Bill Voge of Latham & Watkins ()
Latham & Watkins had another outstanding year in 2016, with the firm achieving significant gains across all financial metrics.
Latham’s revenue increased 6.5 percent, to $2.823 billion, its seventh consecutive year of revenue growth and the most revenue ever generated by a law firm in a single fiscal year.
Having dipped 2.4 percent in 2015, Latham’s average revenue per lawyer rose 1.9 percent last year, to $1.238 million, the second highest in the firm’s history, narrowly behind its 2014 peak of $1.245 million.
Latham’s net profit, meanwhile, jumped 8 percent in 2016, to $1.424 billion. That helped push its average profit per equity partner past the $3 million barrier for the first time, with that metric rising 5.3 percent, to $3.06 million.
The firm’s profit margin remained flat at 50 percent.
The results, which Latham chief operating officer LeeAnn Black described in an interview with The American Lawyer as “extraordinary,” continue a period of meteoric growth at the firm.
Despite a lack of overall growth in the market for high-end legal services, Latham has managed to add more than a billion dollars to its revenue since the peak of the recession in 2009, equivalent to a 55 percent increase over the past seven years. Its net profit has risen over 80 percent and its profit per partner increased by more than 60 percent during the same period, while its total attorney head count has only expanded by 21 percent.
Latham in 2015 overtook both Baker McKenzie and DLA Piper to become the world’s largest law firm by revenue and looks set to retain that title this year. (DLA has yet to announce its 2016 results, but its revenue would need to have increased by over 11 percent for it to usurp Latham in this year’s Am Law 100.)
Latham chairman Bill Voge said that the firm went into 2016 cautious about how issues such as the U.S. presidential election, Brexit and the depression in oil prices would affect the firm and its clients, but any fears of a slowdown proved unfounded. “At the beginning of 2016, we were cautious because of the macroeconomic issues. By the second quarter [of the year], that caution had turned to staffing concerns because mandates were coming in quicker than we could deal with them,” he said.
All of Latham’s practices and industry groups saw increased demand last year, Voge added, noting that its trial litigation and disputes practice was “red hot.” That practice accounts for about one-third of the firm’s total fee-earner head count, he said.
The firm’s M&A and banking practices both increased their annual revenue by more than 15 percent in 2016, while its public company representation practice was up 12 percent. Latham’s project finance and insolvency practices also saw “tremendous growth” last year, Black said, as did its life sciences and oil and gas industry groups.
Latham continued to expand aggressively in 2016, opening a new office in South Korea and making 26 lateral partner hires globally.
The firm was particularly active in London, bringing in 10 new partners last year, including Allen & Overy’s former banking head Stephen Kensell and M&A star Edward Barnett; Herbert Smith Freehills’ global co-head of energy John Balsdon; and Ashurst’s global co-head of financial regulation Rob Moulton.
Latham’s London office also recruited litigation partner Martin Davies and structured finance partner Sanjev Warna-kula-suriya, who made rare departures from Quinn Emanuel Urquhart & Sullivan and Slaughter and May, respectively. (Davies was the first partner to leave Quinn Emanuel in London since its opening in 2008.)
Black said that the U.K.’s decision to exit the European Union had not caused the firm to reassess its plans in London. “Brexit hasn’t changed our strategy at all. London remains a critical market for us,” she said.
Outside the U.K., Latham boosted its Frankfurt office with the hire of Allen & Overy’s German international capital markets head Oliver Seiler, and continued to develop its litigation and trial department in New York by capturing Freshfields Bruckhaus Deringer executive partner Michael Lacovara, who left the Magic Circle firm less than six months into a five-year term serving on its four-person management team.
Voge and Black both pointed out the international growth of Latham’s pro bono program in 2016, with 80 percent of the firm’s non-U.S.-based lawyers undertaking pro bono work last year, up from 50 percent in 2011. In the U.S., 98 percent of Latham attorneys participated in pro bono activities last year, up from 79 percent in 2011.
The firm handled various pro bono assignments relating to the Syrian refugee crisis and provided direct support to more than 100 asylum seekers in Germany. It also continued its long-standing work supporting U.S. veterans.
“We’re very pleased with the revenue we’ve received from our valued clients, but we also judge our performance on how we’ve helped those that aren’t able to pay the Latham rates,” said Voge. “Our pro bono numbers are just as important as the $2.8 billion in revenue.”
Voge said he is “very optimistic” about Latham’s prospects in 2017, and said the firm will continue to develop its business globally through strategic hires, particularly in its London office and its disputes, financial institutions and regulatory practices.
“We’re not slowing down at all,” he said.
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