Robert Hays ()
King & Spalding’s lawyer head count has surpassed 1,000 lawyers, another milestone for the Atlanta-based firm, while revenue edged up and profit per partner slipped modestly amid an influx of new equity partners last year.
Revenue increased 3.8 percent to $1.06 billion in 2016, after the firm broke the $1 billion revenue mark the prior year.
Net income increased 8.2 percent to $484 million.
Atlanta’s largest firm by head count and revenue, King & Spalding reported 1,005 lawyers for 2016, a net increase of 69 lawyers.
The head count increase and a record expansion in the firm’s equity partner ranks pushed down revenue per lawyer by 3.7 percent to $1.05 million, and profits per partner declined 1.8 percent to $2.47 million.
The firm increased its equity partner ranks by a net of 18 partners for a total of 196 equity partners in 2016—after a net gain of only eight equity partners over the prior three years.
“We were pleased with the growth,” said Chairman Robert Hays. “We are trying to do that for the right people in the right markets and the right practices.”
He noted that the firm’s 10 percent increase in equity partners was well above the norm for big firms. According to a new Citi Private Bank report, equity partner head count increased by only 0.2 percent on average for the 193 large firms responding to its year-end survey.
Particularly busy areas for the firm in 2016 included white-collar matters and investigations, litigation and international arbitration, Hays said—and trade law more recently. Energy law, another key practice, was active, he said, but “not as robust as it has more recently been.”
Hays, typically cautious when it comes to predictions, was upbeat about the year ahead.
“I believe this year might be better for the legal industry and for us,” he said. “After years of stagflation and some gloom, there seems to be more optimism from our clients about our economy going forward. The markets the last few months seem to reflect that,” he said, despite the unexpected outcomes of the U.S. presidential election and the Brexit vote.
Hays said King & Spalding raised rates slightly, which he characterized as “inflationary increases,” and he said the firm ended the year with no debt.
The firm officially opened a Los Angeles office, which has about 20 lawyers, in addition to its California locations in San Francisco, Silicon Valley and Sacramento.
It also renewed the lease for its Atlanta headquarters, adding another decade to the initial 15-year term and extending its occupancy at 1180 Peachtree St. in Midtown to 2031. The firm is downsizing from 416,000 square feet to 320,000 square feet and is embarking on a floor by floor redesign.
King & Spalding added 19 lateral partners, the bulk in Washington and New York. (That’s down from 33 lateral partners in 2015.) In Washington it added a Food and Drug Administration and life sciences regulatory team, Gary Messplay, Sheldon Bradshaw and Kyle Sampson, from Hunton & Williams.
Also in Washington, the firm added partner M. Alexander Koch from the Securities and Exchange Commission’s enforcement division to its white-collar and government investigations practice, and Hogan Lovells partner Jacquie Glassman, a former attorney for the National Highway Traffic Safety Administration, to its product liability team.
In Atlanta, it added health care and life sciences partner Phillip Street, along with of counsel Craig Smith, from Paul Hastings. Partner Mark Kaufman joined from Dentons, and Jay Mitchell, the former CLO for Piedmont Hospital, joined as senior counsel.
Atlanta departures included real estate partner Kristina Thomas, who joined Sutherland Asbill & Brennan, and product liability litigator Bradley Pratt, who started his own solo litigation firm, The Pratt Law Firm. Lovita Tandy left to start a professional development consultancy for firms and corporate law departments.
Several of King & Spalding’s biggest deals were in Georgia last year, and it represented Atlanta’s Super Bowl host committee pro bono in its successful bid to bring the 2019 Super Bowl to Atlanta.
The firm advised Atlanta apartment owner Post Properties on its $3.88 billion sale to Mid-America Apartments Communities, effective Dec. 1, which created the Southeast’s largest multifamily REIT with an equity market capitalization of about $12 billion. It was special real estate and finance counsel to Atlanta office developer and landlord Cousins Properties in its $2 billion stock-for-stock merger with rival office REIT Parkway Properties of Orlando, expanding Cousins’ reach in Atlanta and Sunbelt office markets.
King & Spalding advised Columbus-based Carmike Cinemas on its $1.2 billion acquisition by AMC Entertainment Holdings, creating the nation’s largest movie theater chain. It advised payments company Total System Services, also based in Columbus, on its $2.3 billion in cash acquisition of TransFirst from private equity company Vista Equity.
Further afield, the firm advised Saudi Arabian clients Jeddah Economic Company and Alinma Investment Co. on the formation of a $2.2 billion, Shari’ah-compliant real estate fund with financing from Alinma Bank for the phase one development of the Jeddah Economic City project, whose centerpiece, Jeddah Tower, will be the tallest building in the world at 1 kilometer.
Also in the Middle East, it advised the National Shipping Co. of Saudi Arabia on an agreement with Arab Petroleum Investments Corp. to start an investment fund to acquire very large crude carriers (VLCCs).
On the litigation front, King & Spalding continued to defend Home Depot in a customer data breach class action that settled in March. It defended Wells Fargo & Co. in a case brought by the U.S. government, which settled in April, with the mortgage lender agreeing to pay $1.2 billion for falsely certifying that many of its home loans qualified for Federal Housing Administration insurance.
Its representation of General Motors over faulty ignition switches wound down, and the federal judge for the massive GM Ignition Switch MDL in New York dismissed a plaintiffs RICO claim that the firm conspired with GM to conceal the ignition switch defect from regulators and the public.
King & Spalding also defended RJ Reynolds in 18 so-called Engle progeny tobacco cases in South Florida related to a disbanded 2006 class action, with big defense wins, including one against a $37.5 million claim—and plaintiffs wins, including one for $29 million.