads the litigation section. The activity was spread across all the firm’s commercial practices including intellectual property, traditional oil and gas, and contract disputes, Burgert says. “We saw good growth in each of those areas and are real pleased about that,” he says. � Jeanne Graham STRASBURGER & PRICE Law firms that traditionally focused on insurance defense � a practice area that has been bleeding for the past two years because of tort reform � have had to rethink the way they do business. Dallas’ Strasburger & Price is a good example. While the firm’s gross revenue went down slightly in 2005 compared to the previous year, the firm showed some signs of recovery. The firm brought in $73.9 million in gross revenue for 2005 � a 1 percent drop from the $74.3 million it made in 2004. “The business on the tort defense side is less than it’s previously been,” says managing partner Dan Butcher. “We’re growing the commercial side of the practice to offset that.” Several years ago, tort defense made up about half of the firm’s practice. These days it makes up less than 25 percent, Butcher says. He says the firm is focusing more on transactional work to boost its bottom line. “We’re very busy so far in ’06 and we’re looking for a good year. Adding some lateral partners on transactional and commercial side” helped, he says. Strasburger’s lawyer count in 2005 also was leaner than 2004. The firm had 163 lawyers in 2005, down from their 2004 total of 170 lawyers. “What I see is that probably as we’ve transitioned our practice, we’ve had some lawyers who’ve decided to go to boutique firms,” Butcher says. Lawyers at the firm made more in 2005 than they did in 2004, Butcher says. Revenue per lawyer for the firm was $454,000 in 2005, up 10.5 percent from $411,000 in 2004. “More revenue per attorney translates into more profits,” Butcher says. “That’s moving in the right direction.” � John Council SUSMAN GODFREY 2005 may have been Susman Godfrey’s second most profitable year in the firm’s 26-year history (gross revenue dropped from $202 million in 2004 to $168 million in 2005), but you won’t find managing partner Stephen Susman lamenting about the slide. “We had excellent luck in a couple of contingent-fee cases,” Susman says. “As a matter of fact, our contingent-fee business accounted for around 90 percent of the firm’s income.” Tops among last year’s big hits was a patent infringement suit filed by the firm on behalf of plaintiff MicroUnity System’s Engineering Inc. against Intel Corp., which resulted in a $300 million settlement, according to Intel’s Third Quarter 2005 report. “[The case] had only been pending for a year, and I never expected them to settle,” Susman says. “The stars were aligned correctly, and I was thrilled with the outcome.” The contingent fee certainly helped boost the firm’s bottom line. The numbers reflect a net income of $134 million, down 10.7 percent from the firm’s banner year in 2004 of $150 million. Despite the boutique litigation firm growing in lawyer strength from 60 attorneys in 2004 to 76 attorneys in 2005, Susman Godfrey busted the chart among the 25 highest-grossing Texas-based firms by hitting $2.2 million in the revenue per lawyer category. Even with its profits per partner down to $3.9 million from its 2004 high of $4.5 million, the firm led the 25 firms in this category as well. Patent infringement litigation remains a hot area for the firm, says Susman, who acknowledges at least two reasons for Susman Godfrey’s success in this practice area: “The wisdom of hiring general trial lawyers in a specialized field of law” and the firm being well situated geographically to “the hot place to file these cases � the Eastern District of Texas.” Other than patent infringement suits, most of the firm’s major cases are not pending in Texas due, in part, to tort reform, which “hit Texas bad,” he says, and forced the firm to file many of its plaintiffs cases in other jurisdictions. This has not been particularly problematic for the firm; on the contrary, contends Susman, it fits nicely into its business model, which pairs up lawyers from Susman Godfrey’s different branches � Houston, Dallas, Seattle, Los Angeles � to handle cases around the country. “That gives us great flexibility.” Susman hopes to gain even greater flexibility when he personally opens up Susman Godfrey’s New York office � a move announced by the firm in April. Susman says his partners have mixed emotions about him leaving Houston, but he is doing so for reasons more personal than professional. “I have three grandchildren in New York, and my stepdaughter is about to graduate from high school, and my wife and I will be empty nesters,” he says. “I am going to remain a Texas resident, but I will be spending a lot of time on the project. . . . I wanted a big challenge in the next 10 years, and New York seemed like the thing to do.” � Mark Donald THOMPSON & KNIGHT Thompson & Knight is reaping the benefits of three new offices, gimlet-eyed management and a domestic oil market that’s blowing and going. Profits per partner jumped 18.3 percent last year, to $671,000 in 2005 from $567,000 in 2004. The firm’s net income rose 17.1 percent, to $66.4 million from $56.7 million in 2004. Gross revenue increased 12.3 percent, to $172.2 million in 2005 from $153.4 million in 2004. This growth, says managing partner Peter J. Riley, results from “the fact that our strongest area [energy] was just hotter than a pistol” and the organizational fine-tuning the firm has done over the past three to four years. Thompson & Knight lawyers kept busy with domestic energy transactions and financings, with lawyers working more than in the past and handling what Riley describes as “lots of billion-dollar deals.” With one-third of the firm’s lawyers focusing on energy, the high price of oil combined with higher billing rates � the firm has focused on pushing them up since 2001 � and more hours boosted the bottom line. Also, Riley says, the trial practice “went crazy” for three quarters in 2005 before falling off in the fourth, with attorneys working mostly on Sarbanes-Oxley-related audit committee issues. In addition to lucrative practice areas, the other part of Thompson & Knight’s numbers story is internal streamlining, with moves from a few years back paying dividends now. Three years ago the firm reduced staff by about 10 percent, and Riley says it took some time to manage the new staff properly, while T&K was opening offices. Several years ago, the firm hired a new chief operating officer from Skadden Arps Slate Meagher & Flom, and Riley says she has “kind of touched everything.” Plus, the firm is pushing partner accountability, shifting from a culture that tolerated differing levels of commitment from partners to one in which “everybody is kind of rowing in the boat at the same speed,” says Riley. The new offices the firm opened in 2005 mean more lawyers to help row. Total lawyers rose 3.8 percent, to 332 in 2005 from 320 in 2004. While the number of equity partners dropped by 1 percent, to 99 from 100, the number of non-equity partners rose by 23.4 percent, to 75 from 61. Part of the reason is the laterals who came in when the firm opened new offices: New York and Mexico City both opened Feb. 1, 2005, and London opened June 15, 2005. Riley says the firm brings new partners in as non-equity partners, who then become equity partners at the end of the year. Opening offices in expensive cities could account for the 39 percent jump in the firm’s compensation to non-equity partners. But as a result of being in these offices, Riley says, the firm is getting work with a higher profit margin. He says the New York office opened with partners from Sherman & Sterling and Coudert Brothers who wanted to work in a firm with an established South American practice. The new partners’ established practices combined with the firm’s existing client base in South America to help launch the new office. Even though the firm’s big story last year was in the domestic energy market, the international energy business continued to be good to Thompson & Knight. Riley says the firm did its biggest international deal in Angola, an $8 billion LNG (liquefied natural gas) project for which the firm billed about $3 million. He says the firm continues to represent five government-owned oil companies, in addition to picking up as clients two Chinese government-owned oil companies: PetroChina Co. Ltd. and Sinopec Corp. Dallas partner Andrew B. Derman says Thompson & Knight represents Sinopec, which is primarily a refining company, both in Brazil and Algeria. Riley says he’s seeing synergies in these representations: Often, when one government-owned oil company can’t do a deal, it will refer the project to another national oil company instead of a private energy business. Back in the states, Thompson & Knight worked on a billion-dollar spin-off of producing energy assets. Houston partner Dallas Parker says that Calpine Corp. formed new operating subsidiaries, transferred its domestic oil and gas businesses to the subsidiaries, and then formed Rosetta Resources Inc. to raise funds to buy those subsidiaries. Rosetta, he adds, sold its outstanding equity in a private offering for $800 million, then used those funds and debt to pay Calpine $1.05 billion for the subsidiaries, part of which went to pay the expenses of the transaction. Thompson & Knight represented the parent company and subsidiary � Calpine and Rosetta � in that deal, Parker says, and adds that Calpine also was represented by in-house attorneys and other outside lawyers and advisers. � Anne K. McMillan VINSON & ELKINS Impressive financial results at Vinson & Elkins in 2005, following a strong 2004, suggest the firm has solidly recovered from a minor hiccup in 2003, when its gross revenue slipped slightly for the first time in more than a decade. In 2005, gross revenue at Houston-based V&E improved by more than 12 percent, increasing to $510.2 million, compared to $454.9 million in 2004. Net income jumped by more than 20 percent, to $244.1 million in 2005, compared to $202.5 million in 2004. Joseph Dilg, the firm’s managing partner, says V&E’s financial success in 2005 reflects the strength of the energy business. He says the firm’s capital markets practice was strong in 2005, throughout the firm’s offices, which stretch from Texas to New York, London, Moscow, Dubai in the United Arab Emirates and Shanghai in China. Transactional lawyers at V&E were so busy in 2005 that T. Mark Kelly, a Houston partner who is co-head of the firm’s corporate finance and securities section, was concerned about overworking them. “I was worried about killing my people, but it was a heck of a year,” Kelly says. He says the firm’s client base includes a great cross-section of public energy companies, and that helps keep the work rolling in. “The energy sector was very active. Oil prices closed in the high $60s yesterday [in April] and prices at the pump continue to increase. . . . You see a lot of activity, both in the mergers-and-acquisitions and finance areas, for the energy companies,” Kelly says. The firm benefits from a close relationship with several major investment banks and private equity companies, and does a lot of work for master limited partnerships, he says. Also, the firm’s lawyers represented the issuers in nine initial public offerings in 2005, including the largest U.S. IPO of the year, Salt Lake City’s Huntsman Corp.’s $1.4 billion offering. The litigation side of the firm wasn’t quite as busy as the transactional side in 2005, says Robert Walters, a litigation partner who manages the firm’s Dallas office. “It was just a solid year. I didn’t consider it to be an extraordinary year,” says Walters. He says the firm handled a number of securities suits, patent suits and substantial class actions in the insurance arena. Lawyers also put in hours on the defense side in accounting and legal professional liability suits, he says. Partner Robert Schick, a co-head of litigation in Houston, says the firm’s mass tort docket has stayed constant over the past five years, but he has noticed an uptick in commercial and securities suits. In the torts area, the firm represents Purdue Pharma L.P. of Stamford, Conn., in litigation filed over the prescription pain killer OxyContin, and continues to represent Bridgestone/Firestone Inc. in tire litigation, and Wyeth of Madison, N.J., in litigation filed over the diet-drug combination fen-phen. The firm intentionally shrank a bit during 2005, Dilg says, due to a smaller class of law students during the summer of 2004. Dilg expects head count to increase in 2006, primarily because the transactional areas are so busy. He says the firm’s London office was particularly busy in 2005. The firm did bump up billing rates in 2005 “in accordance with the market.” V&E associates got an extra year-end bonus of up to $10,000 because of the great financial results in 2005. Revenue per lawyer was up by 15 percent at V&E in 2005, and profits per partner improved by 19.5 percent, even though the number of equity partners, 228, was virtually unchanged from 2004. The number of non-equity partners declined slightly in 2005, dropping to 58, compared to 66 in 2004. � Brenda Sapino Jeffreys WINSTEAD SECHREST & MINICK Winstead Sechrest & Minick had a good year in 2005, despite some struggles with collections as the year wound down, says W. Mike Baggett, the firm’s chairman and chief executive officer. “It was a good year. We did not collect as well in the fourth quarter as we normally do,” he says. But because of that, collections during the first quarter of 2006 were significantly higher than the year before, and 2006 results will reflect that, Baggett says. Gross revenue at Winstead came in at $143.1 million in 2005, up 2.1 percent from 2004′s $140.1 million. Net income, which is compensation to equity shareholders, declined by 8.5 percent to $49.8 million in 2005, compared to $54.4 million the year before. But that decline reflects a reduction in the number of equity shareholders in the firm � the firm had 94 equity shareholders as of Aug. 31, 2005, compared to 108 the year before. On the same date, the firm had 62 non-equity shareholders, compared to 52 the year before. For the most part, Baggett says, the number of equity shareholders declined when several moved to non-equity or of counsel status in 2005 because they reached retirement age or scaled down their practices. “We don’t have mandatory retirement, but what we will do is, when they get older and less active in their practice, we will reclassify them,” Baggett says. Revenue per lawyer was $518,000 in 2005, up 3.6 percent from 2004, and profits per partner were $530,000 in 2005, up 5.2 percent from the previous year. The firm held its ground and is virtually the same size as in 2004. Baggett says Winstead’s national real estate practice is booming, particularly a “niche” practice the firm has developed representing lenders who participate in funds that invest in commercial real estate. “That is hot as a pistol,” he says. Financial institutions and real estate work are big business for Winstead, Baggett says, noting the firm does transactional, workout and litigation matters for clients in those areas. All of that was busy in 2005, he says. Litigation was solid during the year, he says, although the firm didn’t rack up any huge contingent fees in 2005 to pump up the bottom line. � Brenda Sapino Jeffreys

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