Squire Patton Boggs offices in Washington, D.C. March 2015. Photo by Mike Scarcella/THE NATIONAL LAW JOURNAL. (Mike Scarcella)
Squire Patton Boggs edged total revenues closer to the $1 billion mark and posted average partner profits of nearly $1 million in 2016, in what Steve Mahon, the firm’s global managing partner, called its “best year ever.”
Gross revenue grew by $54 million to $983 million, a 6 percent increase over 2015. Revenue per lawyer was up 3 percent to $670,000.
Profits per partner last year jumped 15 percent, reaching $975,000.
In a statement, Mahon said the firm’s cross-border compliance, regulatory, transactional and litigation practices had especially contributed to its rising fortunes.
“We have spent the past several years making investments aimed at building a platform that helps our lawyers deliver results for clients, and also attracts new clients and talent to the firm,” Mahon said. “We are seeing those investments pay off.”
Squire Patton Boggs was formed in 2014 with the combination of Squire Sanders, a firm with roots in the U.K. and in Ohio, and Patton Boggs, which was based in Washington, D.C. Last February it grew again, bolstering revenue with the acquisition of 55-lawyer San Francisco-based firm Carroll, Burdick & McDonough.
Carroll Burdick’s former chairman Matthew Kemner told The Recorder last week that 12 of the firm’s 13 equity partners have stayed at Squire. “I don’t know a single one of the 12 who hasn’t been working on legacy Squire projects,” he said.
The combined firm exceeded 2016 budget goals by almost 10 percent, Kemner added.
Overall, Squire Patton Boggs’ head count grew by 40 lawyers in 2016, to 1,466 worldwide. The firm counted 172 equity partners—26 more than it had in 2015. The nonequity partnership shrank by 34 full-time equivalent positions, to 308. A firm spokesman said the changes in partnership totals represented natural attrition and promotions from nonequity to equity status.
Besides the merger, Squire initiated other internal changes in the United States. The Patton Boggs’ legacy lobbying reputation in Washington resurged when former Republican House Speaker John Boehner, an Ohioan, joined the firm in September.
The firm also hired top lawyers from Nationwide Mutual Insurance Co. and Starwood Hotels & Resorts.
Frederick Nance, a partner in Cleveland, became the firm’s U.S. managing partner this year, while Jane Haxby in the U.K. leads the European portion of the firm. Squire is organized as a Swiss verein, so finances and management can remain separate between markets.
In court, Squire saw several wins—for its clients and the firm itself.
A federal judge’s ruling protected the firm from a challenge to a settlement its predecessor firm had made with Chevron Corp. regarding legal work done related to a long-running dispute over pollution in Ecuador’s rain forest. Squire Patton Boggs was represented by lawyers at Morvillo Abramowitz Grand Iason & Anello.
In domestic matters, the firm earned the contract to independently monitor the police force of Ferguson, Missouri, following federally mandated reform. That work is capped at $1.25 million over five years, or no more than $350,000 in a single year.
Income in Focus
Even with its recent merger history, the income increase that Squire Patton Boggs reported for 2016 is unusual. Net income—meaning the total profits divided among equity partners last year—grew by $44.5 million, or 36 percent, to $167.5 million. Setting aside new income used to compensate promoted equity partners, which previously would have been considered an expense, Squire converted nearly half its new revenue directly into profits.
John Niehoff, an accountant with Baker Tilly Virchow Krause, who looked at the numbers and does not work for Squire, called the margin increase “outstanding.” Profitability increases such as Squire’s typically relate to a major contingency win or a dramatic shift in the utilization of lawyers firmwide, he said.
“An overall average increase in contribution from all lawyers in the firm, including lateral additions, has contributed to this year’s financial results,” a firm spokesperson said when asked for further explanation of the margin increase. The profitability was “not materially impacted by any contingency fees, cost-cutting initiative, exchange rate changes” or changes in the management of the partnership, the spokesman added.
Two years ago, Squire’s partner compensation ratio was the highest in Big Law, with top-earning partners making 30 times more than the lowest earners as of two years ago. In 2016, the firm reported that its highest-earning partners received a more modest 12 times that of the lowest-compensated partners, including nonequity. A 12-to-1 partner compensation ratio is close to what’s typical among Am Law 100 firms.
Squire’s expansion plans continue this year. The firm acquired a four-lawyer intellectual property boutique in Palo Alto two months ago. The firm also added three IP lawyers in Germany before the end of the year.
Katelyn Polantz is based in Washington, D.C., and writes about government and the business of law. She can be reached at email@example.com. On Twitter: @kpolantz.
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