The mid-size law firm Holland & Hart posted declines in revenue, profits and head count in 2018 as it lost 16 partners in a hot lateral market.
The firm’s gross revenue dropped 5.1 percent, from $249 million to $236.2 million as net income saw an 8.5 percent decline, from $96.5 million to $88.3 million. Profits per equity partner decreased by 3.1 percent, from $445,000 to $431,000.
The firm’s head count also fell by 8.8 percent—from 443 attorneys to 404.
Despite the numbers, Holland & Hart firm chair Liz Sharrer said the year was a good one for the firm. She noted that revenue per lawyer rose 4.1 percent, from $562,000 to $585,000.
“We’re actually happy with 2018,” Sharrer said. “Our lawyers were very busy and did a lot of work.”
The firm’s patent practice saw a 20 percent increase in revenue year over year, she said. And for 2019, the practice is on track for another 25 percent increase, she said.
The firm’s energy practice, an area where the mid-sized Colorado-based firm first made its name, is also performing well, according to Sharrer. Not only is the firm advising in the oil, gas and mining space, but Holland & Hart’s renewables practice is increasingly landing work, she said. Additionally, the firm’s corporate and M&A practice saw $3 billion in transactions last year, said Sharrer.
The active lateral market did take a toll on the firm, however. And retirements also had an impact.
Holland & Hart saw two major groups leave for Dorsey & Whitney: A group of ten intellectual property partners left in February, and a seven-lawyer corporate transactions team left in September. Polsinelli picked up three former Holland & Hart partners in Colorado early in the year, and Las Vegas office managing partner Patrick Reilly joined Brownstein Hyatt Farber Schreck.
The firm added only one lateral partner—former Stoel Rives partner Loren Hulse.
Holland & Hart has also transitioned from a one-tiered equity partnership to a multilevel partnership split into three parts: income partner, equity partner and senior partner. Sharrer said the change was aimed at retaining and recruiting talent.
“In this really competitive market, we have a lot of really good senior associates that deserve that title,” she said.
Income partners are most analogous to non-equity partners in that they don’t participate in profit sharing but they do engage in the firm’s governance. Senior partners serve a quasi-of counsel role, although, like income partners, they are active in the firm’s governance.
Sharrer stressed that Holland & Hart will avoid the pitfall of many multitiered partnerships, wherein an associate makes non-equity partner with little opportunity to advance to equity partner. She calls this phenomenon a “parking spot.”
The firm has promoted five attorneys to income partner, nine to senior partner and four to equity partner since the beginning of this calendar year.
Throughout the year, Sherrar said the firm will make “strategic hires” in key areas such as tax, renewables and intellectual property. She also said the firm will continue to leverage its 2017 investment into an innovation office led by Technology & Innovation Officer Duc Chu.
“We’re trying to anticipate what the changing needs of our clients are and partnering with them in ways that they love,” said Sharrer. “That’s where we see the most success in clients that are coming back and growing our work.”