Even with cost-conscious clients keeping industrywide demand in check, Duane Morris edged forward in 2016, hitting new highs for revenue and profits per equity partner (PPP).
The firm boosted revenue 4.6 percent, from $434.5 million in 2015 to $454.5 million in 2016. Revenue per lawyer (RPL) was basically flat, going from $695,000 in 2015 to $700,000 in 2016, an increase of 0.7 percent.
The firm’s total lawyer head count grew by 4 percent, to 651 lawyers. The equity partner tier grew by 2.5 percent, to 122, regaining ground lost since 2014.
The firm also saw growth in PPP, which increased by 4.4 percent in 2016 to $940,000.
“The demand curve is in a challenging place for law firms,” Duane Morris chairman John Soroko said. “We were very fortunate to post the numbers we did.”
Duane Morris had a good year in litigation, corporate deal work and intellectual property, Soroko said, while the real estate and employment law practices were particularly strong.
Meanwhile, he acknowledged, maintaining a steady pipeline of relatively simple matters is getting harder and harder.
“The market continues to be influenced by all kinds of disrupters,” Soroko said, including growing corporate in-house departments and alternate service providers.
He said sophisticated clients are no longer looking for representation “on a soup to nuts basis,” and are going to alternate providers for basic services. This has been a gradual change, he said, but it has stepped up recently.
“All practices are subject to this to a degree,” Soroko said.
Like other firm leaders, Soroko said his firm has noticed the effects of an industrywide downturn in bankruptcy activity. However, he noted, the firm still handled a significant amount of bankruptcy work.
Expenses and Expansion
Soroko said the firm prepaid a larger-than-usual proportion of its 2017 expenses, and the financial results could have been meaningfully different were it not for that prepayment. The firm has prepaid expenses virtually every year of the last 10, he said.
Soroko said the firm aims to “live within our means.” But Duane Morris is among many firms grappling with added expenses from associate raises last year.
Associates at Duane Morris enjoyed two recent bumps in salary, once in September 2016 and another at the beginning of this year. The base salary for first-year associates is now $165,000. The firm is also adding associates, Soroko said.
“That gets expensive,” he said. “This is something that law firms have to manage around.”
The firm made a number of notable lateral hires in 2016, both in the United States and abroad.
Duane Morris has continued its emphasis on emerging markets, Soroko said. The firm opened an office in Taiwan in the fall, which he said has been successful so far. It was the firm’s fourth new international office since 2013.
Soroko said he doesn’t anticipate a change of strategy in Asia, even though some large law firms are considering closing their Asia offices. The firm first planted a flag on the continent in 2007, when it opened an office in Singapore and two in Vietnam.
Soroko said other firms may have pulled out of Asia in reaction to operational results in those offices. But Duane Morris’ Asian offices are performing well, he said, and have smaller operational costs. About 10 percent of the firm’s total head count is outside the United States,
Duane Morris also expanded its presence in Los Angeles, where it absorbed an eight-lawyer corporate and banking boutique, bringing an established corporate practice to the Los Angeles office for the first time. That office now has 28 lawyers.
In south Florida, the firm added 11 lawyers in 2016. That includes five partners and four associates who joined the Miami office from Carlton Fields Jorden Burt in April. They brought several different practices, including tax and wealth planning. The firm now has 40 lawyers in south Florida.
Soroko said he hopes to continue growth in Los Angeles and Miami in 2017. He also said he wants to continue growing the firm’s corporate and transactional practices.
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