Ballard Spahr saw significant gross revenue growth in the year following the biggest merger in its history, while profits per equity partner (PEP) took a slight hit in the midst of integration.
The Philadelphia-based firm saw gross revenue increase by 17.4 percent, to $414.88 million in 2018, up from $353.34 million in 2017. Revenue per lawyer was roughly flat, increasing by 0.6 percent, to $689,000.
PEP was down 2.8 percent from 2017 to 2018, dipping to $620,000. But net income was up 16.7 percent, to $162.98 million.
Ballard Spahr chairman Mark Stewart said the 2018 PEP was still the second best the firm has seen. “This is part of the process,” he said, of “trying to create a foundation to compete.”
The firm made its merger with Minneapolis-based Lindquist & Vennum official at the start of 2018. Just a couple months before, in the fall of 2017, it had acquired media law boutique Levine Sullivan Koch & Schulz.
Integrating all those lawyers was “the biggest thing we’ve ever undertaken,” Stewart said.
The firm’s total head count, on a full-time equivalent basis, went from 516 in 2017 to 602 last year. Its equity partnership grew by 20.1 percent, to 263 partners. Ballard Spahr doesn’t have a nonequity tier.
Among strong practices in 2018 were intellectual property litigation, the firm’s Chancery practice in Delaware, and finance practices including public finance, transactional finance and real estate finance, Stewart said.
Bankruptcy continued to be weaker, he said, and litigation “felt a little slowdown” as some big matters resolved.
Courting the Midmarket
The entrance into Minneapolis was aimed at strengthening the corporate practice and increasing contact with midmarket clients, Stewart said. Those clients, he noted, “are more reliant on their lawyers,” because they don’t have large in-house legal departments.
“It’s a lucrative place for us,” and one in which Ballard Spahr’s rate structure fits well, he said.
Ballard Spahr did raise rates by an average of 3 percent across the firm, he said. And the Lindquist & Vennum lawyers’ rate structures have been adjusted gradually over time to be more in-line with the rest of the firm’s business, he said.
But Stewart said the firm has been aiming to increase its revenue without constant rate increases, looking to improved project management as way to achieve that. “That’s working,” he said, noting increases in the firm’s realization rate over recent years.
About 17 percent of the firm’s work is handled under alternative fee arrangements, he said. And the firm’s chief client value officer, Melissa Prince, whose role was made official at the beginning of last year, has become increasingly involved in customizing those arrangements.
Prince’s office used to be a fairly quiet place, Stewart said, but “now it’s Grand Central Station” as lawyers within the firm increasingly seek Prince’s help in customizing aspects of their client relationships.
The firm started this year with several other lateral acquisitions as well. Ballard Spahr took a federal lobbying group from Nossaman in Washington, D.C., after long seeking to add federal lobbying capabilities. And it brought on commercial and intellectual property litigator Aliza Karetnick from Duane Morris as a partner in Philadelphia.
The firm also saw cybercrime prosecutor Edward McAndrew leave for DLA Piper last month. And earlier this year, project finance co-leader Tom Hoffman left for Foley & Lardner, while labor and employment partner Daniel Johns headed to Cozen O’Connor.
In 2019, the firm will look to rebuild its cyber practice, which is in progress, Stewart said.
It will also continue to focus efforts on improving project management, and may eventually seek to grow in the Florida and Texas legal markets, he said.
Asked whether any more mergers might be on the table, Stewart said, “if it’s in the best interests of the firm.”
However, he added, “If you ask our partners, they’d say let’s focus on making what we’ve got a 100 percent success.”