Richmond, Virginia-based McGuireWoods’ total revenue jumped more than $100 million last year, and profits per equity partner leapt 33 percent despite a growing equity partnership.
Revenues grew more than 14 percent, according to preliminary ALM reporting, with gross annual revenue passing $817 million and revenue per lawyer climbing above $800,000. Profits per equity partner jumped to $1.36 million from $1.02 million, as the firm grew its equity partnership by more than 7 percent and shrank its nonequity ranks.
While the firm reported four fewer total partners overall for 2018, it said it added 14 equity partners last year.
McGuireWoods ranked 54th in last year’s Am Law Law 100 rankings, based on its 2017 revenues.
Tracy Walker, McGuireWoods’ managing partner, did not attribute the growth to any single development but noted that productivity increased in the firm’s transactional, litigation and regulatory teams. He described the firm’s rates as rising “modestly.”
“Like everyone, we benefited from a strong economy, an increased demand,” Walker said. “I really wish I had a sexier story to tell you, but the real driver for us was our long-term investment in our people and in our firm.”
Walker pointed to the firm’s offices in Dallas, Los Angeles, Pittsburgh and Raleigh, North Carolina, as strong performers in the preceding year. He said its long-standing investments in laterals, firm technology and innovation and its government affairs arm all led to the profit growth. The firm’s private equity team and litigation teams enjoyed a particularly strong 2018, he said.
McGuireWoods saw significant business on the transactional front, particularly from Dominion Energy’s $13.4 billion merger with SCANA Corp. and in representing Park Sterling Corp. in a $691 million stock-for-stock merger that produced work throughout the 2018 calendar year.
Turning to a pair of (so-far) symbolic victories in hot-button cases, Walker also cited the firm’s efforts to secure a $500 million judgment for the family of Otto Warmbier against the government of North Korea as work he was particularly proud of. He also touted associate Betsy Hutson’s “landmark” $8 million federal human-trafficking verdict in Kansas federal court.
Walker’s calling attention to the work of an associate comes amid a decision by the firm not to jump to join the associate salary arms race last summer. McGuireWoods decided to take a “go-slow approach” to associate salaries, Walker said, adding that he thought media attention to the associate salaries was “something of a tempest in a teapot.”
“We’ve made a number of adjustments to our comp system that are becoming effective in 2019, and both our salary and our bonus structure will be consistent and is consistent with our peer firms in all the markets that we serve,” Walker said. “And in the large city markets [it] is largely on a scale with or just incrementally behind the Cravath scale for our best performing associates.”
Walker said the firm wants to compensate its associates well, and he said he anticipated lateral hiring would increase at McGuireWoods in 2019 as well. In the lateral front, he cited the addition of three IP partners in New York and the addition of debt finance partner Chris Molen in Atlanta as models for future investment. McGuireWoods’ private equity practice is also a target for growth in 2019, he said, alongside the debt finance team Molen has just joined.
Walker didn’t pinpoint specific cities for future expansion, except to say that the firm would be looking outside Richmond and Charlotte, North Carolina, where many of the firms’ lawyers are already concentrated. He cited Atlanta, Georgia, California, Washington, D.C., New York and Texas as potential areas of head count growth.
As for whether the firm in entertaining merger offers or considering acquiring another firm, Walker suggested only time will tell. “Because number one, we’re still considering some things and number two, a lot of those things end up being opportunistic,” he said.
McGuireWoods is a little more than one year into the tenure of its current leadership group, led by chairman Jon Harmon and Walker. Harmon is the first minority ethnicity chairman of McGuireWoods and still appears to be the only African American leader of an Am Law 100 firm.
Walker said the firm is dedicated to fostering diversity and inclusion in its ranks and developing young lawyers. He noted that more than half of this year’s partnership class at McGuireWoods were women.