Covington & Burling crossed the $1 billion mark in revenue for the first time in 2018, boosting its top line by more than $170 million and enjoying a second straight year of $100 million-plus revenue growth.
Gross revenue increased 18.1 percent last year to nearly $1.12 billion, according to ALM reporting. Revenue per lawyer and partner profits both saw notable upticks even as the total lawyer head count at the firm grew by 79, including 14 more equity partners than in 2017. Revenue per lawyer increased $91,000, approximately 9.1 percent, in 2018, and profits per equity partner grew by $191,000, or 12.1 percent.
Covington has grown both revenue and head count aggressively since Timothy Hester became chair in 2008. That year, Covington recorded gross annual revenues of $467 million and had 662 total lawyers, according to ALM data. Ten years later, annual revenues have more than doubled and the firm is home to more than 1,000 lawyers.
“At the start of 2008, when I became chair, we thought we needed to grow—both to have larger scale in our offices and in our practices,” Hester said. “We also thought we needed to expand geographically. So what we’ve achieved over the past 10 or 11, 12 years is, we think, a real, fundamental shift in the firm’s competitive position that is reflected in these numbers.”
He added, “We did not lay off people during the recession, we continued to grow during the recession, which is different from what a lot of firms did. We continued to make new classes of partners. A lot of the partners we promoted in 2008, 2009, 2010 are the ones who are driving practices for us [now].”
Last year was, Hester said, “by far and away our best financial results our law firm has ever had.”
Hester said the firm’s strong financial performance was driven broadly across the firm’s offices and its corporate, litigation, white-collar and investigations, and regulatory and policy practices.
Alongside its work in the U.S., Hester pointed to Covington’s presence in China and Europe. The firm also has a growing presence in Africa and the Middle East, with offices opening in Johannesburg and Dubai, United Arab Emirates, in the past two years. Hester said the firm is not presently looking at opening additional offices.
On the transactional front in 2018, Covington advised Bacardi Ltd. in its $5 billion acquisition of Patrón Tequila, guided Merck’s €2.1 billion acquisition of Antelliq, and advised Illumina Inc. in its $1.2 billion acquisition of Pacific Biosciences.
Covington lawyers and lobbyists also had their hands full assisting Qualcomm Inc., particularly in fending off a hostile takeover attempt from Broadcom that involved the engagement of the Committee on Foreign Investment in the United States. Covington scored another victory via CFIUS when the committee cleared the way for client Genworth Financial’s $2.7 billion acquisition of China Oceanwide Holdings Group Co.
Covington’s white-collar and investigations team continues to be found near the center of some of corporate America’s white-hot controversies. CBS Corp. enlisted Covington, alongside Debevoise & Plimpton, in investigating Les Moonves, the former CBS CEO who resigned amid sexual harassment claims. (Moonves has subsequently locked horns with CBS over his desired $120 million severance package.)
Hester also touted the firm’s handling of a policy assessment for Starbucks regarding issues of civil rights, equity, diversity and inclusion. Former U.S. Attorney General Eric Holder, now a partner at Covington, led the Starbucks inquiry.
Holder’s work at Covington in 2018 made headlines not only because of his work, but because he became the target of a violent would-be bomber. Covington’s D.C. office was the intended recipient of an improvised explosive device aimed at Holder last year.
“The package never made its way into our space, it was intercepted in the mail services of the government before it ever got to us,” Hester said. “We’re obviously vigilant about these issues and we have a number of high-profile people who work here and so we always have to be thoughtful about it, but it really didn’t change any of our processes.”
The episode didn’t appear to stop a number of laterals of varying practices and political stripes from joining the firm. Broderick Johnson, former assistant to President Barack Obama and cabinet secretary in the Obama administration, joined the firm as of counsel in January 2019.
Former Arizona Sen. Jon Kyl stepped away from Covington to briefly replace the late Sen. John McCain and then returned to Covington last month. Kyl served as the lead sherpa for Justice Brett Kavanaugh’s confirmation to the U.S. Supreme Court, ushering Trump’s pick to replace now-retired Justice Anthony Kennedy through meetings with U.S. Senators. He then joined the Senate to fill McCain’s seat until the end of 2018, and is now of counsel again at Covington.
Elsewhere, Covington celebrated 10 years in Silicon Valley last year and moved into new offices in Palo Alto, California. Thus far this year, the firm has poached a pair of prominent Californian lawyers: William Stern, a class action lawyer formerly of Morrison & Foerster, and Denny Kwon, a lawyer specializing in mergers and acquisitions with a decade of experience at Wilson Sonsini Goodrich & Rosati. Both Stern and Kwon work from Covington’s San Francisco office, which is approximately 20 years old.
Hester also pointed to the additions of Terrell McSweeny, who was a Federal Trade Commission commissioner until April before joining Covington, and Trisha Anderson, previously FBI principal deputy general counsel who returned to Covington in the fall, as points of pride.
Hester said the firm has taken “surgical steps” to add laterals in targeted areas and, “We’re not on a path of a merger.”
“We like to set our own destiny, and we’re very focused on this independent path that we’re on and we think it’s been succeeding,” Hester said. “I think when we look at the financial results … we see them as confirming that we’re on the right strategic path and that we’re doing the right things to have a valuable offering for our clients that delivers a lot of important service.”