Latham & Watkins last year became the world’s first law firm to exceed $3 billion in annual revenue, setting a new benchmark for the industry and erecting a new challenge for other firms looking to take Latham’s place at the top of the Am Law 100.
The global giant boosted its revenue by 8.5 percent to $3.064 billion in 2017, while profits per partner grew 6 percent to $3.25 million, according to preliminary ALM data. The results come on the heels of a strong 2016, when revenue rose 6.5 percent and PPP grew 5.3 percent.
Latham’s revenue growth was supported by a nearly 7 percent surge in attorney head count last year. The number of lawyers at the firm rose to 2,436, and revenue per lawyer inched up 1.5 percent to $1.258 million.
The firm’s equity partner ranks grew by 2.6 percent to 477, helped in part by 34 lateral partner hires over the course of the year.
LeeAnn Black, the firm’s chief operating officer, said she plans to talk at an upcoming Latham partners’ meeting about how the firm accomplished its “1-2-3” punch of reaching the $1 billion revenue mark in 2003, the $2 billion mark in 2007, and now the $3 billion mark.
“It was a lot of strategic thought and effort and execution to actually get all the pieces in place,” Black said in an interview. “And now we have this wonderful opportunity in front of us to take advantage of it, and we’re starting to see significant benefits.”
London-based vice chair Richard Trobman agreed that the firm was poised to keep building on its recent growth: “We’re convinced that we’ve only begun to benefit from all the investment that we’ve put in over the years,” he said.
The American Lawyer has not yet reported 2017 financial results for Kirkland & Ellis, which occupied the No. 2 spot in the Am Law 100 rankings last year. In order for Chicago-founded Kirkland to top the $3 billion revenue mark, it would need to grow its top line by about 13 percent from 2016.
‘One Stop’ for Talent
On its path to breaking revenue records, Latham has invested heavily in the global lateral market over the past decade, competing for top legal talent in the largest legal centers: New York, Washington, D.C., Silicon Valley and San Francisco, London and Germany.
2017 was no different in that regard.
Among other high-profile lateral hires, Latham brought on former DLA Piper senior partner Juan Picon in Madrid; former Wilson Sonsini Goodrich & Rosati co-managing partner John “Jack” Sheridan in San Francisco; former Quinn Emanuel Urquhart & Sullivan litigator Martin Davies in London; and, also in London, former Quinn Emanuel financial regulatory head David Berman.
The firm also focused on building its trial and disputes practice, hiring 18 laterals in that group last year. Those included former Kirkland & Ellis partners Andrew Clubok in Washington, D.C., and Elizabeth Deeley in San Francisco. Thomas Nolan joined from Skadden, Arps, Slate, Meagher & Flom in Los Angeles, where Joshua Hamilton also came over from Paul Hastings.
The additions are increasingly paying off, Trobman and Black said, as Latham’s clients have turned to the firm for a larger share of their global legal needs.
The firm’s 25 largest clients, for instance, have engaged Latham lawyers from an average of 21 of Latham’s 31 offices, the firm said. Its top 50 clients have engaged lawyers from an average of 19 offices.
While some corners of the legal market are concerned by client efforts to disaggregate legal services, Trobman said Latham believes the firm’s clients want one law firm to provide a well-rounded range of practices.
“Given their choice, our view is that most clients and our clients would prefer to have one stop,” Trobman said. “The problem for most of those clients is finding a firm, finding somebody, that can actually deliver that consistency of quality across the entire platform.”
Latham’s transactional practices saw healthy growth last year, with the firm’s M&A, capital markets and banking groups each growing more than 25 percent from the previous year.
Latham’s capital markets practice, for instance, advised on more than 790 debt and equity capital markets transactions, helping clients raise more than $496 billion globally. That was good enough to top numerous deal tables put together by Bloomberg and Thomson Reuters.
“There was a lot of apprehension coming into 2017 because of Brexit, and throughout the year we saw the concerns around tax reform,” Black said. “But the way it has played out has been just a fabulous year for the transactional market. And going forward we see that companies have a significant amount of cash on hand, and the market is primed for a big financial year. We feel quite strong about 2018.”
The firm also says 100 percent of its U.S. lawyers and 83 percent of the lawyers in Europe, the Middle East and Asia worked on pro bono matters last year, totaling more than 236,000 hours valued at more than $180 million.
Trobman said the firm would continue to recruit partners in major markets where it has already brought in talent from major law firms.
“We’re looking to build on our successful 2017 and have an even more successful 2018,” Trobman said. “We’re not complacent. We’re going to continue to invest in our platform. We’ll continue to focus and deliver sustained, profitable growth.”