Whew — 2009 is over.
That thought likely ran through the minds of managing partners of the 25 highest-grossing Texas firms at the end of 2009, which was a dismal year for the U.S. economy.
The financial results of the 25 Texas-based firms included in Texas Lawyer ‘s Annual Report on Firm Finance reflect the rough economic times. Combined gross revenue at the 25 firms posted a rare decline in 2009 of 3.7 percent compared to 2008, and net income was flat. In 2008, combined gross revenue increased by 3.8 percent compared to 2007, and net income again was flat.
The bad economy had an impact on how well Texas-based firms did in 2009, but the overall result wasn’t too bad, all things considered. While some practice areas, including real estate and mergers-and-acquisitions, were unusually slow in 2009, other practices were booming, managing partners say in interviews. Some of those robust practices include litigation, bankruptcy and restructuring, white-collar crime defense, compliance and privacy, and work for private equity funds. Managing partners say the first few months of 2009 were relatively slow, but business in many areas, including energy deals so important to Texas firms, picked up during the last half of the year.
In 2009, the 25 highest-grossing firms brought in a total of $5.2 billion in gross revenue, which is 3.7 percent less than the $5.4 billion combined gross revenue for the 25 highest-grossing firms in 2008. Nine of the firms improved their gross revenue in 2009, while 16 posted lower gross revenue than in 2008. [See "Despite Economy, Ike, BigTex Revenue Rose in '08," Texas Lawyer , April 27, 2009, page 18.]
All but one of the firms on this year’s list are making return visits. The newcomer is Houston firm Looper, Reed & McGraw, which replaces McGinnis Lochridge & Kilgore of Austin.
The five highest-grossing Texas operations of out-of-state firms are ranked separately.
The dip in combined gross revenue at the 25 firms is unusual, but 2009 wasn’t a typical year because of the economy. In 2008, combined gross revenues at the 25 firms on the list increased by 3.8 percent over 2007, but percentage increases have been much larger for most of the past decade. The increase in 2007 was 6.1 percent, the increase in 2006 was 8.9 percent, and the increases in 2005 and 2004 were 2.3 percent. Gross revenue went up by 4.9 percent in 2003, 7.9 percent in 2002, 15.1 percent in 2001, 13.8 percent in 2000 and 16 percent in 1999.
The combined net income, which is compensation to equity partners, was unchanged in 2009 — for the second year in a row — at $2.1 billion.
Average revenue per lawyer at the 25 firms was $642,000 in 2009, down 1.8 percent compared to an average of $654,000 in 2008.
Average profits per partner at the 25 firms were $813,000 in 2009, up 2.4 percent from $794,000 in 2008.
Those four measures in the Annual Report on Firm Finance help describe each firm’s financial performance and provide a means to compare them. This year marks the 24th Annual Report on Firm Finance published by Texas Lawyer. The first was published in 1987, when it included the 10 highest-grossing firms in Texas for 1986.
As it has done for the 12th year in a row, Akin Gump Strauss Hauer & Feld of Dallas leads the list of the highest-grossing firms, with $718.8 million in gross revenue, although the firm’s gross is 7.9 percent off the $780.5 million it posted in 2008. The next four firms on the list hung on to their positions from last year: Fulbright & Jaworski of Houston had $642.3 million in gross revenue in 2009; Houston-based Baker Botts had $574.8 million; Houston firm Vinson & Elkins had $561.9 million; and Dallas’ Locke Lord Bissell & Liddell had $399 million.
The gross revenue chart is the master list for the Annual Report on Firm Finance.
Related charts and other stories:
Looper, Reed & McGraw and Gardere Wynne Sewell saw the biggest bump in gross revenue in 2009, with increases of 10.6 percent and 10.5 percent respectively. Dallas firm Carrington, Coleman, Sloman & Blumenthal posted the largest decline, with 22.3 percent.
Fulbright kept its top spot on the net income chart, with $270 million in 2009, down 6 percent from $287.3 million in 2008. V&E moved into second place, with $261.5 million, and Baker Botts dropped to third place with $253.3 million. Like last year, Akin Gump and Locke Lord take the next two spots on the list with $247 million and $128 million, respectively.
Thirteen of the firms boosted their net income in 2009, and 12 did not. Gardere improved its net income by a whopping 38.9 percent, with $89.6 million in 2009 compared to $64.5 million in 2008, but managing partner Stephen D. Good says the increase is largely due to some extraordinary contingent-fee income. Other firms with double-digit increases in net income are Winstead, up 15.5 percent; Looper, Reed, up 14.9 percent; Chamberlain, Hrdlicka, White, Williams & Martin of Houston, up 14.6 percent; and Akin Gump, up 12.1 percent compared to 2008. On the other hand, net income at Austin’s Brown McCarroll declined by 26.6 percent in 2009, and the drop was 14.3 percent at Carrington, Coleman and 13.8 percent at Clark, Thomas & Winters of Austin.
Litigation firm Susman Godfrey of Houston again topped the RPL chart with $1,477,000 in 2009, down 3.3 percent from $1,527,000 in 2008. RPL didn’t reach the $1 million mark at any other firm, although Akin Gump’s was $991,000 in 2009; V&E had $811,000; Baker Botts had $796,000; and Carrington, Coleman had $782,000. RPL was up at 13 firms in 2009 and down at 12 others. Only at Gardere did RPL increase by a large percentage, up 15.4 percent to $764,000 in 2009 from $662,000 in 2008.
The highest profits per partner in 2009 were at Susman Godfrey, where partners earned an average of $1,939,000, down 11.2 percent from $2,184,000 in 2008. Partners in four other firms earned more than $1 million on average in 2009 — Akin, Gump, $1,453,000; Baker Botts $1,362,000; V&E 1,270,000; and Gardere $1,179,000. PPP improved at 13 of the firms in 2009 and declined at 12.
The Annual Report on Firm Finance also includes a Profitability Index that shows whether equity partners in a firm are taking home more or less than average RPL.
Texas Lawyer ‘s Annual Report on Firm Finance includes a firm-by-firm analysis that attempts to explain 2009 financial results from each of the 25 firms. The fact that lawyers from the firms are quoted in this article is no indication of a firm’s cooperation with the preparation of the Annual Report on Firm Finance. Lawyers simply respond to questions about work and developments at their firms in 2009. Texas Lawyer does not identify the firms that cooperate with our reporting by providing financial information or those that do not.
Also, for the eighth year, the report includes graphs that illustrate the trend line for each firm’s revenue over the past several years. The gross revenue numbers were collected from previous Texas Lawyer Firm Finance reports. For a few firms, numbers go back to the first Firm Finance report in 1987, while other firms are newer to the charts. The report does not include a graph for Looper, Reed because the firm is new to the list this year. The graphs are not on the same scale, so they should not be compared side-by-side with graphs of other firms. All the revenue figures illustrated in the graphs are for calendar year 2009, except for Gardere Wynne Sewell, whose 2009 fiscal year ended March 31, 2010.
— BRENDA SAPINO JEFFREYS
AKIN GUMP STRAUSS HAUER & FELD
At Dallas-based Akin Gump Strauss Hauer & Feld, gross revenue dropped 7.9 percent to $718.8 million in 2009, down from $780.5 million in 2008. But the firm posted an increase in its net income of about 12.1 percent, reporting $247 million in 2009, up from $220.4 million in the previous year. Akin Gump chairman Bruce McLean of Washington, D.C., says gross revenue dropped partly because 2009 was a difficult year for the firm’s clients. McLean says the firm also experienced a significant number of departures in its attorney ranks. As of Aug. 31, 2009, Akin Gump had about 725 lawyers in its 13 offices worldwide, down from 807 at the same time in 2008, a decrease of 10.2 percent. Kristen White, Akin Gump’s communications manager, says the firm had 205 lawyers in its Texas offices at the end of August in 2009. McLean says that “all in all, we had a pretty good year” in 2009. Akin Gump’s profits per partner increased by about 3.4 percent, with $1,453,000 reported in 2009, compared to $1,405,000 in 2008. The firm also posted a 2.5 percent increase in its revenue per lawyer, with $991,000 in 2009, compared to $967,000 the year before. McLean says the firm paid very close attention to costs in 2009 and did a good job on collections at the end of the year. Akin Gump’s Texas offices — Dallas, Houston, Austin and San Antonio — also had a good year. Kenneth Menges Jr., Akin Gump’s partner-in-charge in Dallas, says the financial restructuring and bankruptcy practice area was one of the highest performing in his office in 2009. “We were just on fire all year,” Menges says. Fred Hodara, a partner in Akin Gump’s New York City office and the leader of the firm’s financial restructuring practice, says, “Our Dallas office has a particular lock in getting cases in the oil patch and energy-related work.” One of the cases that Hodara cites is In Re: Edge Petroleum Corp., et al., filed Oct. 1, 2009, in the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi. Sarah Schultz, an Akin Gump partner in Dallas, says that on Dec. 11, 2009, U.S. Bankruptcy Judge Richard Schmidt approved the $260 million sale of the equity in the reorganization of Houston-based Edge Petroleum’s subsidiaries to Mariner Energy Inc., also of Houston. Approximately 70 Texas-based Akin Gump lawyers represented Edge Petroleum in the bankruptcy and restructuring, Schultz says. Christine LaFollette, Akin Gump partner-in-charge in Houston, says Akin Gump’s Texas offices did more than 60 deals valued collectively at more than $24 billion in 2009. Those include the $5.5 billion acquisition by Baker Hughes Inc. of BJ Services Co., which has involved 23 Akin Gump lawyers representing Baker Hughes, including 15 in the Houston office. The two Houston-based companies announced their agreement on Aug. 31, 2009, and Akin Gump lawyers continued to work on the deal in 2010, LaFollette says. She also says that 36 Akin Gump lawyers, including 15 from Texas, worked on the $1.2 billion transaction that Houston-based Dynegy Inc. and LS Power Partners, a New York-based equity firm, announced in August. The deal, which closed in December 2009, involved the sale of eight of Dynegy’s power generating plants and an interest in another power plant project to LS Power. As part of the deal, Dynegy reacquired part of its stock shares owned by LS Power, LaFollette says.
— MARY ALICE ROBBINS
Gross revenue at Andrews Kurth of Houston was $243 million in 2009, down 8.7 percent when compared to $266 million in 2008, but the firm posted net income of $80.1 million in 2009, up 1.5 percent over 2008′s $78.9 million. Revenue per lawyer declined by 4.8 percent to $700,000, compared to $735,000 in 2008, but profits per partner improved to $954,000 in 2009, up 5.2 percent over $907,000 the previous year. Managing partner Robert Jewell says the firm’s revenue came in close to an early-year forecast that factored in the nation’s poor economy, but attention to the expense side of the equation helped the firm post an increase in net income for the year. “We were pleased with how responsible our partners were with spending the firm’s money,” he says. Because net income was solid for 2009, the firm for the second year in a row prepaid expenses, using about 10 percent of 2009 profits to prepay 2010 fixed expenses, Jewell says. He says bankruptcy/restructuring and litigation were busy practice areas during 2009, but the transactional, corporate and real estate practices were down during the first few months of the year. Robin Russell, a partner in Houston who does bankruptcy and restructuring work, says major projects in 2009 included representing the Official Creditors’ Committee in the Pilgrim’s Pride Corp. Chapter 11, In Re: Pilgrim’s Pride Corp. , which was filed in U.S. Bankruptcy Court for the Northern District of Texas. The firm also represented creditors in the Lyondell Chemical Co.and Lehman Brothers bankruptcies, Lyondell Chemical Co. and In Re: Lehman Brothers Holdings Inc. ; both were filed in the U.S. Bankruptcy Court for the Southern District of New York. “Our work has been quite diverse. A lot of our strong corporate clients found themselves as creditors in some of the larger bankruptcies,” Russell says. The firm’s litigators also were busy in 2009. Partner Thomas Taylor of Houston says the suits included oil and gas litigation, intellectual property litigation mostly in the U.S. District Court for the Eastern District of Texas, and medical malpractice litigation for clients including Kelsey Seybold. The firm also is regional counsel for BP for toxic-tort work, Taylor says. On the transactional side, Houston partner Michael O’Leary says the firm worked on a number of capital markets financings for energy companies and for private equity firms. Among many private equity deals, the firm represented Global Infrastructure Partners in its $588 million investment into a natural gas joint venture with Chesapeake Energy Corp. of Oklahoma City, he says. Andrews Kurth lost some lawyers during the year — headcount decreased to 347 lawyers as of Aug. 31, 2009, compared to 362 on the same date in 2008. Texas Lawyer reported in March 2009 that Andrews Kurth laid off about 20 associates for economic reasons, but Jewell declined to comment on “any headcount matters.” He says the firm expects to beef up lateral hiring this year.
— BRENDA SAPINO JEFFREYS
At Baker Botts of Houston, gross revenue was $574.8 million in 2009, down 6.3 percent from $613.3 million in 2008, and net income was $253.3 million in 2009, down 6.6 percent when compared to 2008′s $271.3 million. Profits per partner at the firm were down .1 percent at $1,362,000 in 2009 compared to $1,363,000 in 2008, and revenue per lawyer was $796,000 in 2009, down 3.3 percent compared to $823,000 the prior year. Baker Botts had 722 lawyers as of Aug. 31, 2009, down 3 percent from 745 in 2008. In August 2009, the firm laid off lawyers but did not disclose how many. [ See "Layoffs at Baker Botts," Texas Lawyer, Aug. 31, 2009, page 3. ] Firm spokesman Mike Cinelli released a statement from managing partner Walt Smith that says the reduction in revenue was “experienced pretty evenly across a broad array of our practices. We still had several bright spots, however, and our corporate and restructuring, environmental and tax practices seemed to weather the storm the best in 2009. Despite the decline in revenues, our efforts throughout the year to hold the line on costs helped us keep our profits per partner at the same level achieved in 2008.” Partner J. David Kirkland Jr., chairman of the firmwide corporate practice, says, “The real story is: After a slowdown, deal activity is up again.” The firm represented Perot Systems Corp., the publicly traded, Plano-based company that entered into a definitive agreement in the fall of 2009 to be acquired by Dell Inc. Baker Botts also represented Centex Corp. in its $3.1 billion stock-for-stock merger with Pulte Homes Inc. last summer. Kirkland says the firm represented other longtime clients, including Liberty Media Corp., on smaller transactions. In these difficult economic times, the firm warmed up to the idea, often presented by clients, of alternative billing arrangements, such as contingent-fee deals and fixed fees. “We are open to a variety of risk-sharing arrangements and fees that are not just hourly rates,” Kirkland says. Partner Jennifer Smith of Houston, deputy chairwoman of the litigation department, says the firm represents Krage & Janvey partner Ralph Janvey, the appointed receiver of Stanford Financial Group, in investigatory and bankruptcy matters. Houston partner G. Irv Terrell says the firm represented ASARCO LLC in its litigation against Americas Mining Corp. and defended Credit Suisse Group and Deustche Bank AG in a $13 billion fraud and tortious interference suit over Huntsman Corp.’s failed merger with Hexion Specialty Chemicals Inc. The Credit Suisse-Deustche Bank suit settled, Terrell says.
— MIRIAM ROZEN
BEIRNE, MAYNARD & PARSONS
Gross revenue at Houston-based Beirne, Maynard & Parsons dipped to $40.5 million in 2009, an 11.2 percent decrease from the firm’s 2008 gross revenue of $45.6 million. “2009 was probably one of the more challenging years we have had, let alone our clients,” says Martin D. Beirne, managing partner of the litigation-only firm. The firm’s net income also fell year-to-year coming in at $13.4 million, a 9.5 percent decrease from the $14.8 million net income posted the previous year. “2009 was volatile,” Beirne says. “Where we saw the greatest impact was in an increase in our accounts receivable,” he says. Some of the firm’s clients, who traditionally had paid their Beirne, Maynard legal fees within 30 days of billing, instead took 60, 90 days or even 120 days to pay, he says. Beirne estimates that the firm’s 2009 revenue would have been about 5 percent higher than it was if all clients had paid their bills that were due in 2009. “We’re not looking at any write-offs,” he says, noting that clients paid the balance of their 2009 bills during the first quarter of 2010. Profits per partner were $788,000, a 9.5 percent decrease from the $871,000 profits per partner the firm posted for 2008. Revenue per lawyer dropped 8.5 percent, to $579,000 for 2009 compared with $633,000 the previous year. The firm’s 2009 lawyer count dipped slightly to 70 lawyers as of Aug. 31, 2009, down two lawyers or 2.8 percent from the 72 lawyers at the firm on Aug. 31, 2008. Beirne, Maynard’s 2009 financial results were the fourth year in a row that the firm decreased lawyer count and gross revenue. The firm began downsizing after Texas lawmakers adopted tort reform during the 2005 legislative session. In 2005, the firm had 102 lawyers as of Aug. 31 and reported $61.3 million in gross revenue. Beirne says the firm is no longer downsizing as a result of tort reform and that 2009 decreases in lawyer count were driven by the economy. Last year, the firm handled some significant cases for the energy and petrochemical industry involving rig failures and contract issues, as well as litigation regarding offshore and onshore issues, Beirne says. He declines to identify clients. The firm also had major matters on behalf of four manufacturers in the transportation industry, he says. “Also, we have an extensive coverage practice on the insurance side,” Beirne says. Insurance coverage accounted for 18 percent to 20 percent of the firm’s 2009 revenue, much of which was generated by Houston partners Jeffrey R. Parsons, Roger L. McCleary and Stephen Edmundson, he says. “Nobody will crow about what 2009 looked like,” Beirne says. “A lot of firms really did suffer. We were very fortunate to get out of 2009 the way we did.”
— JEANNE GRAHAM
BRACEWELL & GIULIANI
Gross revenue improved a bit at Bracewell & Giuliani in 2009, hitting $277.1 million, up .6 percent from $275.4 million the previous year. However, net income declined in 2009 by 7.7 percent to $93.1 million when compared to $100.8 million in 2008. Last year, profits per partner came in at $950,000, up 10.2 percent from $862,000, and revenue per lawyer was $678,000, up 4.2 percent compared to 2008′s $651,000. Bracewell managing partner Mark Evans says he is happy the firm increased its gross revenue in 2009, despite the difficult economy, and he is pleased PPP was up so much. He says PPP rose partly because the firm lost a group of 10 lawyers at the end of 2008 that formed Thompson & Horton, a public law boutique, and Bracewell had 98 equity partners as of Aug. 31, 2009, compared to 117 a year before. Evans says the firm did not lay off any lawyers for economic reasons during 2009, although there was some “normal attrition.” The firm did reduce its staffing levels during the year, he says. Litigation, particularly intellectual property litigation, and restructuring were busy practice areas at Bracewell in 2009, along with white-collar defense, Evans says. “When I took a look at the numbers, our litigation group was about 37 percent of revenue, and when you put bankruptcy in there, it’s about 45 [percent],” Evans says. Corporate work was down in 2009, but Gregory Bopp, a partner in Houston who co-chairs the corporate section, says that even though mergers-and-acquisitions and initial public offering work declined in 2009, the firm’s capital markets practice, particularly on the debt side, remained strong, and private equity clients focused on distressed investments during the year. Some corporate lawyers also worked with the bankruptcy and restructuring lawyers on workouts, Bopp says. Transactional work included a number of securities offerings for clients including Kinder Morgan Inc., El Paso Corp. and ConocoPhillips, all of Houston, and a $1.2 billion joint venture for Enbridge Energy Partners of Houston. “All in all it was a pretty good year,” Bopp says. Glenn Ballard, a partner in Houston who heads the firm’s trial section, says litigators were busy in 2009, with “close to 100 percent utilization” in the trial section. The firm added five litigation partners and 17 associates in 2009, beefing up the intellectual property litigation and white-collar crime defense strength to meet client need. Litigators also did a lot of bankruptcy-related work in 2009, he says, including representing second lien holders in In Re: Tousa Inc. filed in the U.S. Bankruptcy Court for the Southern District of Florida. The firm continues to defend Valero Energy Corp. of San Antonio and other clients from MBTE (methyl butyl tertiary ether) litigation around the country, Ballard says.
— BRENDA SAPINO JEFFREYS
Austin-based Brown McCarroll posted gross revenue of $51.4 million in 2009, down from $60.1 million in 2008. Adam Hauser, Brown McCarroll’s managing partner, says the 14.5 percent decline in the firm’s revenue is the result of a combination of the nation’s general economic conditions and a decrease in the number of lawyers. “The firm made a strategic decision a few years ago to reduce the size of its litigation practice,” Hauser says, noting that Brown McCarroll has been phasing out lower-rate litigation practices, particularly asbestos defense work. Hauser says 10 lawyers left Brown McCarroll last year, so the firm had 113 lawyers as of Aug. 31, 2009. The firm has offices in Austin, Dallas, Houston and El Paso. Brown McCarroll experienced a 26.6 percent decrease in its net income, reporting $12.7 million in 2009, compared to $17.3 million the year before. Revenue per lawyer was down 6.8 percent, reported at $455,000 in 2009, compared to $488,000 in 2008. Brown McCarroll saw a 14.3 percent decrease in profits per partner, with $353,000 in 2009, down from $412,000 in 2008. The decreases were the result of the economic conditions firms faced last year, Hauser says, noting “firms just had less work.” While Hauser says 2009 was “a very challenging year” for Brown McCarroll, he adds, “I feel like it was a successful year.” Efforts to diversify practice areas help the firm make it through when the economy is down, he says. One of the practice areas Hauser says is doing well is health care. David Hilgers, an Austin partner whose practice focuses on health care, corporate and administrative law, says Brown McCarroll represented Austin Heart, a cardiac and vascular services physician group, when it was purchased by St. David’s HealthCare for an undisclosed price. Hilgers says five Brown McCarroll lawyers worked on the Austin Heart transaction, which closed Dec. 31, 2009. Hilgers says four Brown McCarroll attorneys represented Dallas-based Pinnacle Consultants Mid Atlantic, the management services company of Pinnacle Anesthesia Consultants, when it was purchased by Emergency Medical Services Corp. That transaction also closed Dec. 31, 2009, at an undisclosed purchase price, he says.
— MARY ALICE ROBBINS
CARRINGTON, COLEMAN, SLOMAN & BLUMENTHAL
Gross revenue at Carrington, Coleman, Sloman & Blumenthal dropped to $53.2 million, down 22.3 percent from $68.5 million in 2008. Net income also fell to $23.9 million, a decrease of 14.3 percent compared to $27.9 million the previous year. The firm had 68 lawyers as of Aug. 31, 2009, a 15 percent drop from 80 lawyers at the same time in 2008. Revenue per lawyer decreased to $782,000, down 8.6 percent from $856,000 in 2008. 2009′s profits per partner were $664,000, a 9.5 percent drop from PPP of $734,000 the previous year. The highest revenue-generating practice areas at the Dallas firm in 2009 were business litigation; securities and director-and-officer issues; and bankruptcy and reorganization. Carrington, Coleman clients include Dallas-based Southwest Airlines Co. and Memphis, Tenn.’s Morgan Keegan & Co. Inc. Last year the firm represented Dallas-based One Technologies LP in a labor and employment case, Collop v. One Technologies , and Grand Prairie-based Chemguard Inc. in a trademark infringement case, Chemguard Inc. v. U.S. Foam Inc. et al. Both cases were in the U.S. District Court for the Northern District of Texas in Dallas. Carrington, Coleman managing partner Tim Gavin declines comment.
— JEANNE GRAHAM
CHAMBERLAIN, HRDLICKA, WHITE,
WILLIAMS & MARTIN
At the start of 2009, shareholders in Chamberlain, Hrdlicka, White, Williams & Martin of Houston weren’t sure what to expect out of the year, managing shareholder Wayne Risoli says. “We were as nervous as most firms were about what 2009 would turn out to be, but the tax section and the litigation section had very good years, and our corporate section performance was the same as in 2008, so overall we had a much better year than we predicted,” Risoli says. Chamberlain, Hrdlicka posted gross revenue of $61.2 million in 2009, up 5 percent compared to $58.3 million in 2008. Net income came in at $27.4 million, up 14.6 percent from 2008′s $23.9 million. Revenue per lawyer was $577,000, up 2.9 percent compared to $561,000 the previous year. And profits per partner were $685,000, which is 6 percent higher than the $646,000 in 2008. Risoli says the firm didn’t lay off any lawyers but took a conservative bent toward the expense side of the balance sheet — at least until midway through 2009, when it was clear the firm would do better than anticipated. Risoli says no single suit or matter fueled the firm’s revenue or profits, but the firm had a large docket of tax controversy work in 2009. Tax controversy work, a niche practice for the firm, includes negotiating with the Internal Revenue Service on behalf of clients or defending clients from litigation filed by the IRS. On the transactional side, Risoli says, the volume of work in 2009 was similar to 2008. The firm’s headcount of 106 lawyers as of Aug. 31, 2009, is flat when compared to 104 lawyers one year before.
— BRENDA SAPINO JEFFREYS
CLARK, THOMAS & WINTERS
Austin-based Clark, Thomas & Winters experienced a 9.6 percent drop in its gross revenue to $44.1 million in 2009, down from $48.8 million in 2008. The firm’s net income fell 13.8 percent to $19.4 million last year, compared to $22.5 million the previous year. Meade Bauer, who became Clark, Thomas’ president on March 1, says the Chrysler bankruptcy in 2009 impacted his firm’s bottom line adversely. Chrysler is a large client, and the bankruptcy meant less work for lawyers at Clark, Thomas, Bauer says. The merger of two pharmaceutical companies, which had been Clark, Thomas clients but whom Bauer declines to identify, also resulted in less work for the firm in 2009, he says. Revenue per lawyer at Clark, Thomas dropped 9 percent to $383,000 in 2009, compared to $421,000 in 2008. The firm also saw profits per partner decrease 11.5 percent to $262,000 in 2009, down from $296,000 in 2008. “I wouldn’t say we had a stellar year,” Bauer says. “It was pretty good, considering the economy.” Clark, Thomas, which has offices in Austin, Houston and San Antonio, had 115 lawyers as of Aug. 31, 2009, one less than at the same time the year before. Bauer says the firm’s energy practice group did fairly well in 2009. Austin shareholder Casey Wren, head of the energy practice group, says eight Clark, Thomas lawyers represented New York City-based Delphi Midstream Partners in its acquisition of the Mansfield System, a natural gas gathering and compression system, from Carrizo Oil & Gas Inc. According to Wren, that deal closed Oct. 2, 2009, for an undisclosed amount. Wren says Clark, Thomas also represented several power companies before the Texas Public Utility Commission in 2009. Wren says seven of the firm’s lawyers worked on Shreveport, La.-headquartered Southwestern Electric Power Co.’s rate case, filed Aug. 28, 2009, for a $75 million revenue increase. The PUC approved the unopposed settlement in that case April 15, he says. Wren says eight Clark, Thomas lawyers began work in the fall of 2009 on the rate case that Beaumont-based Entergy Texas Inc. filed Dec. 30, 2009, seeking a $198.7 million revenue increase. That case is set for a hearing July 13, he says. Wren says four Clark, Thomas lawyers represented Electric Transmission Texas of Austin, which sought to be selected by the PUC to construct $1.4 billion in transmission facilities to serve Competitive Renewable Energy Zones. The PUC awarded $840 million in transmission facilities to ETT on May 15, 2009, he says.
— MARY ALICE ROBBINS
COX SMITH MATTHEWS
The troubled economy depressed financial results in 2009 at San Antonio-based Cox Smith Matthews. Gross revenue, net income, revenue per lawyer and profits per partner each dipped a little in 2009. James “Jamie” Smith, the firm’s managing director, says the drops were due to “the economy affecting levels of demand from clients.” The firm’s gross revenue was $54.6 millionin 2009, down 6.4 percent from $58.3 million in 2008, and net income hit $19.3 million, down 6.8 percent compared to $20.7 million the previous year. RPL and PPP were down by 8.6 percent, with RPL at $455,000, compared to $498,000 in 2008, and PPP coming in at $402,000, compared to $440,000. Nevertheless, several practice areas were busy at Cox Smith in 2009, Smith says, including energy and bankruptcy/restructuring. Also, the firm’s financial institutions practice was healthy, particularly with regulatory, compliance, and mergers-and-acquisitions work, he says. Interestingly, Smith says, another practice area that hit new highs in 2009 was Internet privacy and other privacy issues, mostly for financial institutions and health-care industry clients. “It continues to grow for us,” Smith says, adding that it’s become more than an intellectual property niche practice at the firm. On the downside, the firm’s real estate and corporate transactional practices were slower in 2009 than in 2008, Smith says. With business down a bit in 2009, Smith says the firm managed its expenses more aggressively. He says the firm trimmed its support-staff ranks, because of smaller demand and anticipated demand in some practice areas, but did not lay off any lawyers. The firm, which also has offices in Austin, Dallas and McAllen, grew modestly in 2009, with 120 lawyers as of Aug. 31, 2009, compared to 117 a year earlier.
— BRENDA SAPINO JEFFREYS
FULBRIGHT & JAWORSKI
Fulbright & Jaworski posted 2009 gross revenue of $642.3 million, a decline of 7.5 percent from $694.7 million in 2008. The Houston-based firm’s net income also declined, coming in at $270 million for 2009, down 6 percent from 2008′s $287.3 million. “We went into 2009 expecting it to be very challenging, and it was,” says Steven B. Pfeiffer, chairman of the firm’s executive committee. Profits per partner, at $813,000 for 2009, declined 5.2 percent from $858,000 in 2008. Revenue per lawyer also was down at $710,000, 6.3 percent less than the firm’s 2008 RPL of $758,000. Pfeiffer says a handful of the firm’s practice areas, including energy, real property, and labor and employment, brought in revenue exceeding 2008 levels. The firm’s lawyer count was 905 as of Aug. 31, 2009, down 1.2 percent from 916 lawyers on Aug. 31, 2008. Fulbright’s 2009 cost-cutting included freezing associate salaries and bonuses at 2008 levels and deferring the start date of its 51 first-year associates from the fall of 2009 to Jan. 11, 2010. Pfeiffer notes that 2008 had been a banner year for the firm in revenue and profitability. “To be down only 7 percent against 2008 is OK,” he says. The firm handled three initial public offerings in the technology sector in 2009, says Houston partner James W. Repass, co-head of the firm’s intellectual property and technology department. The three IPOs were Arlington, Va.-based Rosetta Stone Inc., New York-based Medidata Solutions Inc. and Mistras Group Inc. of Princeton Junction, N.J., he says. The firm’s IP business was evenly balanced between litigation and transactions, he says. In 2009, the firm successfully represented Vienna, Va.-based Feld Entertainment Inc., the owner of Ringling Bros. and Barnum & Bailey Circus, in a “bet the company case,” says Houston partner Stephen C. Dillard, chairman of Fulbright’s litigation department. In ASPCA, et al. v. Feld Entertainment Inc. , the plaintiff sought to remove the elephants from the circus, in a suit heard in the U.S. District Court for the District of Columbia. “That was a huge win for our client and one that we’d been working on for several years,” Dillard says. The firm also won twice at the U.S. Supreme Court last year, he says. Fulbright represented the state of Alaska in Alaska v. Southeast Alaska Conservation Council, et al. , in a challenge of federal regulations regarding mining operations, he says. And the firm represented the government of Iraq in Republic of Iraq v. Beaty, et al ., a sovereign immunity case regarding the alleged abuse of U.S. contract employees during the former regime of Saddam Hussein, he says.
— JEANNE GRAHAM
GARDERE WYNNE SEWELL
Because of the downturn in the economy, some Texas firms were singing the blues last year, but Gardere Wynne Sewell was not one of them. The Dallas-based firm, whose 2009 fiscal year ended March 31, 2010, posted its best gross revenue total ever last year. Gardere brought in $187.2 million in gross revenue, up 10.5 percent from $169.4 million in 2008. So what’s the reason that the firm known for slow, steady growth posted extraordinary gains during a recession? Contingent-fee cases. “We’ve tried to manage the normal operating business on steady growth. But we have made a decision to invest more in our contingent-fee business,” says Stephen D. Good, Gardere’s managing partner. “The strategy is you continue your regular business, but you invest in contingent-fee business on top of that. And we were successful.” A couple of contingent-fee cases paid off for the firm in 2009: One was an antitrust suit in which Gardere represented a hospital, and the other was an insurance-coverage case in which the firm represented an oil and gas company, Good says. “Those were the two largest ones. We certainly had a good year otherwise.” The firm began investing in contingent-fee work four years ago, Good adds. Gardere accepts only a handful of contingent-fee suits each year and those cases are heavily screened, says Dallas partner David Timmins, who chairs the firm’s contingent-fee committee. The committee screens contingent-fee cases and tracks their costs to make sure they don’t become a budget liability for the firm. “We want to know what our investment is on a current basis,” Timmins says. “We certainly had a good year on contingent-fee cases. This is kind of the fruition of having screened those cases two years ago,” he says. While real estate transactions suffered last year because of the economy, the firm still had clients who needed help, especially in the hospitality industry. Gardere represented South American investors taking advantage of inexpensive real estate prices to buy hotels in the United States, he says. “Once the prices go down enough, people get off the sidelines and start doing deals,” Good says. The firm’s net income for 2009 was $89.6 million, up 38.9 percent from $64.5 million in 2008. Total lawyer count dropped to 245, down 4.5 percent from 256 in 2008. “Just like everyone, during the downturn in the early part of the year when things were really slow, we did have some decreases,” says Good of the loss of lawyers. “I hate to use the word ‘layoffs,’ but we did have some adjustments in business at that point in time.” But the firm began adding lawyers by the end of the 2009, he says, pointing out that the firm hired three new partners and two new associates for its Austin office. “We’re not trying to be the largest office in Austin. We do targeted representation for clients,” he says. The firm also contained costs by lowering first-year associate salaries to $120,000. First-year associates had been earning $160,000 years earlier, Good says. In 2009, the firm lowered the billable-hour requirements for first-year associates but increased their training. “And the response from our clients [has been] tremendous,” he says. “They feel like they’re not being trained at their expense. . . . Our clients are looking for value,” he says. The firm’s revenue per lawyer was $764,000 in 2009 — up 15.4 percent from $662,000 in 2008. Profits per partner increased to $1,179,000 last year — up 49.8 percent from $787,000 in 2008.
— JOHN COUNCIL
HAYNES AND BOONE
In 2009, Dallas-based Haynes and Boone increased its gross revenue and grew its lawyer count. “We feel very fortunate to have done as well as we did,” says financial partner Rick Fijolek of Dallas, who sits on Haynes and Boone’s board of directors. The firm’s bankruptcy and litigation sections are what fueled economic gains in 2009, offsetting the drop in transactional business, which continues to be slow, he says. The firm saw a 6.4 percent increase in its gross revenue, up to $306.3 million in 2009 from $287.8 million in 2008. The firm also saw a 2.1 percent increase in net income, up to $108.2 million last year from $106 million in 2008. Partner Mike Boone says, “We have a lot of new, significant clients. Our business base grew substantially. . . . We’re seen as stable, and there’s always a flight to stability in tough economic times.” The firm added 20 lawyers last year, up to 481 from 461 in 2008. Most of those lawyers came onboard last year after the firm acquired McPherson Kwok Chen & Heid, which has California offices in San Jose and Orange County, Fijolek says. “One of our particularly strong practices is intellectual property,” Fijolek says. “There was client interest in our being in California. We were just pursuing that. And these are folks that we’ve been working with and talking to for the last five years.” While some firms are shying away from adding lawyers because of the uncertain economy, Haynes and Boone has the opposite view, Fijolek says. “Because we generally are pretty financially stable — we don’t have any debt — we end up being a very attractive platform for laterals,” Fijolek says. “We actually use downturns to go out and hire attractive laterals.” The firm saw a 2.1 percent increase in its revenue per lawyer, up to $637,000 in 2009 from $624,000 in 2008, and a 5 percent increase in profits per partner, up to $801,000 last year from $763,000 in 2008.
— JOHN COUNCIL
Gross revenue at Jackson Walker inched up in 2009 to $173.6 million, a 1 percent increase over the $171.9 million generated in 2008. Net income for the Dallas-based firm also improved slightly to $62.2 million, up .3 percent compared to the firm’s 2008 net income of $62 million. Firm managing partner C. Wade Cooper of Austin says the firm is proud of its growth in gross revenue and net income during a tough year. “All things considered, we feel very, very fortunate,” he says. “One of the strengths of the firm is that we are pretty balanced, not depending on one practice area,” he says. “Our [client] diversity helped us.” He describes the firm’s clients as mid-market, from emerging businesses to those with less than $1 billion in revenue. Jackson Walker increased its headcount to 315 lawyers as of Aug. 31, 2009, up 2.3 percent from the 308 lawyers it had on Aug. 31, 2008. Profits per partner declined slightly last year to $655,000, down .8 percent from $660,000 in 2008. “We were prepared to take a little bit of a loss there to keep our crew together,” Cooper says. At $551,000, revenue per lawyer also was down last year, a 1.3 percent decrease from $558,000 in 2008. David T. Moran, managing partner of the Dallas office, says Jackson Walker represented San Jose, Calif.-based Cisco Systems Inc. in two high-profile defamation cases regarding postings on the Patent Troll Tracker blog, John Ward Jr. v. Cisco Systems Inc . and Eric Albritton v. Cisco Systems Inc., et al . Both cases settled. He says the firm also handled complex litigation in 2009 for Chicago-based Harpo Productions Inc. Transactions lawyers completed the sale of a telecommunications company and were busy in the energy sector, he says. And the firm’s banking practice was strong, he says. While the firm does little contingent-fee work, it is flexible about alternative fee arrangements, and last year it used fixed fees, capped fees and success fees, he says. Patrick B. Tobin, a partner in San Antonio, says corporate and securities work during the first six months of 2009 mainly involved matters that already had been in the pipeline for existing clients. “After the financial collapse of the fall of 2008, we hunkered down for the first six months,” Tobin says. About mid-year, business clients seemed to start doing deals again, and the firm handled a number of acquisitions and international transactions, he says. Tobin declines to name clients, but says Jackson Walker represented a group of more than 300 physicians in a transaction to separate from a hospital and create a stand-alone physicians’ network with associated clinics. “We also represented a large multinational company in their export-import-related work as they grew their international business,” he says. Due to increased crime in Mexico, the firm represented a number of Mexico-based businesses that moved their businesses to the United States, he says. With a Toyota Motor Manufacturing Texas Inc. assembly plant near San Antonio, the firm also acquired several new Japanese clients that manufacture various parts for the Toyota Tundra truck, he says.
— JEANNE GRAHAM
KELLY HART & HALLMAN
When the economy is slow, it’s nice to have a solid base of loyal clients who need help. “Our client base has not significantly changed. And they have been active in business litigation in a down economy,” says Dee Kelly Jr., Kelly Hart’s managing partner. His firm has represented AMR Corp., the parent company of Fort Worth-based American Airlines, and the Bass family interests for many years. “We’ve obviously grown some, and we’ve added clients. But it’s very important that we serve our long-term clients.” The business litigation generated by the firm’s long-term clients is a reason why it saw a 4.1 percent increase in gross revenue, up to $63 million in 2009 from $60.5 million in 2008. Net income grew 3.6 percent, up to $34.8 million in 2009 from $33.6 million in 2008. But it wasn’t all rosy for the firm, Kelly says. “Transactional work has been slow for the last several years. We’re not unique in that,” Kelly says. “The concept is as long as credit is tight and banks aren’t lending money, transaction work is going to be slow.” While Kelly Hart’s gross revenue rose, its lawyer count hardly moved. The firm added one lawyer to its total attorney count, rising to 127 lawyers in 2009. The firm has a conservative hiring practice, only adding new lawyers as their clients need them. “We don’t have a normal practice of bringing in a group of laterals,” Kelly says. “To the extent we’ve grown our firm, we’ve done it through our clerkship program.” The firm also saw a rise in its revenue per lawyer, up 3.3 percent to $496,000 in 2009 from $480,000 in 2008. Profits per partner jumped by 3.6 percent to $669,000 in 2009 from $646,000 in 2008.
— JOHN COUNCIL
LOCKE LORD BISSELL & LIDDELL
Locke Lord Bissell & Liddell posted gross revenue of $399 million and net income of $128 million in 2009, each number down slightly from $401 million and $130 million, respectively, in 2008. Partners in the Dallas-based firm were “thrilled” with those financial results, says chairwoman Jerry Clements, considering the challenges Texas firms and their clients faced during 2009′s rough economy. Profits per partner at Locke Lord came in at $979,000 for 2009, up 2.4 percent from $956,000 in 2008, and revenue per lawyer was $750,000, an increase of 2.5 percent compared to $732,000 the previous year. Clements says the firm helped its bottom line in 2009 by hiring laterals in target areas including bankruptcy, intellectual property, environmental and energy finance and “managed our expenses in a way that we made sure didn’t affect our client service.” The firm laid off about 6 percent of its lawyers and 10 percent of its nonlawyer work force on March 31, 2009, for economic reasons. [ See "A Tough Week," Texas Lawyer, April 6, 2009, page 3. ] Clements says several practice areas were strong in 2009, such as white-collar crime, bankruptcy, litigation, energy and insurance regulatory work, and IP was robust during the second half of the year. Bill Swanstrom, a partner in Houston who is co-chair of the energy practice group, says, “It was busier than we expected. Going into the year, it was obviously a choppy economic market.” He notes that some of the energy deals were for private equity funds and then “this explosion of shale gas plays, which are significant,” he says. The firm also represented creditors in some big energy industry bankruptcies, including Flying J. Inc., et al. , filed in the U.S. Bankruptcy Court for the District of Delaware. David Wirt, a partner in Chicago who chairs the firm’s bankruptcy and restructuring group, says the group was busy in 2009. The firm represented New Vision Group, a television company that filed its bankruptcy, NV Broadcasting LLC , in the U.S. Bankruptcy Court in Delaware, he says. Paul Coggins, a partner in Dallas who chairs the firm’s white-collar criminal-defense and internal-investigations practice, says his section also was busy in 2009 representing clients facing antitrust investigations, Securities and Exchange Commission investigations, health-care fraud investigations and Foreign Corrupt Practices Act matters.
— BRENDA SAPINO JEFFREYS
LOOPER, REED & McGRAW
Looper, Reed & McGraw is making its first appearance on Texas Lawyer’s Annual Report on Firm Finance with a 10.6 percent increase in gross revenue, reporting $34.4 million in 2009, up from $31.1 million in 2008. Firm managing shareholder Cary Gray of Houston attributes the hike in revenue to an increase in the number of lawyers at the firm. Looper, Reed, which has offices in Houston, Dallas and Tyler, had 96 lawyers on Aug. 31, 2009, up from 90 at the same time the previous year. The firm also posted a 14.9 percent increase in its net income, with $8.5 million reported in 2009, up from $7.4 million in 2008. Revenue per lawyer grew 3.5 percent to $358,000 in 2009, compared to $346,000 the previous year. However, profits per partner dropped 6.8 percent to $531,000 last year, compared to $570,000 in 2008. Gray notes that the firm increased the number of shareholders last year. Looper, Reed had 16 equity partners in 2009, up from 13 in 2008. Gray says client demand has driven the firm’s growth. “We help businesspeople solve their business problems, and in 2008 and 2009, people had a lot of business problems,” Gray says. Commercial litigation is one of the practice areas that had an uptick last year, he says. Scott Funk, a member in Looper, Reed in Houston, says eight or nine lawyers in the firm worked on litigation involving the failure of a hospital. Tom Rhodus, managing shareholder of Looper, Reed’s Dallas office, cites oil and gas as a key practice area in that office. Rhodus says six lawyers in the Dallas office devote their time exclusively to oil and gas matters, primarily title opinions. “That area of law has been booming in the last couple of years around Dallas,” Rhodus says, noting that much of the work stems from drilling activity in the Barnett Shale, a natural gas formation in north central Texas.
— MARY ALICE ROBBINS
MUNSCH, HARDT, KOPF & HARR
Even though gross revenue was down at Dallas-based Munsch, Hardt, Kopf & Harr, net income, profits per shareholder and revenue per lawyer were all up in 2009. Firm chairman and CEO Glenn Callison says that overall he is pleased with the results even though there was a dip in gross revenue. “Given the external influences that we were dealing with . . . we were glad to have made it through with just a modest increase,” Callison says. Gross revenue at the firm dropped 6.3 percent to $49.1 million in 2009 from $52.4 million in 2008. Total lawyer count dropped 8 percent to 94 lawyers in 2009 from 2008′s 102. Callison says that although the total lawyer count is down for 2009, all three offices — Dallas, Houston and Austin — maintained roughly the same size, and by the end of 2009, the attorney count was back up to 100. Net income rose 7.4 percent to $19.5 million in 2009 from $18.2 million in 2008. Revenue per lawyer also saw an increase, up 1.6 percent to $522,000 in 2009 from $514,000 in 2008. Profits per shareholder increased 1.3 percent to $542,000 in 2009 from $535,000 in 2010. “Our philosophy is when people are continuing to perform at a level that merits promotion . . . we need to reward those who are performing well,” Callison says. Callison also says keeping starting salaries for associates around $130,000 while other firms raised compensation to $160,000 in recent years has benefited the firm. “At the time, that put us sort of out of step with some of the larger firms in the state and in the country,” Callison says. Now firms have to step back, and “fortunately, we haven’t had to do that,” he says. “Without a doubt, our transactional practices were not where they have been in prior years,” but in 2009 the firm saw a good amount of business in the insolvency, restructuring and creditors’ rights practices and in commercial litigation, Callison says. Dallas shareholder Chip Cavanaugh, head of the real estate section, says his group had a down year. “It was definitely a challenge to find work for everyone to do,” Cavanaugh says, but a lot of their clients were more active than expected. Joseph J. Wielebinski, chairman of the insolvency, restructuring and creditors’ rights group and a shareholder in Dallas, says, “We knew it was going to be a good year” but that it ended up more demanding than expected. Callison says the firm fared well overall because of its focus on balance between the different practice areas and a firm culture that encourages teamwork so that as one area slows down and another gets busier, shifts can be made to keep everyone busy. Looking forward, Callison is optimistic about the continued strength of the insolvency, restructuring and creditors’ rights group, and the corporate and securities practices. Callison also says the firm is beginning to see some rebound in the commercial real estate and corporate finance practices. Callison says having a good balance between different practice areas has kept the firm resilient in all economic climates. “It has served us well,” he says.
— JACYLYN GARDNER
PORTER & HEDGES
2009 gross revenue at Porter & Hedges was practically the same as 2008′s, while net income, profits per partner and revenue per lawyer all increased over the previous year. The Houston firm reported 2009 gross revenue of $61.6 million, a .8 percent decline from $62.1 million in 2008. Net income increased to $27.7 million last year, up 6.5 percent from $26 million the previous year. Work in litigation, bankruptcy and finance helped the firm come near to matching its 2008 revenues, says managing partner Robert G. Reedy. The firm handled litigation and arbitration for Houston-based KBR Inc., finance work for Charlotte, N.C.-based Bank of America Corp. and represents former officers of Houston-based Lyondell Chemical Co. in that company’s bankruptcy matters, he says. The firm also represented Vantage Drilling Co. of Houston in a $75 million public offering and $100 million loan agreement. Profits per partner also increased in 2009 to reach $866,000, a 6.5 percent improvement compared with $813,000 in 2008. Revenue per lawyer grew slightly, up 1.3 percent to $684,000 compared to $675,000 the previous year. “Partner profits were a combination of having excellent revenue drivers and doing a good job on costs,” Reedy says. He says the firm is balanced between litigation and transactions practices and does not depend on any one client or industry sector for revenue generation. Lawyer count was slightly down as of Aug, 31, 2009, at 90 lawyers, compared with 92 lawyers as of Aug. 31, 2008. Reedy notes the firm hired four lateral partners last year. Revenue from litigation during 2009 was up 2.5 percent compared to 2008, says Joanne M. Vorpahl, the firm’s litigation practice group leader. “One of the things that marked 2009 was the great number of matters we had that required substantial work and that went to trial or came very close to going to trial,” she says. Vorpahl says the firm handled a number of matters for KBR, including Celanese Corp. v. Coastal Water Authority, et al., in the U.S. District Court for the Eastern District of Texas. Vorpahl notes the firm obtained an affirmation of a summary judgment for New York-based Prospect Energy Corp. (now Prospect Capital Corp.) in Dallas Gas Partners L.P. v. Prospect Energy Corp . in the 5th U.S. Circuit Court of Appeals.
— JEANNE GRAHAM
STRASBURGER & PRICE
Cost-containment is key for a firm when the economy is suffering, and that strategy helped Dallas-based Strasburger & Price survive 2009 relatively unscathed. “Our profits were actually up last year even though revenue was down,” says managing partner Dan Butcher. “But we were very careful on the expense side last year.” The firm’s gross revenue dipped slightly, down 1.4 percent to $76.3 million in 2009 from $77.4 million in 2008. “Last year was a bad year for everybody, including a number of our clients. We didn’t want to pile on, so we controlled our costs and kept our pricing in line with the previous year the best we could,” Butcher says. One way the firm kept expenses down was limiting travel whenever possible and postponing a partner retreat, Butcher says. In fact, the firm had a hotel reserved for a partner meeting but instead donated the rooms and meeting space to clients and community groups. “We didn’t hold the partner meeting and tried to make lemonade out of lemons,” Butcher says. Kirk Sniff, who leads the firm’s specialty litigation practice, says the firm trimmed where it had to. “We also cut back on some quality of life matters, in terms of tickets and tables at events. We didn’t cut into the bone, but we did make some aggressive adjustments in our discretionary spending.” Last year, Strasburger continued a 2008 initiative to keep billing rates lower than other firms by reducing the number of billable hours and increasing training hours required of associates to receive bonuses. Like most Texas firms, Strasburger saw its mergers-and-acquisitions practice slow down in 2009. But the firm’s M&A lawyers found other things to do, including bankruptcy workouts, Butcher says. The firm’s litigation practice continues to be strong, he says. Strasburger represents a number of investors who lost money with R. Allen Stanford and five of his related companies, whose assets were seized by the U.S. Securities and Exchange Commission after they were accused of running a “massive Ponzi scheme” in a 2009 amended SEC federal complaint. “That kept our corporate lawyers busier than they would have been without that,” Butcher says. The firm’s revenue per lawyer rose 2.7 percent, up to $449,000 in 2009 from $437,000 in 2008, and profits per partner rose .3 percent, up to $378,000 in 2009 from $377,000 in 2008.
— JOHN COUNCIL
In 2009, Houston’s Susman Godfrey maintained its position as the top-ranked firm in Texas in terms of revenue per lawyer — $1,477,000, which is down 3.3 percent from $1,527,000 in 2008 — and profits per partner — $1,939,000, which is down 11.2 percent from $2,184,000 in 2008. The firm’s gross revenue increased in 2009 to $130 million, an increase of 1.3 percent from $128.3 in 2008. The firm’s net income was down 3.4 percent to $95 million from $98.3 million in 2008. Neal Manne, a partner in the Houston office, says he and four other lawyers at the firm, which handles litigation almost exclusively, worked on a case that led to “an eight-figure fee.” Similarly, Manne says, firm founder Steve Susman had worked on a case in 2008 that led to a delayed fee payment in 2009 of eight figures. In 2009, Manne says, 25 percent of the firm’s revenues were generated by hourly billing, 41 percent by contingency fees and 34 percent by fixed fees. In 2008, he says, 25 percent came from hourly billings, 54 percent from contingency fees and 21 percent from fixed fees. Among the firm’s clients, Manne says, was Milwaukee County and D.C. Chemical (now known as OCI Co.). The firm did take some steps to save costs, although philosophically the management has focused typically on drawing in good cases that lead to large revenue gains as a way of making the business thrive rather than “bean counting,” Manne says. The firm postponed a retreat until September 2010, when Manne says, “We will all go to Mexico to drink moderately.” As for holiday parties, the firm threw them in each of its branch offices’ respective cities, rather than flying everyone down for a Houston bash. The firm also reduced recruiting costs, limiting the number of law schools to which it sent representatives and focusing instead on hiring lawyers who were already clerking for judges.
— MIRIAM ROZEN
THOMPSON & KNIGHT
At Dallas-based Thompson & Knight, gross revenue dropped 4.1 percent to $223.8 million in 2009 from 2008′s $233.4 million. Net income was down 4.9 percent, to $79.4 million in 2009 from $83.5 million in 2008. Revenue per lawyer dropped 9.3 percent to $534,000 in 2009 from $589,000 in 2008. However, profits per partner rose 1.3 percent to $854,000 in 2009 from 2008′s $843,000. Managing partner Jeffrey A. Zlotky says that although gross revenue and revenue per lawyer decreased, he is happy PPP improved. He believes that improvement is an “indication that we are providing our services to our clients in a very efficient manner.” He also says his firm cut costs by being careful on the expense side. Although last May the firm laid off for economic reasons 17 lawyers and 25 support staff in all of its U.S. offices, total lawyer count rose 6 percent to 419 as of Aug. 31, 2009, from 396 in 2008. [ See "Layoffs Hit T&K," Texas Lawyer, May 11, 2009, page 3. ] Zlotky does not attribute the overall drop in U.S. lawyers to downsizing. “Because of our long-term view, we are not going to overreact to significant downturns in business. . . . . [W]e know this cycle, too, shall pass,” he says. For the most part, Zlotky says partners who left the firm did so on good terms: Some retired while others went in-house or pursed government positions or professorships. Of the partners who left in 2009, he says, few left to join competitors. Zlotky says that last year was a transition year for the firm for a number of reasons, including dealing with the death of his predecessor, Pete Riley. [ See "Diversity and Inclusion: Lead By Example," page 43. ] Zlotky says the real estate and banking practice group suffered the most in 2009, but the firm’s corporate reorganization and creditors’ rights practice group and the litigation practice in the intellectual property group had a good year. He says having a diversified client base helped the firm stay busy. Houston partner Rhett Campbell, head of the corporate reorganization and creditors’ rights practice group, says 2009 was “probably the best year we have ever had as far as statistics.” Jane Politz Brandt, a partner in Dallas and co-chair of the intellectual property group, attributes the IP group’s successful year to the clients, who she says remained loyal to the firm. Houston partner Alfie Meyerson, head of the real estate and banking practice group, notes in an e-mail that the group had a slower year but kept busy doing oil and gas transactions and loan workouts, loan modifications and foreclosures. He writes that in 2009, the group did more than $9.3 billion in workouts, modifications and foreclosures. In addition, Meyerson writes the group continued to do a lot of leasing work. He says in an interview that in 2009 it represented investment funds buying or bidding for discounted notes from financial institutions. And in early 2009, he says the firm developed a distressed real estate practice group. “We are evolving as the economy evolves,” he says. Fred Fulton, a partner in the corporate and securities practice group in Dallas, says the firm’s focus on energy matters helped it through 2009, since there was a lot of work in that area. He also says geography helped, since “we are in the oil patch. Between that and hard work between partners and associates, we did better than expected,” Fulton says.
— JACYLYN GARDNER
THOMPSON, COE, COUSINS & IRONS
The theory goes that when the economy takes a dive, businesses are more likely to get sued. That is why Dallas-based Thompson, Coe, Cousins & Irons saw an improvement in its gross revenue in 2009. “We saw a rebound in litigation,” says Jack Cleaveland of Dallas, chairman of the firm’s management committee. “And because we’re primarily a litigation firm, it was a good year for us.” The firm also saw a boom in business because of insurance claims related to Hurricane Ike, which hit Galveston in 2008. “We do a lot of insurance litigation. And we’ve also experienced a big increase in hurricane litigation,” Cleaveland says. Dallas partner David Taylor, head of the firm’s general litigation section, agrees. It was a good year for the firm because insurance defense clients had plenty of work, he says. The firm’s gross revenue grew 2 percent, up to $35.9 million from $35.2 million in 2008. The firm also had a 2.2 percent gain in its net income, up to $9.4 million from $9.2 million in 2008. And there was another reason the firm performed better in 2009 than the previous year, Cleaveland says: Clients paid on time. “I think in ’08 we also experienced a slowdown in payment by clients. And in ’09 we did not have that same issue,” he says. The firm’s total lawyer count was flat, dropping to 100 attorneys in 2009 from 101 attorneys in 2008. There were no changes in the firm’s hiring practices, Cleaveland says. “It was pretty much business as usual.” Revenue per lawyer at the firm increased 2.9 percent, up to $359,000 from $349,000 in 2008. Profits per partner decreased by 1 percent last year, down to $285,000 from $288,000 in 2008.
— JOHN COUNCIL
VINSON & ELKINS
Gross revenue declined at Vinson & Elkins in 2009, while net income improved. Gross revenue in 2009 came in at $561.9 million last year, down 4.8 percent compared to $590.5 million in 2008. Net income rose to $261.5 million, up 5.5 percent compared to $247.8 million in 2008. Revenue per lawyer in 2009 was $811,000, down 6.2 percent from $865,000 in 2008, and profits per partner totaled $1,270,000 in 2009, down 3.1 percent from $1,311,000 in 2008. “We had a pretty good year overall, all things considered,” says Joseph Dilg, the Houston firm’s managing partner. Dilg notes that with the exception of restructuring work, the first quarter of the year was “as slow as I’ve seen things in my 30-plus years” at the firm. Dilg says V&E looked closely at expenses, for instance cutting the annual partners’ conference and the annual firm meeting, which helped the firm post an improved net income for 2009. Also, net income was boosted by a larger number of equity partners — 208 last year compared to 189 in 2008 — and fewer non-equity partners because non-equity partners are categorized as those who receive more than 50 percent of compensation on a guaranteed basis. Dilg says no one was laid off at the firm for economic reasons. “We were able to go through without having layoffs or things of that nature. Our headcount was basically flat,” says Dilg. The firm’s total headcount was flat, with 693 lawyers as of Aug. 31, 2009, compared to 683 the previous year. Dilg says four areas of practice were particularly strong in 2009: restructuring, environmental litigation, the Asia practice, and representing private equity buyers of distressed assets and financial instruments. Traditional mergers-and-acquisitions and capital markets work was down, he says. A high point was the firm’s restructuring practice, says partner Daniel Stewart, a bankruptcy partner in Dallas and New York City. “We were extremely busy on a large and varied number of matters,” he says. The firm, for instance, represents Innovative Communications Corp., the parent company of the Virgin Islands Telephone Corp., in Innovative’s bankruptcy, Innovative Communication Co. LLC , in the U.S. Bankruptcy Court in the Virgin Islands (many of the hearings are in Pittsburgh because the judge handling the bankruptcy is based there). The firm also represents BI-LO Foods in its bankruptcy, BI-LO LLC, filed in the U.S. Bankruptcy Court for the District of South Carolina. Stewart says the firm also helped a number of energy companies restructure their balance sheets and represented some in bankruptcy court, including CDX Gas, which filed CDX Gas LLC in the U.S. Bankruptcy Court for the Southern District of Texas, and Spectrum Brands Inc., which filed Spectrum Brands Inc. in the U.S. Bankruptcy Court for the Western District of Texas. “All of those large cases entailed the work of not only our core restructuring lawyers but many, many of our energy lawyers, our litigation attorneys, our mergers-and-acquisitions attorneys, and other business and tax lawyers,” he says.
— BRENDA SAPINO JEFFREYS
Winstead started paring down expenses in early 2009, a strategy that helped the Dallas-based firm post better financial results last year than in 2008. “It was a strong year,” says Denis Braham, the firm’s Houston-based chairman and chief executive officer. Braham says 2009 was “much more pleasing” to shareholders because “we did the cost-containment early, and we still had a good, solid flow of work.” The firm’s gross revenue was $140.3 million in 2009, down 2.3 percent compared to $144.4 million in 2008, but net income improved by 15.5 percent, coming in at $70.2 million in 2009 compared to $54.7 million the year before. Revenue per lawyer was up 5.3 percent at $559,000 compared to $531,000 in 2008, and profits per shareholder were $695,000 in 2009, up 9.3 percent from 2008′s $636,000. Braham says some of the improvement in revenue per lawyer and profits per partner are because the firm scaled back during the year: It had 251 lawyers as of Aug. 31, 2009, compared to 272 on the same date the previous year. In March 2009, the firm laid off some lawyers and canceled its summer associate program. [ See "No Summer Program," Texas Lawyer, March 16, 2009, page 3. ]The total number of shareholders was down a little in 2009 — 147 compared to 153 — but 101 are equity shareholders, compared to only 86 in 2008. Braham says the firm promoted a number of non-equity shareholders during 2009 simply because “they deserve it.” He says, “For us, it’s not a numbers game; it’s really about who’s contributing, who’s building the business base of the firm.” Braham says the firm’s banking and restructuring and reorganization practices were busy, as was the litigation group. Other strong practices in 2009 were energy, sports and public/private project finance. However, Braham says, “Financial institutions as an industry was our busiest area, both on the litigation side and the workout side.” Michael Hilliard, a shareholder in Dallas who chairs the finance and banking practice group, says 2009 was a year with a “still reasonable amount of positive lending activity,” particularly in certain segments of the energy industry. The firm also did a good deal of restructuring work, he says. “Although my lawyers early on were concerned about our revenue goals, we managed to beat them by 8 percent by the end of the year,” Hilliard says. Phillip Lamberson, a shareholder in Dallas who heads the business restructuring and bankruptcy practice group, says his team was busy, too, and early in the year represented lenders in a number of energy industry bankruptcies, including Energy Partners Ltd., et al. , filed in the U.S. Bankruptcy Court for the Southern District of Texas, and Clearwater Natural Resources LP , filed in the U.S. Bankruptcy Court for the Eastern District of Kentucky. “Once we had the energy wave earlier in the year, maybe August, September, we started seeing a significant number of real estate [bankruptcy] filings,” Lamberson says.
— BRENDA SAPINO JEFFREYS