Robert Reedy, Porter Hedges.

Outpacing the growth rate of many larger Texas-based firms, Porter Hedges saw revenue increase 9.5% and net income grow by 13.6% in 2018, even as its lawyer count changed little from the year before.

The firm, which has offices in Houston and Oklahoma City, posted gross revenue of $83.8 million in 2018, compared with $76.5 million in 2017, and revenue per lawyer was $838,000, up 12.4% from $746,000 in 2017.

Profits per equity partner burst through the seven-figure mark at $1.013 million, up 20.3% from $843,000 last year. Net income was $34.5 million, compared with $30.3 million the year before.

Changes in lawyer counts did boost those improvements in RPL and PEP, but only slightly. Total lawyer head count dipped a little in 2018, with 100 lawyers on a full-time equivalent basis, compared with 103 in 2018. And the equity partnership included 34 lawyers in 2018, down two from the year before.

The strong financial performance in 2018 comes after less impressive results in 2017, when revenue improved by 1.3% and RPL increased 2.8%, but PEP dropped 7.5%.

Robert Reedy, the firm's managing partner, said Porter Hedges' strategy of concentrating growth on key practice areas is reaping benefits.

“We have made some significant investments in people over the last few years, both laterals and organic growth. It's time for all of that to pay off and it paid off big time in 2018,” said Reedy, who has led Porter Hedges since 2009.

Most of the firm's lateral hires in 2018 were at the associate level, with many of them coming from much larger firms, Reedy said. “That's a big deal for us,” said Reedy, who also noted that four associates were promoted to partner in January 2018 and five this January.

In December 2018, the firm hired lateral real estate partner Tracey Reisman Gerber, who came from Houston's Schlanger, Silver, Barg & Paine.

Asked which practice groups contributed to Porter Hedges' 2018 growth, Reedy said the bankruptcy practice group “performed at a high level” in 2018, noting that Chapter 11 clients include PetroQuest Energy, of Lafayette, Louisiana. Additionally, litigation was very busy, bucking national trends, he said, and transactional practices also did very well.

But Reedy said no single practice area should get all the credit for 2018's strong financials, and while about a third of the firm's revenue comes from litigation, there was no windfall from any single case.

Despite all the activity in the Texas legal market, with out-of-state firms opening offices in the state and high lateral movement, Porter Hedges is staying focused on its strengths in corporate, energy, bankruptcy, litigation, finance, real estate and construction. The middle-market firm also has strong ties to the energy industry and clients benefit from its competitive billing rates, he said.

Despite the active law firm merger market, Reedy said Porter Hedges lawyers intend for the firm to stay independent, particularly with how well 2018 turned out.

As for 2019, Reedy said, “So far, so good.” However, he notes that 2018 results have set a much higher bar to exceed.

“The results speak for themselves. We are very pleased. We are always trying to get better,” he said.

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Report: Texas Lawyer's 2018 Firm Finance