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Latham & Watkins Latham & Watkins offices in Washington, D.C. Photo: Diego M. Radzinschi/ALM

Latham & Watkins has become the world’s first law firm to exceed $3bn in annual revenue, setting a new benchmark for the industry and erecting a new challenge for other firms looking to take its place at the top of the Am Law 100.

The global giant boosted its revenue by 8.5% to $3.064bn in 2017, while profits per equity partner (PEP) grew 6% to $3.25m, according to preliminary ALM data. The results come on the heels of a strong 2016, when revenue rose 6.5% and PEP grew 5.3%.

While the firm declined to provide specific details of its London performance, London-based vice chair Richard Trobman said that the City office had seen a double-digit increase in revenue over the year.

Trobman said: “I think our partners recognise the importance that London has for our overall platform. We had a spectacular year in London and growth in the City exceeded growth in the firm overall.”

Latham’s revenue growth was supported by a nearly 7% surge in lawyer headcount last year. The number of lawyers at the firm rose to 2,436, and revenue per lawyer inched up 1.5% to $1.258m.

The firm’s equity partner ranks grew by 2.6% to 477, helped in part by 34 lateral partner hires during the course of the year.

LeeAnn Black, the firm’s COO, said she plans to talk at an upcoming Latham partners’ meeting about how the firm accomplished its “1-2-3” punch of reaching the $1bn revenue mark in 2003, the $2bn mark in 2007, and now the $3bn mark.

“It was a lot of strategic thought and effort and execution to actually get all the pieces in place,” Black said in an interview. “And now we have this wonderful opportunity in front of us to take advantage of it, and we’re starting to see significant benefits.”

Trobman agreed that the firm was poised to keep building on its recent growth. “We’re convinced that we’ve only begun to benefit from all the investment that we’ve put in over the years,” he said.

Kirkland & Ellis has not yet reported its 2017 financial results, after the firm placed second in the Am Law 100 rankings last year. In order for the Chicago-founded firm to top the $3bn revenue mark it would need to grow its top line by about 13% from 2016.

‘One stop’ for talent

On its path to breaking revenue records, Latham has invested heavily in the global lateral market over the past decade, competing for top legal talent in the largest legal centres – New York, Washington DC, Silicon Valley and San Francisco, London and Germany – and 2017 was no different in that regard.

Among other high-profile lateral hires, Latham brought on former DLA Piper senior partner Juan Picon in Madrid; former Wilson Sonsini Goodrich & Rosati co-managing partner John “Jack” Sheridan in San Francisco; former Quinn Emmanuel Urquhart & Sullivan litigator Martin Davies in London; and, also in London, former Quinn Emmanuel financial regulatory head David Berman.

Trobman said the firm is looking to make further hires in litigation and corporate, as well as in finance and capital markets. “The market for the best legal talent is incredibly competitive,” he said. ”We are trying to distinguish ourselves. We will continue to pursue the best talent.”

The firm’s strong performance in London last year came on the back of a concerted period of lateral recruitment in the City during 2016, with partners joining from top UK firms including Slaughter and May, Allen & Overy and Ashurst.

“2016 was a really interesting year for hiring because the platform and our investment all came together – all the areas we had focused on,” Trobman added. ”If the opportunities present themselves, we would hire as many people this year as we did then.”

Trobman also said the firm’s hire of former DLA chief Picon would help in its efforts to leverage Spain as “a gateway for Latin America”.

“Spain as a market in of itself is extremely important – we see it as a gateway for Latin America. We see real opportunity there,” he said. ”When we opened in Spain ten years ago we were very disciplined and [former Spain managing partner] Jose Luis Blanco did a wonderful job, but we thought that with him retiring, and the evolution of our thought process on Spain and how it fits into the global platform, that it was the right time to pursue a slightly different strategy. We were very fortunate that Juan Picon could join us.”

The firm also focused on building its trial and disputes practice last year, hiring 18 laterals in that group. Those included former Kirkland & Ellis partners Andrew Clubok in Washington DC and Elizabeth Deeley in San Francisco. Thomas Nolan joined from Skadden Arps Slate Meagher & Flom in Los Angeles, where Joshua Hamilton also came over from Paul Hastings.

The additions are increasingly paying off, Trobman and Black said, as Latham’s clients have turned to the firm for a larger share of their global legal needs.

The firm’s 25 largest clients, for instance, have engaged Latham lawyers from an average of 21 of Latham’s 31 offices, the firm said. Its top 50 clients have engaged lawyers from an average of 19 offices.

While some corners of the legal market are concerned by client efforts to disaggregate legal services, Trobman said Latham believes the firm’s clients want one law firm to provide a well-rounded range of practices.

“Given their choice, our view is that most clients and our clients would prefer to have one stop,” Trobman said. “The problem for most of those clients is finding a firm, finding somebody, that can actually deliver that consistency of quality across the entire platform.”

Latham’s transactional practices saw healthy growth last year, with the firm’s M&A, capital markets and banking groups each growing more than 25% from the previous year.

Latham’s capital markets practice, for instance, advised on more than 790 debt and equity capital markets transactions, helping clients raise more than $496bn globally.

“There was a lot of apprehension coming into 2017 because of Brexit, and throughout the year we saw the concerns around tax reform,” Black said. “But the way it has played out has been just a fabulous year for the transactional market. And going forward we see that companies have a significant amount of cash on hand, and the market is primed for a big financial year. We feel quite strong about 2018.”

The firm also says 100% of its US lawyers and 83% of the lawyers in Europe, the Middle East and Asia worked on pro bono matters last year, totaling more than 236,000 hours valued at more than $180m.

Trobman said the firm would continue to recruit partners in major markets where it has already brought in talent from major law firms.

“We’re looking to build on our successful 2017 and have an even more successful 2018,” Trobman said. “We’re not complacent. We’re going to continue to invest in our platform. We’ll continue to focus and deliver sustained, profitable growth.”

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