With a batch of big-ticket cases coming to a close, litigation-focused Kasowitz Benson Torres & Friedman saw its gross revenue fall 8 percent, to $229.5 million, and its profits per equity partner plunge 15 percent, to $1.45 million, according to The American Lawyer’s reporting.
Founding and managing partner Marc Kasowitz downplayed the sharp drop in revenue, noting that the firm boasts impressive profits for a shop of its size. About 43 percent of the firm’s revenue last year, Kasowitz says, was profit.
“Each year, we aim for that to be about 50 percent,” he said. “I think most firms our size would be very happy with those kinds of numbers.”
Kasowitz Benson is among the handful of relatively young, litigation-centric firms able to fill a void in the wake of the financial crisis when most of their more venerable rivals found themselves conflicted out of cases that would have pitted them against the Wall Street banks they typically represent. That work has started drying up, which Kasowitz says is a big reason his firm suffered a substantial decline in revenue last year. (As sibling publication New York Law Journal reported, the end of those cases led Kasowitz Benson to lay off roughly 30 people last month, including partners, associates, counsel and nonattorney staffers.)
“This is true of all litigation firms,” he says. “We can be victims of our own success.”
By way of example, Kasowitz says his firm was extremely busy in 2012 defending MBIA Inc. against Bank of America’s claims that the former’s post–financial crisis restructuring was a fraudulent conveyance. That case culminated in a favorable bench verdict for MBIA in early 2013.
The revenue hole is likely to get even bigger this year with Kasowitz Benson poised to wrap up its work on behalf of the U.S. Federal Housing and Finance Agency. The agency, which serves as the conservator for Fannie Mae and Freddie Mac, hired the firm in 2011 to help Quinn Emanuel Urquhart & Sullivan pursue claims that 18 major banks had duped the government entities into investing $200 billion in mortgage-backed securities. Nine of those banks settled with FHFA within the last year, and others are expected to follow suit by years end.
Despite some of its biggest matters coming to a close, Marc Kasowitz says his namesake firm’s future is bright. It has invested in an investigations and white-collar defense practice led by former U.S. Senator Joseph Lieberman, who joined Kasowitz Benson as a senior counsel last June. The firm also continues to land high-stakes litigation matters, Kasowitz says, particularly contingent-fee cases that can prove lucrative. In one such case, the firm represents a group of BP service stations in a pricing dispute with the British oil giant. The case survived a dismissal bid in October 2013 and could go to trial in late 2014.
Total attorney head count was relatively stable in 2013, rising just under 2 percent, from 365 to 372. At the same time, the makeup of Kasowitz Benson’s partnership ranks changed slightly, with nonequity partners now outnumbering equity partners. The number of equity partners dropped 14 percent, from 57 to 49, while the nonequity partner population grew roughly 24 percent, going from 51 to 63.
Kasowitz Benson partner Aaron Marks says there is no concerted effort on the firm’s part to purge equity partners and that the decline on that front is partially attributable to the defection of intellectual property lawyers to Latham & Watkins. The nonequity partner ranks, meanwhile, increased largely because the firm promoted six associates and one special counsel to that status in 2013.
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.