Saul Ewing Arnstein & Lehr in Miami.

In its first full year after a major merger, Saul Ewing Arnstein & Lehr posted increases in both revenue per lawyer (RPL) and profits per equity partner (PEP), beating firm leadership’s expectations.

The firm saw gross revenue increase by 3.6 percent, to $227.3 million. But RPL climbed by 6.5 percent to $623,000, recovering from a dip in 2017, when head count grew by nearly 50 percent.

Saul Ewing announced in September 2017 that it had merged with Arnstein & Lehr, adding more than 100 lawyers in Chicago and Florida to the Philadelphia-based Am Law 200 firm.

According to managing partner Barry Levin, Saul Ewing beat its budget by 18 percent in 2018. “It was a great year,” he said.

PEP increased by 8.5 percent to $602,000 in 2018, also surpassing 2016 levels after a slide in 2017. Net income, at $70.9 million, showed a 9.5 percent increase.

With a head count of 365, Saul Ewing had 10 fewer lawyers in 2018 than in 2017, showing a decrease of 2.7 percent. Much of the contraction came in the nonequity partner tier, which shrank by six, to 84 nonequity partners. The number of nonpartner lawyers decreased as well, while the equity partner tier grew by one.

“On the heels of a merger, it’s not unusual to have some consolidation,” Levin said. Some of the lawyers who left the firm retired, he said, and some went in-house with clients. According to Levin, there was just one lawyer who cited the merger as a reason for leaving, but that person departed in 2017.

Certain practices were especially strong, including higher education and insurance, Levin said, as well as litigation in general, and real estate. The higher education group, he said, “is one of our top revenue drivers in the firm.” That work includes litigation and regulatory counseling, with some of the firm’s larger clients based in Pennsylvania, he said.

Other significant litigation work included representing Castle Hill Gaming in a trademark case in Oklahoma, and representing Delta Chemical Corp. in a multidistrict litigation, Levin said. Real estate engagements included work in New Jersey and Florida for Property Markets Group, as well as Drexel University’s Schuylkill Yards project. And the firm handled a bankruptcy case for Singapore-based Ezra Holdings.

Saul Ewing raised rates “modestly” in 2018, Levin said, noting that its hourly rate remains competitive. But the firm has also aimed to emphasize its project management team, he said, which is increasingly involved in client relationships—Steven Flaks, Saul Ewing’s director of pricing and project management, often attends client meetings, he said.

“It’s absolutely a significant part of our business model now,” Levin said. While the “vast majority of work is still billed hourly,” he said, “more billing is tied to budgets.”

The focus on efficiency has resulted in better realization, he said, which was “well into the 90s” in 2018.

Another major focus for 2018, Levin said, was continuing to integrate lawyers throughout the firm, which added on large groups in Chicago and Florida in September 2017. The firm also prepared for an entrance to the Minneapolis market, which came to fruition this year.

From a financial perspective, that integration has involved evening out compensation. After two partner compensation cycles, Levin said, the firm has now integrated the two bands of partner pay that had existed between the two firms pre-merger.

“Having a productive, strong year makes that easier,” he said.

The firm is still working on “harmonizing” associate salaries, Levin said, which is part of why Saul Ewing did not implement firmwide associate raises after other large firms did so starting last summer.

As for its plans for the rest of 2019, Levin said the firm will aim to grow within its current footprint. He said he has noticed increased interest from lawyers seeking to join Saul Ewing since the 2017 merger.

But no additional mergers are on the immediate horizon, he said.

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