Gary Wingens
Gary Wingens ()

Lowenstein Sandler, one of New Jersey’s highest-grossing home-grown firms, enjoyed strong revenue growth last year thanks largely to a marked rise in transactional work.

The Roseland firm’s $222.5 million in gross revenue for fiscal year 2013 is a 3.5 percent climb from the prior year’s total, $215 million, according to a survey by The American Lawyer.

That growth rate beats recently reported averages of 2.5 percent, in a survey of national firms by Citi Law Firm Group, and 2.2 percent, in a survey of national and global firms by Wells Fargo Legal Specialty Group.

The increase puts Lowenstein on track to once again top the New Jersey Law Journal‘s annual list of highest-earning firms and branches in the state.

Managing partner Gary Wingens says the growth was driven largely by a 19 percent revenue spike in transactional practice.

That includes the burgeoning life sciences industry. Wingens says part of the firm’s five-year strategy has been to add lawyers to service that sector, in which Lowenstein counseled six initial public offerings in 2013.

“Because we had invested there, we were able to take advantage of that growth,” Wingens says. “We were able to participate in a market pickup…and to increase our market share.”

He adds that increased M&A activity, especially among private equity clients, also fueled the growth: 2013 saw more deals, particularly middle-market transactions valued less than $1 billion.

Lowenstein’s bankruptcy practice—which hedged drop-offs in other areas during the recession’s bleakest years— also fared well, with 6 percent revenue growth.

Wingens claims the year-to-year revenue jump is much higher (9.4 percent) in “core” revenue, which excludes receipts from contingency matters. Last year was anomalous in that not a single contingency matter was resolved, which affected the total gross, he says.

Most other metrics paint 2013 as a good year for Lowenstein.

Profits per partner grew on pace with gross revenue (up 3.5 percent, to 1.5 million from 1.45 million) while average partner compensation climbed 6.9 percent (to $1.01 million from $945,000).

Still, not all the news was sterling. Though Lowenstein remains the most profitable firm, by a wide margin, in New Jersey’s Top 20, profits dipped 6.7 percent (to $70 million from $75 million) and the profit margin fell to 31 percent from 35 percent.

Also, revenue per lawyer stayed relatively flat: a 0.6 percent uptick (to $850,000 from $845,000).

Wingens declines to specify which practice groups need improvement but points out that the 6 percent revenue growth in litigation practices, while “directionally right,” is “certainly not what it was pre-recession.”

“I think it is a long-term shift in outlook” by clients now more reluctant to embark on costly litigation, he says. “They’re looking for value and certainty in an uncertain world,” including early case resolution and alternative billing models, Wingens adds.

Lowenstein’s firmwide headcount increased 2.8 percent (to 261 from 254).That puts it on a pace to remain New Jersey’s third-most populous firm, behind McCarter & English in Newark and McElroy, Deutsch, Mulvaney & Carpenter in Morristown.

The firm reported a 9.6 percent drop in equity partners (to 52 from 47) and 27.8 percent rise in nonequity compensation (to $34.5 million from 27 million), but that’s because the firm for the first time adjusted its definition of equity partnership to match The American Lawyer‘s, which excludes partners receiving a certain level of fixed income, Wingens says.

Lowenstein didn’t acquire any firms or practice groups in 2013, though it made four lateral hires, and hasn’t needed to reduce headcount, Wingens says.

Brian Davis—a recruiter in Major, Lindsey & Africa’s New York office who works with firms and financial institutions—says there’s been a “tremendous pickup” in transactional practices that is “broad and deep.”

“It seems like all of our clients are really busy in transactional” and looking to make new hires, he adds.

Davis, who does recruiting work for Lowenstein, says it has penetrated the New York market well and is “competing against the New York firms” to advise the most significant deals.

“They seem to really have a tremendous game plan and are executing it well,” says Davis. “It just seems like they don’t really make big missteps when it comes to growing the firm.”

In the coming year, that growth is likely to come in the form of a new office in Washington, D.C., where Lowenstein currently is communicating with several acquisition targets, Wingens says.

It would be Lowenstein’s first new office since 2008, when it set up shop in Palo Alto, Calif., concentrating on intellectual property and linking up investor clients on the East Coast with technology firms out West.

Aside from its Roseland headquarters, Lowenstein has several dozen attorneys in its New York office.

A Washington, D.C. expansion would allow Lowenstein to grow its regulatory practice—something McCarter did earlier this month by acquiring 14-lawyer Miller, Balis & O’Neil and opening an office in the capital.

For Lowenstein, better regulatory capabilities could mean peripheral growth in life sciences, health-care, white collar and securities practices, Wingens says.

“One of the nice things about our industry is, there still are a lot of paths to success,” he says.

“A lot of the pundits like to complain” about the state of the legal industry, he adds. “It’s still a very good business to be in.”