After suffering a rare drop-off in gross revenue the previous year, Bingham McCutchen made a return to topline growth in 2012, according to The American Lawyer‘s reporting.
Bouncing back from a 0.5 percent dip in total revenue in 2011 that ended a 15-year run of topline gains, Bingham saw its gross revenue rise 0.4 percent last year, from $868.5 million to $872 million—just $1 million below the all-time high the firm achieved in 2010. Bingham’s net income also increased in 2012, growing almost 2 percent to a record $282.5 million. Profits per partner, however, fell 1.5 percent, to $1.69 million, thanks to a 3.1 percent jump in equity partner head count to 167. Revenue per lawyer, which climbed above $1 million for the first time in 2011, dropped 4.4 percent to $970,000 last year. The firm’s profit margin remained static at 32 percent.
Bingham global chairman Jay Zimmerman describes 2012 as a “transformational year” for the firm, whose bottom line felt the effect of what he called a major investment in a new 250-staff business services center due to open in Lexington, Kentucky in April. “Our global service center initiative has been a hugely significant step for us,” Zimmerman says. “It cost us a lot of money and that had an impact on partner profits—without it we would’ve had our best year ever—but we think it’s a great investment for the future.”
Zimmerman says Bingham racked up direct and indirect costs totaling about $15 million last year in preparation for launching the new center. The firm covered those costs, he notes, entirely out of its cash flow and without incurring any debt. While Bingham expects to spend a similar sum this year to get the Lexington office up and running, Zimmerman predicts that it will be “cash-flow positive” by 2014 and will generate an estimated $25 million per year in cost savings beginning in 2016.
In terms of last year’s standout performers, Zimmerman says Bingham’s core financial services litigation and broker/dealer groups were “extremely strong" and that several noncyclical practices, including investment management and telecommunications, also had very good years. On the flip side, he says, the firm’s domestic restructuring practice continued to face challenges as a result of a “substantial downturn” in the area, while the wider litigation team saw its workload decrease after a number of big cases, including the firm’s representation of Anadarko Petroleum in the Deepwater Horizon oil spill litigation, settled in 2011.
Outside of the United States, Bingham’s London and Tokyo offices both had record years, with the latter getting a boost in November with the arrival of Herbert Smith Freehills’s former office head Steve Lewis. Having launched in December 2011 with the hire of Jones Day partner Ye Xiaowei and the relocation of corporate partner Brian Beglin from Tokyo, the firm’s new Beijing base performed “better than anticipated” in its first full year of operation, according to Zimmerman. At the same time he acknowledges that the office has yet to turn a profit. (It is common for a newly launched office to take around 18 months before it becomes accretive to a firm’s bottom line.)
Surveying the year ahead, Zimmerman says he is “quite optimistic” about Bingham’s prospects. He expects to see continued growth in Europe and Asia, and another strong year for financial services litigation. The firm’s structured transactions practice has also seen activity levels pick up after a “difficult few years,” he notes, with billings up a full 50 percent in January, year over year. Bingham has no immediate plans to open any new offices in 2013, Zimmerman adds, but intends to strengthen its existing presences in Beijing, London, New York, and California.
“There will be challenges, with continued pressure on fees and what is clearly a spotty economic recovery,” he says. “We’re also going to have another year of significant investments [with the business services center], but we’re confident that we can carry that investment and feel very good about where we’re sitting right now.”
(Bingham’s 2012 growth rates were affected by the addition of its 68-lawyer Tokyo office, which despite opening in 2007 had not been included in previous years’ survey data. Revised percentages will appear in the full Am Law 100 survey, published in the May issue of The American Lawyer.)
This report is part of The Am Law Daily’s early coverage of 2012 financial results of The Am Law 100/200. Click here to see an interactive chart comparing this firm’s 2012 finances to those of other Am Law 100 and Second Hundred firms that The Am Law Daily and its sibling publications have reported on to date. Final rankings and full results for The Am Law 100 will be published in The American Lawyer’s 2013 issue and on AmericanLawyer.com. The Am Law Second Hundred will be published in the June issue.