Winston & Strawn saw its gross revenue dip 1.9 percent in 2013, to $741 million, while its profits per equity partner were down 5.4 percent, to $1.41 million, according to the firm. Winston’s net profits, meanwhile, fell 7.5 percent, to $245 million.
Managing partner Thomas Fitzgerald says the drop-off in gross revenue was almost entirely a product of the firm failing to make up for a $14 million contingency fee it collected in 2012. “Our operating income was otherwise flat, year to year,” Fitzgerald says.
The decline in profits, Fitzgerald says, was driven by increases on the expense side of the ledger related to bringing on a firm-record 20 new lateral equity partners and adding new offices in Silicon Valley and Brussels. “We’re going to invest, and that’s going to cost money,” says Fitzgerald. “I think our partners understand that.”
The laterals coming aboard included a four-partner Houston-based team from Weil, Gotshal & Manges composed of veteran commercial litigator John Strasburger, Weil bankruptcy litigation cochair Melanie Gray, litigator Jason Billeck and restructuring specialist Lydia Protopapas. “That was a huge pickup for us,” says Fitzgerald. Winston also hired prominent Manhattan criminal defense veteran Gerald Shargel in June, snapped up a four-partner group in Washington, D.C., from Finnegan, Henderson, Farabow, Garrett & Dunner with International Trade Commission expertise in August and welcomed additional individual partners across various cities and practices.
Despite all the hiring, Winston saw both its overall and partner head counts drop. The firm ended 2013 with 822 lawyers all told, a 2.4 decrease from 2012 and its third straight decline in total attorney population. While Winston now has more than 100 fewer lawyers than it did in 2011, Fitzgerald shrugs off last year’s decline as par for the course. “A 2.4 percent adjustment in head count is ordinary stuff,” he says.
The drop in head count helped give the firm a slight boost in revenue per lawyer, which rose 0.6 percent, to $900,000.
Winston’s equity partnership ranks were also down slightly, shrinking by four to 174—the fewest equity partners the firm has had since 2000. The nonequity partner tier also got smaller, going from 182 to a 13-year low of 176. Describing the slippage as consistent with the firm’s normal ebb and flow, Fitzgerald says the losses mainly reflect the retirement of roughly eight partners.
Those who left Winston last year for other firms rather than retirement include bankruptcy and restructuring partners Lawrence Larose and Samuel Kohn, who joined Chadbourne & Parke, and global banking and finance partners Loren Weil and Matt O’Meara and private equity partner Brien Wassner, all of whom jumped to Jones Day.
Discussing the year as a whole, Fitzgerald says Winston had a slow first quarter, with corporate work in the doldrums and litigation somewhat sluggish. Deal work picked up dramatically in the year’s second half, and the firm’s litigators kept busy from April through December, Fitzgerald says.
The year’s litigation highlights included the firm’s representation of TV streaming company Aereo Inc. in its closely watched copyright battle with the major broadcast networks and its defense of Goldman Sachs & Co. in a groundbreaking class action in which a dozen financial institutions are accused of colluding to control the credit default swaps market.
Winston’s significant corporate work included advising Davis + Henderson Corporation in connection with its $1.2 billion acquisition of Harland Financial Solutions Inc.; Sycamore Partners in its acquisition of teen clothing retailer Hot Topic Inc.; and Toyota Motor Credit Corporation in its negotiations for $13 billion in revolving credit.
As for 2014, Fitzgerald says the year is off to a robust start. “Our first two months have been much much stronger across the board,” he says. “It’s a completely different corporate environment. The whole market is up—debt and equity, transactional, and IPOs.” Litigation, too, “has actually been substantially up in the past three to four months,” he says. “The number of matters we’re handling is higher. We have more cases than ever before.”
This report is part of The Am Law Daily’s early coverage of 2013 financial results of The Am Law 100/200. Final rankings and full results for The Am Law 100 will be published in The American Lawyer’s May 2014 issue and on AmericanLawyer.com. The Am Law Second Hundred will be published in the June issue.