Thomas Milch of Arnold & Porter (Photo: Diego M. Radzinschi/ NLJ)
For the first time since 1994, Arnold & Porter saw a decline in gross revenue last year, according to our reporting.
Gross revenue went down by 6.2 percent, from $731 million in 2012 to $686 million last year. Profits per partner dropped by 6.3 percent, from $1.42 million to $1.33 million, and net income also declined, by 9.5 percent, from $353 million to $319 million. The data are part of The National Law Journal‘s reporting of 2013 financial results of The Am Law 100, a list of the country’s highest-grossing firms.
Firm Chairman Thomas Milch attributed the decline to the “confluence of events” of several significant matters ending in late 2012 and early 2013. Milch cited, among other things, the firm’s handling of the 2012 sale of approximately $63 billion in assets for Aurora Bank FSB to Nationstar Mortgage LLC.
Milch said the firm didn’t see a downturn in work in any particular area.
“I’m not happy with the results,” Milch said. “We’ve had some pretty extraordinary jumps, so we did go down this year, and I think that it’s a reflection … in part of the challenges in the marketplace.” The firm saw a 14.3 percent increase in gross revenue between 2011 and 2012.
Milch said the decline in the firm’s financials would not prompt changes within the firm. “We feel very good about where we are. We think we had a strong year,” he said. “Obviously we’d prefer to go up every year.”
Major matters the firm handled last year included advising The Kroger Co. on its $2.5 billion merger agreement with Harris Teeter Supermarkets Inc. The firm reported advising on approximately $20 billion in sovereign financing deals.
In April, the firm secured a ruling from the U.S. Court of Appeals for the D.C. Circuit upholding the dismissal of a $17 billion lawsuit against the Republic of Colombia concerning rights to sunken treasure dating back more than 300 years.
Arbitration was a strong practice area in 2013, Milch said, with the firm engaging in matters on behalf of a number of foreign governments, including South Korea, Hungary and Panama. Other firm clients included BP PLC and the Federal Housing Finance Agency, the conservator for Fannie Mae and Freddie Mac.
The number of attorneys at Arnold & Porter went down by 3.7 percent, from 748 in 2012 to 720 last year. The number of partners also dropped, by 3.6 percent, from 248 to 239. Milch said the firm lost some partners to retirement and also didn’t grow the partnership as much as it had in previous years, in part because the firm was focusing on integrating hires from previous years.
“We are not growing for the sake of growing,” Milch said. “But over a longer time period, we’ve grown as a law firm over the last six, seven years, and I think we’re going to continue to grow.”
New partner hires last year included San Francisco-based litigator Peter Obstler, who came from Bingham McCutchen and brought expertise in financial services, and former U.S. Air Force general counsel Charles Blanchard.
The average compensation for partners went down by 6.3 percent, from $1.42 million to $1.33 million.
Looking ahead to 2014, Milch said the firm would focus on growing practice areas that had long been strong, including arbitration, patent litigation, antitrust, life sciences and government regulation. He said he expected to see an uptick in work on data security issues.
“It’s a very challenging market out there. I expect it will be a challenging market again in 2014 and 2015, for law firms,” Milch said. “I think we’re in a strong position, I feel good about the firm. I’m particularly excited about the next generation.”
This report is part of The National Law Journal‘s coverage of 2013 financial results of The Am Law 100. Final rankings and full results for The Am Law 100 will be published in the spring in The American Lawyer and on AmericanLawyer.com.