Fried, Frank, Harris, Shriver & Jacobson enjoyed a stellar year in 2015, driven at least partly by strategic and operational changes made by chair David Greenwald.
The firm’s gross revenue passed half a billion dollars in the fiscal year ended Feb. 29, 2016, rising almost 10 percent, to $504.5 million. Average revenue per lawyer climbed 10.4 percent, to a record high of $1.23 million.
Fried Frank’s bottom-line performance was even more impressive. Net income leaped 18.1 percent, to $228.5 million, driving a 21.5 percent increase in average profits per equity partner, to $2.2 million—another firm record. Its profit margin increased by three percentage points, to 45 percent.
Greenwald said the growth was spurred by a “realignment” of the firm’s strategy and a greater focus on costs and efficiency.
“The strategic decisions we took in 2014 are beginning to pay off,” he said. “We set very ambitious performance goals for the firm, and thanks to a lot of hard work and talent, we met them all. It was a very strong year.”
Greenwald took over as Fried Frank chair in March 2014, after Valerie Jacob stood down a year early. A former deputy general counsel at Goldman Sachs, he carried out a “rigorous” assessment of the firm’s operations, practices and offices. (Capital markets practice head Jacob left the firm six months later along with two partners to join the New York office of Freshfields Bruckhaus Deringer.)
Greenwald’s new strategy targeted high-end work in the United States and Europe across six core practice areas: M&A, private equity, real estate, finance, capital markets and asset management.
As reported by The American Lawyer, this led in early 2015 to a bold decision to pull out of Asia by effectively closing the firm’s Hong Kong and Shanghai offices, which a source with knowledge of the situation said were operating at a loss.
“It was a question of discipline and good business judgment,” said Greenwald at the time, in his first ever interview with the press. “It’s not a decision we took lightly—we took a rigorous view on the performance of the practice, and our view was that the prospects for growth did not justify the cost.”
Greenwald, who says his time at Goldman Sachs instilled in him the importance of “planning, evaluation and holding people accountable,” also set about improving the firm’s efficiency and productivity. His initiatives have included a partner self-assessment process and a new timekeeping policy that sees partners fined $100 per day if they are late to record their weekly billable hours.
“Partners weren’t disciplined about recording their time, but [the new policy] changed behavior literally overnight,” he said.
Greenwald admits that there is still “more work to be done,” however. Fried Frank is “understaffed” in a number of practice areas, including real estate, private equity, M&A and asset management, which are currently struggling to keep up with demand from clients, he said. Meanwhile, the firm’s litigation offering is still “too small a part of the whole,” despite recent efforts to bulk it up, Greenwald said.
The firm is also seeking to further develop its London office, which has recently received significant investment in the form of a number of splashy lateral hires. Having brought in Kirkland & Ellis senior partner and private equity star Graham White as its first ever London managing partner at the end of 2014, Fried Frank returned to the Chicago-based firm last May to capture a three-partner funds team.
Also in May, the firm hired Hogan Lovells London banking partner Stuart Brinkworth, and more recently, in early 2016, launched a London restructuring practice with the recruitment of Mayer Brown cohead Ashley Katz.
Greenwald said the hiring is set to continue, with the firm shortly to relocate to new premises in the heart of the London’s financial district that are roughly twice the size of its existing offices. “We’re well positioned going forward,” he said.