Philadelphia-based Fox Rothschild was the rare Pennsylvania firm whose revenue rose by a higher percentage than its profits per partner in 2010. The firm’s gross revenue in 2010 was about $239.3 million, up nearly 10.3 percent from 2009, when its gross revenue was about $217 million.

Meanwhile, its profits per equity partner (PPP) grew by 3.6 percent, from about $550,000 in 2009 to about $570,000 in 2010.

The firm’s administrative partner, Mark L. Silow, said 2010 was a “year of investment” that included both geographic and practice growth.

Silow attributed the spike in the firm’s revenue partly to the addition of new lawyers.

The firm, with a fiscal year end of March 31, grew its total headcount by 5.6 percent from 429 in 2009 to 453 in 2010.

Because The Legal ‘s affiliate, The American Lawyer , began tracking headcount figures based on a full-year average full-time equivalent (FTE) this year rather than the Aug. 31 FTE cutoff it previously used, Fox Rothschild’s total headcount for 2009 has been restated based on the full fiscal year cutoff.

Along with 14 first-year associates, several laterals joined the firm, helping to ramp up the firm’s equity partner tier 9.8 percent, from 122 to 134, and the nonequity partner tier 7.4 percent, from 68 to 73.

But Silow said the firm’s revenue also grew because many of its existing lawyers had productive years.

“Part of that involved a few alternative fee arrangements, whether they were contingency or bonus fee arrangements,” he said, adding that alternative fee arrangements accounted for about $6 million of the firm’s revenue in 2010.

“Our client base is very much an entrepreneurial middle-market client base and they’re more comfortable entering into more entrepreneurial fee arrangements,” he said.

In addition, Silow said the firm’s litigation practice was “very busy.”

“We had several large litigations going on,” he said. “One [was] in the pharmaceutical industry involving distribution rights and, in the IP area, we had a significant patent infringement case going on. In commercial litigation, we had significant litigation involving distribution agreements and contract rights.”

Bankruptcy was also a hot area for Fox Rothschild in 2010, Silow said, adding that it was “very booming” in Las Vegas, in particular.

The firm also noticed some promising signs from less likely practices in 2010.

“We started to see the return of transactional work about halfway through the year,” he said. “We saw the second half of the fiscal year be very active on the corporate transactional front. In the last six months, real estate and corporate [attorneys] were leading the firm in billable hours.”

Now, early in its 2011 fiscal year, Silow said the firm is continuing to receive corporate and real estate transactional work.

“It’s not what it was three or four years ago, but we do see some life,” he said.

But while a number of firms that experienced revenue gains in 2010, as well as many that didn’t, told The Legal that they were able to increase PPP by keeping a tight rein on costs, Silow said Fox Rothschild took the opposite approach.

“Our expenses actually went up this year,” he said.

For example, the firm spent money to beef up its bankruptcy practice in Las Vegas, adding bankruptcy partners Brett A. Axelrod and Anne M. Loraditch to its Las Vegas office from Greenberg Traurig in April 2010, Silow said.

Fox Rothschild also invested in its West Palm Beach, Fla.-based litigation practice, bringing on seven attorneys from Ruden McClosky in March 2010, according to Silow.

And in November, Silow said, the firm opened a Washington, D.C., office with the addition of Margaret M. Gatti, the former chair of Dilworth Paxson’s international law group, who brought two other Dilworth Paxson lawyers and an international trade law and government compliance practice to the firm.

Silow said the firm was in a position to make these types of investments in 2010 because it never had to make any drastic cuts during the recession.

“We have operated the same way in good times and in lean times,” he said. “We continue to invest in the practice, we continue to grow headcount, we continue to expand facilities and we have not had the sharp drops in costs because we haven’t had any sharp drops in headcount.”

Silow said the firm’s ability to navigate the economic downturn and emerge unscathed speaks to the nature of its client base, which he said could be divided into two categories under two separate definitions of “middle-market work.”

One category includes what Silow called “traditional middle-market clients,” such as family-owned business, high net worth individuals, charitable organizations and small public companies.

The other category comprises Fortune 50 clients for whom Fox Rothschild performs very specialized niche work, he said.

“We have a rate structure that I think has proven to be more attractive for all segments of the middle market than some larger firms have had in the past few years,” he said.

Looking ahead to how the firm will invest in its practices in 2011 and beyond, Silow said Fox Rothschild is “actively looking for quality lateral partners and merger opportunities with smaller firms.”

“We’re dedicated to building our newest presence in Washington, D.C., and we’re looking for added strength in every area and in every other office,” he said. •