Emily A. Parker, managing partner, Thompson & Knight (Handout photo)
Editor’s note: This report is part of Texas Lawyer’s coverage of the 2013 financial results of the 25 highest-grossing Texas-based firms as part of the AmLaw 100 and Second Hundred reports. Texas Lawyer will publish its Annual Report on Firm Finance on April 28. The American Lawyer, a Texas Lawyer affiliate, will publish full results for the AmLaw 100 in May. The AmLaw Second Hundred will be published in June.
With a slow start to last year, gross revenue declined by 2.9 percent at Thompson & Knight of Dallas in 2013, while net income dropped by 16 percent.
“The first quarter of 2013 was as slow as we have ever seen it in everyone’s memory,” said managing partner Emily Parker, who is in Dallas. “The last quarter of 2012 was a barnburner. … It cannibalized the first quarter of 2013.”
Largely for tax reasons, Parker said, clients were rushing to complete transactions and settle lawsuits during the final weeks of 2012, which led to a decline in work once the calendar turned to 2013.
Parker said the volume of work improved as the year went on, “but I don’t think we ever dug out of the hole.”
Gross revenue came in at $201 million in 2013, down from $207 million in 2012. Net income was $76 million, compared with $90.5 million the previous year.
Revenue per lawyer averaged $695,000 in 2013, down 5.4 percent compared with $735,000 in 2012. Average profits per partner were $855,000, down 13.2 percent from $985,000 in 2012.
Parker said some practice areas were very busy in 2013, including, in part, intellectual property litigation and, after the first quarter, oil and gas transactional.
On the expense side, Parker said the firm opened an office in San Francisco in 2013, and it took on more office space in New York City. But the largest unanticipated expense was a change in the associate compensation system that affected the timing of payments to associates and increased expenses by about $2 million, she said. With the new system, the firm paid 2012 associate bonuses in 2013 but also paid higher base salaries to associates during last year.
“It did not increase total compensation to associates in absolute terms, but it moved the expense into 2013,” Parker said.
The firm had 290 full-time equivalent lawyers in 2013, 3.2 percent more than the 281 in 2012.
Thompson & Knight has four Texas offices—Austin, Dallas, Fort Worth and Houston—as well as offices in Detroit, Los Angeles, New York, San Francisco, Algiers, London, Monterrey and Paris.