David Greenwald ()
Fried, Frank, Harris, Shriver & Jacobson had what global chair David Greenwald described as its best ever year in 2016, with the firm posting record numbers across all key metrics.
The New York-based firm’s revenue increased by more than 10 percent last year, to $556.5 million, passing its pre-recession peak of $537.5 million, set in 2007.
The significant growth in gross revenue meant that the firm’s average revenue per lawyer rose 3.3 percent, to $1.26 million, despite a 6.8 percent increase in total lawyer numbers, to 440.
Fried Frank’s growth in net income was even more impressive, leaping 15 percent, to $263 million in the last fiscal year, which for the firm ended on Feb. 28.
This drove substantial gains in average profit per equity partner, which, having broken through the $2 million barrier for the first time in 2015, rose 13.6 percent last year, to $2.51 million.
“They’re the best financial results in the firm’s history,” Greenwald told The American Lawyer. “Our fantastic financial performance reflects the efforts of everyone at Fried Frank—lawyers and staff.”
The results represent another outstanding year for Fried Frank, which has seen a significant improvement in its financial performance since Greenwald took over as chair in 2014. In the past two fiscal years, its revenue has increased 21 percent, its net profit is up 36 percent and its profit per partner has risen 38 percent. This hasn’t been fueled by merger or massive expansion, however: The firm’s total lawyer head count has only expanded by 6 percent over the same period.
Greenwald, a former deputy general counsel at Goldman Sachs, said the firm’s continued growth is partly due to an improvement in underlying market conditions—”in some ways, the rising tide is raising our boat,” he said. But it also reflects a series of strategic and operational changes made by Greenwald early in his tenure.
Shortly after replacing former chair Valerie Jacob, who subsequently left the firm along with two other partners to join Freshfields Bruckhaus Deringer, Greenwald undertook a rigorous review of Fried Frank’s business. This led to the implementation of a new, more focused strategy for the firm to target high-end work in the United States and Europe across six core transactional areas: M&A, private equity, real estate, finance, capital markets and asset management. (The firm also pulled out of Asia, closing its Hong Kong and Shanghai offices, which were operating at a loss. “It was a question of discipline and good business judgment,” Greenwald told The American Lawyer at the time.)
Greenwald also set about improving the firm’s efficiency and productivity. His initiatives have included a new partner self-assessment process and a timekeeping policy that fines partners $100 per day if they are late to record their weekly billable hours. This practice fixed the firm’s issues with timekeeping “overnight,” he said, while the other changes—and the improved financial results—have fostered a more positive, driven partnership culture.
“I think people are more focused on building the business, more optimistic about the future and generally more excited about being partners in the firm,” Greenwald said.
Fried Frank achieved growth across all practice areas and offices in 2016, Greenwald said, with its London revenue “way up” over the previous year. (The firm would not disclose specific revenue figures for any individual office.) Fried Frank established a London restructuring practice last year, hiring Ashley Katz, Mayer Brown’s co-head of restructuring, bankruptcy and insolvency. The office also benefited from its asset management practice, which had its first full year of operation after launching in mid-2015 following the arrival of a three-partner team from Kirkland & Ellis.
Greenwald said that while Brexit has made the firm “more cautious” about its investment in London, it hasn’t changed its overall strategy or dented its ambitions. “London has been a capital of finance for centuries—I don’t see that changing anytime soon,” he said. “Our results show an incredible improvement in London, but we have a lot more to do there.”
Fried Frank last year moved into new offices in London, taking approximately 32,000 square feet across two floors in the heart of London’s financial district.
Greenwald does think that the U.K.’s decision to leave the European Union will cause continental Europe to become a “more important” market for global law firms. Brexit is widely expected to result in a shift of some business from London to cities such as Frankfurt and Paris. Fried Frank already has a small office in Frankfurt, and Greenwald said the firm is now “trying to figure out what to do there” in response to Brexit. “Things aren’t going to change overnight—we’ll have to see what we need to do to service our clients as the situation evolves,” he said. “That almost makes it harder to address. You need to have a lot of foresight.”
Fried Frank had another busy year of recruiting in 2016, making eight lateral partner hires. These included Paul Hastings’ banking and payment systems head Gerard Comizio, who joined the firm in December to lead and develop its banking practice globally. More recently, in January 2017, Fried Frank further boosted its global asset management practice with the hires of Akin Gump Strauss Hauer & Feld partner Jeremy Berry and the D.E. Shaw & Co.’s general counsel John Liftin, who joined the firm as senior counsel.
Greenwald said that the firm will now “probably hit the pause button” on additional hires in asset management, but will continue to invest in its other core practices— particularly litigation. Increasing the proportion of the firm’s contentious business is a key strategic priority, he said, adding that the firm would like to double the size of its 25-partner litigation practice within the next five years.
Greenwald said he expects the firm to continue to grow in 2017. “We’re optimistic about the upcoming year, despite the economic and perhaps more importantly political uncertainties that we and our clients are facing,” he said.
Chris Johnson, chief global correspondent at ALM, writes about law firms and the business of law from London.