A steep reduction in its equity partner ranks allowed Squire Sanders to overcome a major drop in net income to maintain average partner profits in 2012, according to The American Lawyer‘s reporting.
Despite posting a 4.5 percent increase in gross revenue to reach a record $774.5 million, the firm saw more than $26 million wiped off its bottom line after net income crashed by 20 percent, to $105.5 million. The sharp decline in net income was mirrored by a 20 percent reduction in the firm’s equity partner head count, which slid from 165 to 132. As a result, profits per partner remained static at exactly $800,000.
A firm spokesman denied that Squire Sanders had undergone a “mass deequitization”—while its equity ranks fell by 33 partners, nonequity head count swelled by 34—but acknowledged in a statement that "some" equity partners had been demoted to nonequity or counsel positions. (The American Lawyer‘s 2011 Law Firm Leaders survey revealed that 38 percent of respondents expected to deequitize partners in 2012. Last year’s version of the survey found 46 percent of respondents predicting they would do so this year.)
The partner classifications were also affected by the transfer of some partners between internal structures “for ease of administration," the statement added, but the firm declined to provide additional details on what that actually entailed. The firm also declined to comment on precisely how many partners were deequitized in 2012, or whether the deequitizations and other changes to the firm’s partnership structure were specifically engineered to maintain average profits per partner in the face of falling net income.
The firm’s revenue per lawyer figure rose 2.5 percent, to $615,000, meanwhile, bouncing back after tumbling 10 percent in 2011. Its profit margin slid 4 percentage points to an all-time low of 14 percent, however. The firm’s profit margin has halved since 1999 and fallen by 8 percentage points in the past two years alone.
Squire Sanders launched new offices in Riyadh, Seoul, Singapore, and Sydney in 2012, and recruited a total of 23 lateral partners. Transactional highlights the past 12 months include representing Canadian gold and silver miner B2Gold Corp on its $1.1 billion acquisition of CGA Mining Ltd.; Japanese trading company Itochu Corp. on its $1.7 billion acquisition of Dole Food’s global packaged foods and Asian fresh produce division; and Visteon Corp on the $410 million sale of its automotive climate business to its Korean affiliate, Halla Climate Control Corp.
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.