On the heels of a dynamic 2018, in which Sullivan & Worcester grew revenue by nearly 10%, buoyed by smart lateral hiring, the Boston-based firm announced Monday it is rebranding as just “Sullivan.”
“Sullivan has always been a firm of innovative and strategic thinkers with a keen focus on getting positive outcomes for our clients,” managing partner Joel Carpenter said in a statement. “Our new brand and logo capture our firm’s energy,”
Gross revenue crossed the nine figures for the first time in 2018, reaching $104.8 million, while net income swelled by over 15%, from $23.7 million to $27.4 million.
“We added $3.4 million to the bottom line just from lawyers that we hired last year or at the end of 2017,” Carpenter explained in a recent interview.
Sullivan & Worcester has been recruiting around core areas, such as the firm’s hefty tax practice, its closely connected REIT practice, and its investment management practice. With a joint venture in Tel Aviv, the firm is also a major player in bringing Israeli companies public on Nasdaq. That joint venture, formerly known as ZAG-S&W, will now co-brand with Sullivan to form one cohesive, internationally recognized brand.
“People like to come to a platform where you’re already doing good stuff, and so we’re trying to figure out hot new areas where a synergy could be achieved,” Carpenter said.
These additions include the February 2018 arrival of New York hi-tech M&A partner Scott Kaufman, who provides services to Israeli clients in the U.S., and a three-lawyer affordable-housing team in Boston that joined in March 2018.
While the firm’s overall head count in 2018 was steady at 136 attorneys, the distribution of the partnership shifted. The number of equity partners dropped by four, while the number of nonequity partners increased by the same figure. That’s a function of demographics, Carpenter said, a point that tracks what a number of other law firms are showing: retirements have been outpacing promotions.
Consequently, Sullivan & Worcester’s profits per equity partner shot up in 2018, growing almost 32% from $655,000 to $864,000.
Carpenter also identified several other strategic decisions that play a role in the firm’s growing profitability. Sullivan & Worcester has been narrowing its business development focus to its core areas of practice. He said that’s led to increased work from new clients. They contributed $12.5 million in revenue in 2018, compared with $6.8 million in 2015.
Some of these new clients are contributing to the substantial bankruptcy work the firm is now handling in New York, with a team of two lawyers who came aboard in 2017. The firm also handled a major acquisition for an overseas REIT that was making its first American acquisition.
“When it’s something complicated like a foreign REIT coming into the U.S., we’re a great choice for that,” Carpenter said.
He also highlighted a deliberate effort to make partners more attuned to the intricacies of billing and collections. The firm published billable hour and billings and collections goals to partners a third of the way through last year.
“It really moved the needle in terms of people’s focus and attention on these kind of basic things,” Carpenter noted.
The firm is also embracing more work on contingency. It took in $1.5 million last year and expects to pull in $2 million on these cases in 2019.
“We’re much more open than we used to be about contingency matters. … We’re also smarter in the ones we take,” Carpenter said. “We thought it was another arrow in the profitability quiver we could exploit.”
The firm’s 11-lawyer London office, founded in 2013 with a team that left Dentons, is also increasing its contribution. Revenue grew from $2.5 million in 2017 to $3.6 million in 2018.
“It’s been a growth effort for them,” Carpenter said. “They’ve been establishing themselves in the firm, establishing their reputation and marketing Sullivan & Worcester in London. It takes time to grow the revenue.”
Carpenter also hopes the hire earlier this year of new chief operating officer Robert Brace from the real estate sector will aid continued growth.
“We thought we could realize some value from getting the perspective of someone who hadn’t spent their whole career drinking the law firm Kool-Aid,” he said. ”He wants to know the reason for everything. ‘Well, we always did it this way,’ isn’t a good enough reason.’”
Carpenter acknowledged that litigation, while another core offering of the firm, has been somewhat cyclical in recent years. He’d like to combat that by enlarging the practice, particularly in the area of white-collar crime and investigations. Because of the firm’s work in the financial services sector, there’s already brisk demand.
“Our people who do that tend to be busy,” he said.
While the firm has five more laterals lined up to come aboard in the next month, Carpenter said the firm is content in its overall footprint, with an office in Washington, D.C., in addition to Boston, New York and London.
And while the firm has stayed out of merger talks in recent years, Carpenter doesn’t foreclose the possibility.
“I’ll take a meeting with a managing partner of another firm,” he said. “We haven’t had anything that went any further than a ‘get to know you thing’ in some time. We think it’s irresponsible to say ‘No, we’d never do it,’ but we’re not actively looking to do it either.”