Reed Smith saw increases in its key financial metrics between 2011 and 2012 that the firm attributed in large part to its cross-selling across its core industry groups.
According to preliminary numbers released today by Reed Smith, the firm saw a 2 percent rise in gross revenue from $993 million in 2011 to $1.01 billion in 2012. That marks the first time Reed Smith has crossed the billion-dollar mark when it comes to gross revenue.
The firm’s profits per equity partner (PPP) increased 5.9 percent from $1.02 million to $1.08 million and its revenue per lawyer (RPL) rose 3.3 percent from $668,000 in 2011 to $690,000 in 2012.
Reed Smith said revenue in the firm’s financial services industry group increased 4.5 percent. Nearly 90 percent of the attorneys in the firm served Reed Smith’s top 30 financial sector clients in some way.
Reed Smith Global Managing Partner Gregory B. Jordan said there continues to be a “massive amount” of litigation in the financial services sector in the wake of the recession.
Revenue from the life sciences industry group increased 12.6 percent, with half of Reed Smith’s lawyers working in some capacity with the firm’s top 30 life sciences clients. Jordan said the firm has kept busy in this industry group both on the transactional side and through health care regulatory work.
Reed Smith’s energy practice grew 22 percent year over year, which does not take into account the firm’s entrance into Houston in January. The firm announced it acquired space in Houston but hasn’t given much detail on who will staff the office. Jordan said more details will be available on that later this week, but he said there will be about 30 lawyers to start the office.
Reed Smith’s energy practice includes matters out of Houston and Singapore, Marcellus Shale work in Pennsylvania, alternative energy matters in California and trading and commodities work out of London that extends through Europe and Asia.
These three key industry groups have been a benefit to Reed Smith in a sluggish market, Jordan said.
“Our focus on these key industries, I think, has been a key part of our ability to navigate the slow recovery, because it’s allowed us to focus more intently on these industries where we have a lot of key clients and can bring some experience to bear,” Jordan said.
Along with its industry focus, Reed Smith also touted its global footprint, noting that also contributed to its financial performance in 2012. All of the firm’s top 10 clients were served by at least half of the firm’s 25 offices around the world. A little less than 30 percent of 2012 revenues came from outside the United States, Reed Smith said. That was a slight uptick from years prior.
Jordan said the firm saw a particular uptick in work into and out of Asia. Jordan said he only expects that to continue thanks to the firm’s October 2012 launch of a Singapore office.
The improvement of the financial situation in London and Europe over the course of the year was important for the firm’s overall financial outlook in 2012, Jordan said. London is Reed Smith’s largest office and the firm has spent the last few years adding attorneys and practice groups, to great success, Jordan said. The plan for 2013 is to make those same sorts of investments in the firm’s New York and Washington, D.C., offices.
Jordan said overall headcount fell about 1 percent from the 1,486 attorneys the firm had in 2011, while partner headcount remained relatively flat. He said he would expect headcount to rise about 6 to 7 percent in 2013 thanks to growth in Houston and Singapore as well as the fact that the firm will have two associate classes starting this year. The fall class from 2012 began this January and the 2013 fall class’ start date will be moved up to this year rather than early 2014.
While 2013 will be a year of executing on the expansion the firm has recently undertaken, Jordan said Reed Smith will also start to study more closely potential new markets such as Canada, Australia, Latin America, Brazil and Frankfurt, Germany.
- Read more about it later this week in The Legal.