Drinker Biddle & Reath offices in Washington, D.C. June 25, 2014. Photo by Diego M. Radzinschi/THE NATIONAL LAW JOURNAL. (Diego M. Radzinschi)
Two years into new leadership, Drinker Biddle & Reath saw a second year of increases in revenue and profits per equity partner (PPP) in 2016.
Revenue was up by 6.1 percent last year, to $434.5 million. PPP increased by 6.3 percent, to $850,000. The firm’s fiscal year ended Jan. 31.
Andrew Kassner, Drinker Biddle’s chairman since 2015, said the increase in revenue wasn’t tied to dramatic growth in any particular practice. Instead, he credited a “high tide that lifts all boats.”
While demand has been flat industrywide, Kassner said the corporate, real estate, health and benefits practices have stayed active, and litigation had “a very strong year.” He said the firm’s focus on industry expertise and collaboration between practices has helped keep its lawyers busy.
On the litigation side, class actions, mass torts and white-collar defense and investigations practices were strong, Kassner said.
One area that had a positve, but slower, growth in 2016 was bankruptcy and restructuring, Kassner said, due to overall slowness in restructuring throughout the legal industry. Still, Kassner said, the practice handled some notable matters last year, including in connection with the Caesars Entertainment bankruptcy.
Given the current political climate, the firm’s customs and trade practice has been busy, he said, as well as its health law group.
Profitability and Expenses
Kassner noted that the firm was able to increase PPP last year while adding 11 lawyers to the equity partner ranks, for a total of 187. Nonequity partner ranks shrank by 18.4 percent to 62 lawyers. The firm’s total head count increased 2.4 percent, to 557.
Revenue per lawyer was $780,000, an increase of 3.3 percent from 2015. The firm increased rates by more than 3 percent, and its realization rate was 83.9 percent.
Drinker Biddle’s net income for the year was $159 million, a 12.4 percent increase from 2015. Its profit margin increased by two percentage points to 37 percent. The firm did not prepay expenses for 2017, and has not done so in previous years.
One area where the firm encountered increased expenses was in associate compensation, after the firm announced raises in 2015. That raise was “in the normal course,” Kassner said. Drinker Biddle pays first-year associates $160,000.
Kassner said Drinker Biddle is finishing up a round of office renovations and technology improvements that cost the firm about $12 million last year. He acknowledged that cybersecurity expenses have grown over recent years, including the cost of highly trained staff.
Hires and Growth
Drinker Biddle last year added groups of corporate lawyers in New York and Los Angeles, and brought on lawyers in Philadelphia, Delaware, New Jersey and Chicago.
At the tail end of its fiscal year, the firm announced that it was entering the Dallas market, bringing on 23 lawyers, including nine partners, from Sedgwick. Kassner said that group did work very similar to Drinker Biddle’s existing practices, and allows access to dozens of clients with headquarters or operations in Dallas.
Kassner said the firm plans to diversify its practices in Dallas and build its Dallas presence as quickly as it grew the New York office, which went from seven lawyers to more than 40 since 2011.
Kassner said Drinker Biddle is now focused on “calculated growth.”
In the near future, he said the firm will continue hiring in New York. It’s not unlikely that the firm will enter a new market in 2017 as well, Kassner said. The firm has an eye on Minneapolis for its insurance and financial services, and on Nashville for its health care market.
The firm’s expansion will be mostly domestic, Kassner added. In particular, he said, Drinker Biddle will not look to open an office in Asia.
“A lot of firms are overextending themselves,” by opening numerous offices overseas, he said.
He said the firm is able to serve clients abroad without a physical presence in those countries.
One city the firm pulled out of in 2016 was Milwaukee, which was one of its smallest offices, after two partners left that office to start their own firm. The remaining lawyers are supported by the Chicago office, a firm spokesman said.
Lizzy McLellan can be contacted at 215-557-2493 or email@example.com. Follow her on Twitter @LizzyMcLellTLI.