Daniel L. Butcher, managing partner of Strasburger & Price in Dallas (Mark Graham)
Financially, 2013 was a so-so year for many of the 25 highest-grossing firms in Texas. That’s largely because a madhouse of deals in late 2012, spurred by tax law changes, siphoned work out of the first months of 2013.
The 25 highest-grossing firms in Texas brought in gross revenue totaling $5.0 billion in 2013, down from $5.4 billion in 2012. Gross revenue in 2013 fell at more than half of the firms compared with 2012, although the declines were small in most cases.
Despite that, a number of large Texas firms did quite well in 2013. Gross revenue increased by a third in 2013 at Susman Godfrey, the Houston-based litigation firm, and it increased by 12.7 percent at Strasburger & Price of Dallas and by 10 percent at Kane, Russell, Coleman & Logan, also of Dallas.
Dan Butcher, Strasburger’s managing partner, said his firm’s strategy is paying off, with the financial results in 2013 providing evidence of that. He said the firm focuses on doing work for middle-market companies and doing run-the-company—as opposed to bet-the-company—work for larger companies.
“Clients are realizing that firms our size are a good value,” Butcher said.
He said 2013 was the firm’s best year ever, with the exception of 2007. He said litigation and corporate practice groups were both very busy in 2013, although bankruptcy was down.
“The market has been tough for law firms, so we feel fortunate,” Butcher said.
Twelve of the 25 highest-grossing firms in Texas improved their gross revenue in 2013, compared to 2012, when 17 of the 25 firms brought in more gross income revenue than the previous year. [See Energy Work Drives Firms' Financials," Texas Lawyer, April 29, 2013, page 14.]
The list of the 25 highest-grossing firms in 2013 is a bit different from last year’s list.
Two firms are not on the list. Brown McCarroll merged on July 1, 2013, with Husch Blackwell of St. Louis. Fulbright & Jaworski combined on June 3, 2013, with U.K.–based Norton Rose, to form Norton Rose Fulbright, with 710 lawyers in the United States and 3,437 worldwide.
Beirne, Maynard & Parsons, based in Houston, which slipped off the list last year, returns to the list of the 25 highest-grossing firms in Texas, along with newcomer Burleson, also based in Houston.
Only firms based in Texas are included in Texas Lawyer’s Annual Report on Firm Finance.
Like total gross revenue, total net income for the 25 firms declined a bit in 2013. The total net income of $2.0 billion is less than a total of $2.2 billion for the 25 firms last year.
Revenue per lawyer averaged $695,000 in 2013, up 0.5 percent from 2012′s average of $691,000.
But average profits per partner improved by 3.1 percent in 2013, coming in at $991,000 compared with $961,000 in 2012.
Those four measures in the Texas Lawyer Annual Report on Firm Finance—gross revenue, net income, RPL and PPP—help describe each firm’s financial performance and provide a means to compare them. The gross revenue chart is the master list for the report. [See Firm Finance Report: Charts.]
This is the 28th year that Texas Lawyer has published the annual Report on Firm Finance. The first was published in 1987, when it included the 10 highest-grossing firms in Texas in 1986.
Akin Gump Strauss Hauer & Feld is again the highest-grossing firm in Texas in 2013, with revenue of $828.5 million, up 6.9 percent from $775,000 in 2012.
Only three firms posted double-digit increases in gross revenue in 2013, with Susman Godfrey marking the largest increase. Gross revenue declined at 13 firms, but only two firms, Gray Reed & McGraw (formerly Looper Reed & McGraw) and Porter Hedges, posted double-digit decreases.
Akin Gump also topped the net income chart with $315.5 million in 2013, up 17.9 percent from $267.5 million the previous year. Eight firms improved their net income in 2013 compared with 2012, while net income dipped at 16 other firms and was unchanged at one firm.
Susman Godfrey had the largest increase in net income, 29.5 percent, with $112 million, compared with $86.5 million. Burleson had the largest decrease, 39.1 percent, with $14 million, compared with $23 million. Nine of the firms posted double-digit declines in net income.
Godwin Lewis leads the PPP list, with an average PPP of $2,790,000 in 2013, down 1.6 percent from $2,835,000 the previous year. Profits per partner improved by more than 10 percent at these three firms: Susman Godfrey, Akin Gump and Vinson & Elkins. PPP declined by more than 10 percent at 10 firms.
PPP improved at 10 firms, declined at 14 and was unchanged at one.
Susman Godfrey leads the RPL list, with an average RPL of $1,600,000 in 2013, up 26.5 percent when compared with $1,265,000 in 2012. RPL improved by 10 percent or more at two firms: V&E and Kane Russell. RPL declined by 10 percent or more at only one firm—Gray Reed, where average RPL was $350,000 in 2013, down 30 percent from $500,000 the previous year.
RPL improved at 11 firms, declined at 11 and was unchanged at three firms.
Understand the Report
The Annual Report on Firm Finance also includes a Profitability Index, which shows whether equity partners in a firm are taking home more or less than average RPL. [See chart, Profitability Index.]
The report also includes a firm-by-firm analysis that gives some insight to help explain financial results from each of the 25 firms. [See Firm Finance Report: Firm-by-Firm Analysis.] The fact that lawyers from the firms are quoted in these articles is no indication of a firm’s cooperation with the preparation of the Annual Report on Firm Finance. Lawyers simply responded to questions about work and developments at their firms in 2013. Texas Lawyer does not identify the firms that cooperate with our reporting by providing financial information and those that do not.
The individual firm reports also include 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 graphs are not on the same scale, so they should not be compared side-by-side.
All the revenue figures in the charts are for the calendar year 2013, except for Gardere Wynne Sewell, whose most recent fiscal year ended March 31, 2014. All lawyer counts are full-time-equivalent for the firm’s fiscal year.
See related charts: