Pennsylvania’s largest law firms are still getting larger—at least some of them are—but very little of that growth is taking place in their hometowns.
Of the firms founded in Pennsylvania that saw revenue grow in 2017, growth outside the state has been a major contributor. Or, in the case of one firm, lateral hiring outside the Philadelphia headquarters across the state in Pittsburgh.
Three firms, meanwhile, took large bites out of the mid-market, acquiring midsize firms in markets off the East Coast.
But head count increases weren’t in the cards for all Pennsylvania-born firms. Several saw their lawyer populations decline, as partners made moves to other firms, while others looked to grow revenue by other means.
Morgan Lewis & Bockius
As it broke the $2 billion revenue barrier in 2017, Morgan Lewis kept its eighth-place ranking in the Am Law 100.
The largest Pennsylvania-born firm saw gross revenue grow by 7.6 percent to $2.001 billion and grew profits per equity partner by 10.6 percent, reaching $1.368 million.
Revenue growth outpaced head count growth slightly, with revenue per lawyer increasing by 2.1 percent, to $1.03 million, as head count reached 1,943.
Morgan Lewis’ association with Luk & Partners in Hong Kong was approved in the late summer of 2017, allowing the firm to continue its expansion in Asia. The firm also added to its Shanghai employment practice.
And in U.S. lateral hiring, Morgan Lewis bolstered its international trade practice in Washington, D.C., and its products liability practice in Pittsburgh. The firm also added to its Latin America practice and health care group in Houston, and created a sports industry group led by a lateral partner hire in California.
Reed Smith experienced gains in revenue and partner profits in 2017, while head count remained nearly flat and the equity partner tier grew by just 1 percent.
But the increasingly international Pittsburgh-born firm saw greater growth in its largest office, London, where nonpartner head count went from 190 to 198, and the partnership grew to 119 from 112.
Gross revenue was up 4.1 percent, at $1.12 billion, and revenue per lawyer increased by 3.1 percent, to $722,000.
Profits per equity partner grew 6 percent, to $1.18 million, as net income increased by 7.1 percent, to $350.6 million.
Global managing partner Alexander Thomas said Reed Smith was “hitting on all cylinders” in 2017, as it saw investments from the past four to five years begin to pay off. In particular, he said, the life sciences and health group performed well across litigation, regulatory work and disputes. Energy and natural resources performed well too, he said.
Following a 2016 that was heavily bolstered by a one-time success fee, K&L Gates saw its revenue, profits and Am Law 100 ranking take a big dip in 2017.
Gross revenue, at $989.9 million, decreased by 16.1 percent from 2016 to 2017 causing the Pittsburgh-born firm to drop 9 places in the Am Law 100, to 32. Revenue per lawyer was down 15.3 percent, at $552,000, which is the fifth-lowest among Am Law 100 firms.
Profits per equity partner, at $932,000, saw a smaller decline of 8.1 percent.
According to a spokesman for the firm, if not for the $210 million success fee it won in 2016, K&L Gates actually would have seen a 2 percent increase in gross revenue and 3 percent increase in RPL. But that also means the firm would have seen massive decreases in revenue and profit in 2016, if not for that success fee.
The most profitable Pennsylvania-based firm achieved record profits per equity partner in 2017, and surpassed $1 million in revenue per lawyer.
Dechert saw gross revenue increase by 7.3 percent, to $977.9 million, causing revenue per lawyer to grow by 5.8 percent, to $1.053 million.
Profits per equity partner, grew by 5.2 percent to reach $2.7 million.
According to firm chair Andrew Levander, the firm’s international presence bolstered its results. He said the litigation practice in Europe, the Middle East and Africa was strong, and said the corporate practice was particularly active in Asia. International arbitration was active in Latin America and elsewhere, he noted.
Still, the firm coped with the effects of two major litigation matters winding down—matters it handled on behalf of airbag maker Takata, as well as its representation of Elliott Management in a long-fought dispute over Argentine bonds.
Philadelphia-based Duane Morris also hit new highs in 2017, through modest increases, with revenue up 2.6 percent and profits per equity partner up 2.7 percent.
The firm brought in $466 million in gross revenue, and revenue per lawyer of $706,000, an increase of 1.1 percent. Profitability grew at a similar pace, with profits per equity partner hitting $964,000.
Lawyer head count growth was modest as well, increasing by 1.4 percent to 660. And the equity partner tier was unchanged at 122.
Chairman Matthew Taylor said his firm’s 2017 revenue was not attributable to head count growth, and it came in a year when the firm “probably had one of our lowest amounts on contingency fee.”
The first quarter of 2017 was “sluggish” across the firm, Taylor said, but activity picked up in the late second quarter through fourth quarter on both the transactional and litigation fronts. Intellectual property in particular was “incredibly busy,” he said.
Drinker Biddle & Reath
Drinker Biddle enjoyed its third straight year of revenue growth over 6 percent in 2017, with gross revenue of $461.8 million, up 6.3 percent. Revenue per lawyer increased by 5.4 percent, to $822,000.
Profits saw healthy growth as well, with profits per equity partner increasing by 8.9 percent in 2017, to $926,000, even as the equity partner tier grew by 4.3 percent to 195 partners. Net income was up 13.6 percent, to $180.9 million.
While the firm saw its partnership grow, its overall headcount increased by less than 1 percent, as the firm added only five net lawyers.
Chairman Andrew Kassner pointed to the firm’s cumulative growth over three years. Gross revenue from 2015 through 2017 rose 21 percent, and profits per equity partner increased 28 percent.
Kassner said the corporate practice was “extremely busy” in 2017, especially in the fourth quarter, working on three deals at once that were valued in the billions.
Fox Rothschild continued to experience revenue growth on head count, with gross revenue hitting $450 million. While revenue was up 8.1 percent, revenue per lawyer increased by just 1.3 percent, to $605,000.
Profits per equity partner, meanwhile, grew by 1.7 percent, reaching $675,000, while net income increased by 3.8 percent.
But firmwide managing partner Mark Morris aid the firm measures its success more by the average compensation for all partners, which was $569,000, an increase of 3.6 percent from fiscal 2016.
Fox Rothschild continued to see its lawyer ranks grow, with head count increasing by 6.7 percent, or 47 lawyers, to 744. Many of those additions were nonpartners, as the equity partner tier grew by just four, to 191, and the nonequity tier by five, to 110.
Those additions included the acquisition of Seattle-based Riddell Williams, a 39-lawyer firm that marked Fox Rothschild’s expansion into the Pacific Northwest.
After a major boost in head count and revenue in 2016, Blank Rome saw its growth slow in 2017 as it focused on integrating newly acquired lawyers.
Gross revenue increased by 2.1 percent, to $431.3 million, while revenue per lawyer was up 3.6 percent, to $777,000.
Profits per equity partner were nearly flat, increasing by 0.5 percent from 2016 to 2017, to $916,000. While PPP grew very slightly, chairman Alan Hoffman said he was pleased with the figure given a 4.4 percent increase in equity partners last year, to 145.
Hoffman, pointed to the firm’s longer-term growth trajectory, including a 25 percent increase in gross revenue since 2015.
He said the firm’s financial services, real estate, commercial litigation and maritime and international trade practices were strongest in 2017. Commercial litigation, he said, had “a real bounce back” following an industrywide lag.
Beating its own projections for 2017, Cozen O’Connor posted gross revenue of $416 million, an increase of 10.7 percent from the year before. Revenue per lawyer increased by 2.1 percent, to $681,000.
Profits per equity partner reached $807,000, rising 5.1 percent, with net income up 11.1 percent to $143.9 million.
That came with head count growth of 8.4 percent, to 611 lawyers. That resulted in part from about 100 lateral hires throughout the year.
The 2017 hires included the addition of a practice group focused on institutional response to sexual misconduct. The firm also saw major growth in its labor and employment practice, including a large group from Buchanan, Ingersoll & Rooney. That group also allowed Philadelphia-based Cozen O’Connor to open an office in Pittsburgh, which quickly grew to more than 20 lawyers.
In a year when it announced two significant mergers, Ballard Spahr posted increases in both revenue and profits per partner in 2017.
Revenue increased by 3.4 percent in 2017, to $353.3 million, and revenue per lawyer rose 6 percent to $685,000.
Profits per equity partner rose 5.6 percent, reaching $638,000 in 2017. Net income was flat at $139.6 million.
Chairman Mark Stewart said the year’s results were “better than we had expected,” particularly given the fact that the firm was involved in merger talks throughout the year. He said real estate practice was especially profitable, litigation was busy, and the public finance group had a “huge fourth quarter” thanks to major changes in tax law.
In the fall of 2017, Ballard Spahr announced that it was acquiring Minneapolis-based Lindquist & Vennum, which had over 100 lawyers, as well as media law boutique Levine Sullivan Koch & Schulz. The Lindquist & Vennum deal, however, did not take effect until the beginning of 2018.
While it fell off the Am Law 100 based on its 2017 numbers, Pepper Hamilton saw some recovery in its profits per equity partner last year following a challenging 2016.
The firm saw revenue decline by 1.7 percent to $341.8 million in 2017, as total head count shrank. But profits per equity partner increased by 14.3 percent in 2017, reaching $837,000 distributed among a smaller equity partnership.
Revenue per lawyer was $760,000, up 6 percent from 2016. And net income, at $101.3 million, was up 4.9 percent.
Pepper Hamilton saw quite a few partner departures at the beginning of the year, with a total of 23 partner defections throughout 2017. The firm’s total head count decreased by 7.2 percent to 450 lawyers, and equity partner head count was down 8.3 percent, to 121.
But the firm also hired seven lateral partners throughout the year, and restructured its talent management function by hiring a chief talent officer and a chief lateral partner recruitment officer. And it made several key hires in its health sciences and its commercial and financial services departments.
Buchanan Ingersoll & Rooney
Though it saw a slight increase in profits, Buchanan Ingersoll experienced a drop in its Am Law 200 ranking after head count declined in 2017.
The firm saw gross revenue decrease by 5.4 percent, to $287 million. But thanks to head count decreasing by 19 lawyers, revenue per lawyer dipped only slightly, declining by 1.2 percent to $680,000.
Profits per equity partner increased by just under 1 percent, to $700,000.
The firm experienced some significant lateral departures beginning in May, as several groups of lawyers, eventually a total of 30, decamped for Cozen O’Connor. That includes a labor and employment group that Buchanan replaced later in the summer.
“While we experienced some distractions early in 2017, we ended the year strong,” Buchanan Ingersoll CEO Joseph Dougherty said in a statement.
Saul Ewing Arnstein & Lehr
Making a huge leap in its Am Law 200 ranking, Saul Ewing saw revenue increase by more than $66 million from 2016 to 2017, thanks to the largest merger in its history.
While gross revenue grew by 43.7 percent, to $219.3 million, revenue per lawyer decreased by 3.5 percent to $585,000 thanks to dramatic head count growth. Profits per equity partner also dropped, by 5.1 percent, to $555,000.
Saul Ewing announced in September that it had merged with Arnstein & Lehr, a midsize firm based in Chicago that also had offices in Florida. The combined firm had 375 lawyers, including 117 equity partners and 90 nonequity partners, in 2017.
Managing partner Barry Levin noted the “dilutive effect” of the merger on per-lawyer and per-partner metrics. Still, he said, the firm beat its budget by 7 percent, based on a combination of both firms’ budgets pre-merger.
Marshall Dennehey Warner Coleman & Goggin
Philadelphia-based insurance defense firm Marshall Dennehey experienced head count growth of more than 20 lawyers in 2017, as revenue hit $210 million, landing at No. 141 on the Am Law 200.
With 506 lawyers, the firm had revenue per lawyer of $415,000. Profits per equity partner were $336,000, among 268 equity partners.
Marshall Dennehey was not listed in the Am Law 200 prior to 2018. It has experienced head count growth of nearly 100 lawyers over the past 10 years.
Eckert Seamans Cherin & Mellott
At No. 166 on the Am Law 100, Pittsburgh-based regional firm Eckert Seamans brought in $147 million in 2017. With 328 lawyers, its revenue per lawyer was $448,000.
The firm had 132 equity partners and 104 nonequity partners, and profits per equity partner of $312,000.
Eckert Seamans was not listed in the Am Law 200 from 2000 to 2017. The firm’s head count has grown by well over 100 lawyers since 2000, though it has declined since it reached a high of 373 in 2014.