Chadbourne & Parke, a charter member of The Am Law 100, is in danger of falling off the list of the nation’s 100 top-grossing law firms after seeing its gross revenue decline 5.1 percent, to $290.5 million last year, according to The American Lawyer‘s reporting. The firm’s net income tumbled 14.4 percent in 2012, to $89 million, and its profits per partner slid 6.1 percent, to $1.24 million. Revenue per lawyer, on the other hand, rose 3.3 percent, to $780,000.
New York–based Chadbourne ranked 96th on The American Lawyer‘s inaugural Am Law 100 list, which was published in 1987. The firm—which peaked at number 41 in 1997—also occupied the number 96 spot on last year’s rankings, with gross revenue of $306 million. Meanwhile, 100th-ranked Cozen O’Connor had gross revenues of $294 million.
Addressing the revenue slide, managing partner Andrew Giaccia says the firm got off to a slow start in 2012 but finished with a burst of year-end work, including in disputes and insolvency matters, that won’t be reflected until the 2013 figures are tallied. "[That work] generates inventory into this year, and a ton of momentum," he says.
Chadbourne’s substantial international operations—a third of its lawyers are based outside the United States in such cities as Istanbul, London, Mexico City, and Warsaw—also took a toll last year, says Giaccia. "The economic environment outside is not as robust as the economic environment inside the U.S.," he says. "We are benefiting from the rebound, but other firms that are more purely U.S. firms have benefited more strongly."
In addition to suffering declines in key financial categories, Chadbourne also saw its overall attorney head count drop nearly 8 percent last year, to 373. The equity partner ranks fell by seven lawyers, to 72; the number of nonequity partners dropped by six, to 41.
Underlying those figures was a significant amount of lateral churn. Hiring offset substantial losses that earned Chadbourne a spot among firms with the most departures in The American Lawyer’s 2012 Lateral Report. Since October, Chadbourne has brought in 33 lawyers, including five partners—two New York–based litigators from Latham & Watkins, and international partners in Mexico City and Kyiv, Ukraine—as well as 25 lateral associates and three counsel.
Among those heading in the other direction: a six-partner product liability team, including the former head of Chadbourne’s litigation practice, Thomas Riley, and head of product liability, Gregory Loss, leaving for Herbert Smith Freehills in New York; the entire Almaty, Kazakhstan, office transferring to Dechert; the cochair of Chadbourne’s intellectual property group, John Squires, leaving for Perkins Coie in a four-lawyer team; and Washington, D.C., office managing partner Mary Lopatto defecting to Cozen O’Connor.
Chadbourne does not appear to be mourning the departures. In an interview earlier this year, Giaccia, without discussing specific losses, attributed the "overwhelming majority" of last year’s defections to an initiative he launched soon after becoming chair in November 2010 to make sure there was productivity at all levels, including partners. "This is not the work of a month, they just disproportionately left in 2012," Giaccia said in the January interview. When the Kazakhstan team left in April 2012, Giaccia also told sibling publication The Legal Intelligencer in a statement that the losses were "not inconsistent with our strategic vision for the firm."
(In an email, Lopatto questioned the existence of a plan to weed out partners, saying she "proudly" served as the D.C. managing partner and that she decided to leave Chadbourne after deciding that her reinsurance practice "would be better served at a firm with a broad insurance practice, like Cozen O’Connor’s." Squires said in a separate email that his team left "in an effort to assemble a national IP platform" that was "not to be" at Chadbourne in the absence of growth into Silicon Valley. The Herbert Smith and Dechert lawyers who left Chadbourne did not immediately respond to requests for comment on their departures.)
White-collar partner and litigation group head Abbe Lowell, who rejoined Chadbourne from McDermott Will & Emery amid great fanfare in May 2011, said that the firm underwent a comprehensive strategic planning process throughout last year. "Last year was an introspective year in the modern era of Chadbourne," says Lowell, adding that a result of that introspection was a renewed focus on three core practices: litigation, project finance, and corporate and tax work.
Lowell says last year’s highlights on the litigation front included serving as spirit maker Beam’s national defense counsel in a series of putative class actions that claimed the company’s Skinnygirl Margarita drink was falsely labeled as "all natural"; representing former U.S. senator and vice presidential nominee John Edwards at trial in the case that ended in May 2012 with his acquittal on corruption charges; successfully appealing former Puerto Rico Senator Hector Martinez’s conviction on federal corruption charges; and securing a jury verdict for longtime client Rockwell Automation, which had sued a German company and its U.S. subsidiary for infringing a patent related to programmable logic controller technology.
Chadbourne’s other notable 2012 assignments included serving as counsel to the examiner in mortgage lender Residential Capital’s Chapter 11 bankruptcy; representing Morocco’s government-owned electricity company, Office National de L’Electricite, in connection with its participation in Africa’s largest wind farm project, a $350 million facility in Tarfaya; and representing the lenders to a $6 billion project in Louisiana that will import and regasify liquefied natural gas and export natural gas.
In addition to its client workload this year, Chadbourne will spend preparing to move the firm’s New York headquarters office from 30 Rockefeller Center into a portion of the space at 1301 Avenue of the Americas in midtown Manhattan previously occupied by now-defunct Dewey & LeBoeuf.
Giaccia said in the January interview that the firm is working on overhauling the more than 200,000 square feet it is taking over, which it plans to inhabit for at least 20 years.
The relocation of Chadbourne’s headquarters into the former Dewey space—prompted by the looming expiration in 2014 of its current lease—will be executed without taking on any debt, Giaccia says. That’s just one example, he said earlier this year, of the conservative approach to doing business that he believes sets Chadbourne apart from that "other" firm—one whose name he seems hesitant to even say aloud.
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.