For most of Florida’s seven Am Law 200 firms, 2016 brought growth in revenue but patchwork results in other key metrics.
Six of the seven firms saw revenue growth last year, but only two saw any forward movement in revenue per lawyer—a metric that firm managers and analysts say is a key indicator of law firm health.
While Florida firms shifted up and down the national Am Law 200 gross revenue charts, they maintained their previously established order among their fellow Florida Am Law firms.
Greenberg Traurig remained the top revenue maker among Florida-based law firms with $1.3 billion in revenue, which represented a 4.2 percent increase from the previous year. Greenberg was followed on the revenue chart by Holland & Knight, Akerman, Carlton Fields, GrayRobinson, Shutts & Bowen and finally, Greenspoon Marder, which grew faster than the others, with a 17.2 percent gross revenue increase to $122 million.
Together, the seven firms made $128 million more in gross revenue in 2016 than in 2015. And four of the seven firms translated the revenue into growth in profits per equity partner.
Greenspoon Marder, with strong growth that was based in part on a national expansion into the legal marijuana sphere, saw the greatest jump in profits per partner, with a 10.2 percent increase to $595,000 per equity partner.
Greenberg Traurig’s profits per equity partner grew 4.7 percent to $1.5 million, and Holland & Knight’s grew by 3.2 percent to $1.29 million. Shutts & Bowen saw profits per equity partner increase 2.7 percent to $760,000.
But Akerman and GrayRobinson both saw their profits per equity partner drop 2.2 percent to $660,000 and $445,000, respectively, following hiring at both firms.
Only Carlton Fields, which is two-thirds litigators, saw a drop in overall revenue and profits per partner, which the firm’s management said is evidence of the firm wrapping up a lucrative litigation cycle while it takes on new work. The drop of 11.7 percent in revenue at Carlton represented $26 million less in revenue than the previous year, and profits per equity partner for the year dropped 16.2 percent. The firm’s leadership also reported a drop in headcount, mostly from attrition but also included “counseling out” some lawyers whose skills are not needed for the kinds of cases that are coming in.
Although six of the firms reported revenue increases and four reported increases in profit per equity partner, only two—Holland & Knight and Shutts & Bowen—reported increases in what many consider a more telling metric: revenue per lawyer.
Greenberg Traurig’s RPL remained unchanged at $730,000. Another four Florida firms saw declines in RPLs that ranged from GrayRobinson’s 1.96 percent drop to $510,000, to Greenspoon’s 5.3 percent drop to $620,000. GrayRobinson increased its headcount by 5 percent, and Greenspoon added 37 lawyers nationwide, an increase of about 23 percent.
But Holland & Knight increased RPL by 5.6 percent last year to arrive at $750,000, and Shutts & Bowen increased it by 1.7 percent to $600,000.
Management at both Holland and Shutts credited the success in part to having made concerted efforts to attract not just lateral attorneys but particularly lucrative practice areas.
“Private equity generates a significant amount of merger and acquisition activity and those transactions tend to be large, complex and involve a number of different disciplines,” Holland & Knight managing partner Steve Sonberg said. “In those circumstances, they also produce a higher profit margin than some other practices. We do concentrate on not only looking at revenue, but at the profitability of the revenue we generate.”
At Shutts, the chosen strategic practices include complex commercial litigation, high-end commercial real estate transactions, financial institution representation, international and domestic tax practices, intellectual property and health care.
“Essentially we’ve been able to develop our high-end, more profitable practice areas that command higher rates,” said Bowman Brown, chairman of Shutts & Bowen’s executive committee. “We’ve done that partially through bringing in laterals with specialized practice areas.”
Joshua Dull, a legal recruiter at Major, Lindsey & Africa in Miami, said law firms put themselves at an advantage when they concentrate on laterals that either build up a firm’s strengths or are key to helping it differentiate itself in strategic growth practice areas. But making the tough decisions behind letting lawyers go is also important, especially in an environment where many firms are dealing with a supply of lawyers that outweighs the demand for legal work, he said.
“Management teams that are willing to make tough decisions in terms of dealing with unproductive lawyers in the long run position themselves better for growth,” Dull said.
But growth in revenue per lawyer also generally means retention of the good lawyers a firm already has. Even productive new laterals generally need time to build up their books of business, while productive established attorneys are already billing those hours.
What is more, firms with very stable, low-turnover environments also have an easier time encouraging collaboration among lawyers, which makes the firm more profitable, Brown said. Shutts’s collaborative culture, he said, is both a result and a cause of its low turnover rate.
“A high degree of stability encourages trust among our lawyers,” Brown said. “There’s always a fear when firms have a high rate of turnover and you collaborate with your partner [that] if he leaves, he may leave with your client or part of your client.”