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When Steve Cozen founded his two-attorney insurance litigation boutique in 1971, the last thing on his mind was profits per partner, gross revenue and revenue per lawyer. But 30 years later, Cozen’s firm has arrived on the national stage by finally cracking the Am Law 100, The American Lawyer‘s annual study of the country’s 100 highest-grossing law firms. In addition to Cozen O’Connor’s entry, this year’s edition includes major leaps in partner profitability and gross revenue for Dechert and Reed Smith, a rough year for Buchanan Ingersoll on both counts, another poor showing for Philadelphia firms in pro bono rankings and Pepper Hamilton’s departure from the Am Law 100 after years as a mainstay. Philadelphia-based firms on the list — which ranks firms by gross revenue — include Morgan Lewis & Bockius (9), Dechert (41), Blank Rome Comisky & McCauley (85), Duane Morris (86), and Cozen O’Connor (97). Pittsburgh-based firms with large Philadelphia offices that are on the list include Reed Smith (58) and Buchanan Ingersoll (91). Seven other Philadelphia firms — Pepper Hamilton (103), Ballard Spahr Andrews & Ingersoll (109), Drinker Biddle & Reath (113), Schnader Harrison Segal & Lewis (130), Wolf, Block, Schorr and Solis-Cohen (147), Saul Ewing (181) and Fox, Rothschild, O’Brien & Frankel (189) — will be included in the Am Law 200, a list of the firms ranked 101 to 200 in gross revenue. That information is published in August. The magazine said that with a backdrop of recession and war, it might be difficult to believe that the average Am Law 100 firm posted a 13 percent increase in gross revenue during 2001. The main reason for this increase is the 11 percent increase in lawyer head count — the biggest single-year percentage boost in head count since the survey’s inception in 1985. The increased head count, combined with booming countercyclical practices such as bankruptcy and litigation, allowed Am Law 100 firms to take in a record $35 billion this year. The only problem, the magazine said, was that individual lawyers didn’t bring in much more money than they did in previous years. Revenue per lawyer, which grew by an average of 6.4 percent over the course of the previous five years, increased by a paltry 0.5 percent in 2001. In fact, 22 Am Law firms experienced declines in revenue per lawyer last year, which the magazine attributed to a slowdown in corporate work coupled with the head count increase leading to associates with “a lot of free time.” Cozen’s first appearance on the list in many ways signifies the culmination of a plan hatched by Steve Cozen and Patrick O’Connor a decade ago, when the firm had roughly 100 lawyers — virtually all of whom were litigators. The two firm patriarchs decided they wanted to build a large, full-service firm and spent most of the 1990s reeling in transactional-focused lateral hires from rival Philadelphia firms. The firm now has 440 lawyers and has put itself on the map in practice areas such as business and finance, bankruptcy, real estate, labor and employment and, most recently, intellectual property. “What I’m even more proud of [than making the Am Law 100] is that, if you look at the past five years, we’ve kicked back $40 million in supplemental pay and bonuses to our partners,” Cozen said. “When I look back at it, I just think I’ve been lucky to be surrounded by fabulous people who were like-minded — who shared the same vision as me. Pat O’Connor is like a brother to me, but there were so many others who just said, ‘Let’s go for it.’” Cozen O’Connor’s gross revenue increased by a whopping 26.5 percent, but the firm’s profits per equity partner decreased by 1.2 percent, something Cozen thinks is deceptive because the firm had more partners sharing in the profit pie this year due to all of its additions. Morgan Lewis held on to its ranking as the ninth-highest-grossing firm in the nation on the strength of an 11.4 percent increase in gross revenue. But following a year where the firm celebrated a 40 percent increase in profits per partner, Morgan Lewis had a more modest 5 percent increase in 2001. In 2001, the firm suffered through a year in which it laid off 50 associates and saw its late-1990s boom venture capital practice fall on hard times. Firm chairman Fran Milone was traveling and unavailable for comment on the firm’s solid Am Law showing. Dechert had a tremendous year financially, increasing its gross revenue from $285.5 million to $344 million, a 20.5 percent jump. The news was even better on the profits-per-equity-partner side, as the firm increased from $645,000 to $765,000, an 18.6 percent increase that constituted a rise in the rankings from 58 to 36 nationally in that category. Barton Winokur, Dechert’s chairman, attributed the strong financial year to boffo results in the firm’s mass tort litigation practice, which includes work for several new national clients as well as old standards such as Philip Morris. He said the firm also added several lateral partners and was better leveraged in the partner-associate ratio because of an influx in entry-level and lateral associates. Buoyed by its merger with 100-attorney London firm Warmer Cranston, Reed Smith shot up the gross revenue chart, moving from 76 to 58. The 27 percent increase is largely attributable to the merger, but firm chairman Gregory Jordan — who authorized the firm to cooperate with Am Law reporters for the firm time since the survey began — said he believes the firm also benefited from not investing too much into the venture capital world and a switch from geographic- to practice-based management. Reed Smith also saw its PPP increase by 27 percent, but because that number was a lowly $335,000 in 2000, the firm had nowhere to go but up. Even now, the firm’s $400,000 figure was only good enough for 93 in that category. Jordan said the firm is looking for 15 to 20 percent increases in revenues and partner profits this year. In its second year on the list, Blank Rome enjoyed a 10.7 percent increase in gross revenue and a modest 4.8 percent rise in profits per partner — both being good for an 85 ranking in their respective categories. Only $500,000 in gross revenue separated Blank Rome from the firm ranked 86 on the list — Duane Morris. The firm, which has seen its gross revenue skyrocket from $82.5 million in 1998 to $181 million in 2001, had a respectable 15.7 percent increase. And while the firm increased its profits per partner from $390,000 to $430,000, it actually fell seven spots to 88. Duane Morris Chairman Sheldon Bonovitz said he was pleased partner profits increased by 10 percent during a tough economic year, but he believes if the firm did not incur costs for funding its growth, it would have added $30,000 to its PPP number. Buchanan Ingersoll suffered through the third-highest dip in gross revenue of any Am Law firm, falling 3.3 percent in 2001 — only a year removed from a 38 percent increase. Similarly, the firm endured a drastic 27 percent decline in PPP ($515,000 to $375,000) a year after it experienced a 38 percent increase. William Newlin, Buchanan Ingersoll’s chairman, attributed the financial falloff to one-time costs such as the London office being far below projections, the fact that the firm’s New York office was located near Ground Zero and was greatly affected by Sept. 11 and the recessionary impact on the firm’s corporate practice. Though he did not mention it, one could also surmise that the firm was also affected by several departures, most specifically the 30-attorney Princeton-based corporate group that defected to Boston’s Hale & Dorr in January 2001. Philadelphia firms made modest gains in pro bono rankings, but as a whole, the city’s numbers were not impressive. Last year, Blank Rome and Duane Morris had the dubious distinction of finishing last and second to last among the Am Law 200. Blank Rome moved out of the cellar but still finished a dismal 170 out of the 172 firms that offered up numbers. The firm averaged 4.6 hours of pro bono work per attorney, which is an improvement over the prior year’s 0.92 hours per attorney. Duane Morris saw its numbers increase from 4 hours to 6 hours per lawyer, but finished 164. The firm finished ahead of Saul Ewing, which did not respond to pro bono inquires for 2000 but finished 165 this year. Just like last year, Schnader Harrison was tops in pro bono for Philadelphia firms and was the only local firm to exceed the American Bar Association recommended number of 50 hours of annual pro bono work per lawyer. Schnader finished with 54.74 hours per attorney and a national ranking of 30 out of 172. Ballard Spahr finished second locally, with a national ranking of 43. Pro bono scores are determined through two factors: two-thirds from the average number of pro bono hours per lawyer and a third from the percentage of lawyers with 20 or more hours of pro bono work. Bonovitz does not believe the Am Law pro bono scoring system is an accurate reflection of a law firm’s philanthropic endeavors in its community. “I really don’t think it’s an accurate measure of community involvement,” Bonovitz said. “It just winds up putting pressure on lawyers to do what they otherwise might not do — all so the firm’s Am Law score increases. It’s really just one measure of a firm’s entire contribution to its community. We do a lot more for our communities than what lies within the Am Law’s definition of pro bono.” Related charts: Philadelphia Firms’ Revenue History Philadelphia Firms’ Pro Bono Hours

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