Despite a sluggish start on the transactional side, net income in 2017 grew by 3.5 percent at Dallas-based Thompson & Knight when compared with 2016, although gross revenue slipped by 0.7 percent for the year.
“We were pretty pleased with the year overall,” said managing partner Mark Sloan. “The year started off a little slower on the transactional side, but we really picked up in the second half, corporate and real estate picked up on a good note, and trial stayed busy.”
The firm brought in $212,022,000 in revenue in 2017, up from $213,445,000 the year before. With a full-time equivalent of 280 lawyers, revenue per lawyer came in at $758,000, down 2.8 percent from $780,000 in 2016.
Net income improved to $92,748,000 in 2017, up 3.5 percent from $89,634,000 in 2016. With 97 equity partners on a full-time-equivalent basis, profits per partner hit $956,000, down 2.9 percent when compared with $985,000 last year.
In 2016, Thompson & Knight’s gross revenue improved by 2.9 percent and net income was up by 3.5 percent, compared with 2015. This year, ALM is rounding gross revenue and net income to the nearest $1,000—a change from prior years, when those numbers were rounded to the nearest $500,000.
Sloan said the firm’s 2017 financials were affected by the end of the Life Partners Holdings Chapter 11 restructuring, which “drove a good part of ’15 and ’16″ and provided a lot of work to the firm’s bankruptcy, corporate, finance and tax lawyers. He said bankruptcy work was down in 2017, largely because many of the problems in the oil patch have been worked out, so fewer energy companies are filing for bankruptcy, and because the firm needed to reload its bankruptcy pipeline following the end of the big Life Partners matter.
Another contributor to flat growth in revenue was the firm’s investment in contingency work that hasn’t paid yet, including one judgment that is on appeal, Sloan said.
On the plus side, Sloan said intellectual property litigation picked up in 2017, and other areas that were busy last year include tax controversy and government/regulatory.
The firm did a good job on the expense side in 2017, Sloan said, which contributed to the increase in net income. He said expenses were about $5 million less in 2017 than in 2016—a development he said was due in part to lower health insurance claims, but also to everyone just watching spending.
Thompson & Knight isn’t the only Texas firm that carefully watched expenses in 2017. According to a new report from Citi Private Bank Law Firm Group, expenses declined by 0.1 percent in the Texas region in 2017. It was the only region in the country to post a decline in expenses.
The firm’s 280 FTE head count is up 2.6 percent compared with 273 in 2016, and the firm added a net of six equity partners to reach an FTE of 97.
Sloan said the firm is well-positioned for the future.
“We’ve got a good track record of stability. I think we’ve had some good increases in profits, RPL, the last several years,” he said. “It didn’t go up last year, but I feel good where we are in the market. We will have opportunities.”