Ballard Spahr grew gross revenue 5.3 percent and profits per equity partner (PPP) by 4.7 percent in 2012 thanks to an increase in demand across all of its departments, firm Chairman Mark Stewart said.
Last year was one focused on profitability and controlling costs, Stewart said. It was also a year that saw the benefits of strategy to show its clients the firm understands their needs for certainty in fees, better matter management, an understanding of their businesses and shared corporate values.
"We’re beginning to make inroads into the market by that approach," Stewart said.
Eight of the firm’s top 25 clients in 2012 had never been in the top 25 before. Stewart said many were existing clients that the firm did more work for. The end result was a 5.3 percent jump in gross revenue from $285 million in 2011 to $300 million in 2012. While productivity was relatively flat per lawyer, revenue per lawyer (RPL) grew 3.3 percent. Stewart said rates were increased selectively over 2012, with a net effect of about a 2 percent rise in rates.
Ballard Spahr is taking the route many firms have gone by creating client teams to pull together work the firm does for a client across offices. That has led to more work in additional offices, Stewart said. And to the piece about sharing in clients’ corporate values, Stewart said the firm has partnered with a number of clients on pro bono projects that have also resulted in more legal work to the law firm from those clients.
Five years ago, Ballard Spahr lost a client that Stewart wouldn’t name. He said the firm had been trying ever since to get that work back, but to no avail. That was until the client announced a focus on corporate social responsibility and Ballard Spahr pitched it on a joint pro bono program the two organizations could run together. Now the firm is working with the company on pro bono work and counts it as a paying client again, Stewart said. Ballard Spahr has such pro bono relationships with a number of clients, including GlaxoSmithKline, Exelon, DuPont and Capital One.But Ballard Spahr’s growth in revenue wasn’t simply because of pro bono alliances.
Stewart said the biggest dollar increase in revenue was seen in the litigation department, which now accounts for about 38 percent of the firm’s revenue. He said the largest percentage increase in revenue was found in the intellectual property group. Stewart said the firm’s 2008 merger with IP boutique Needle & Rosenberg is really paying off and revenue in that practice area is "growing exponentially."
Like many firms, Ballard Spahr had a big fourth-quarter when it came to M&A work, but he said that hasn’t been as busy into the first quarter of 2013. The firm’s consumer financial services practice has been busy across the country in part because of the new Consumer Financial Protection Bureau as well as several classes of lenders who are worried they will be next on the regulatory radar screen, Stewart said.
Another area that saw substantial growth in 2012 was data privacy. Stewart said the firm is seeing a growing number of RFPs on those types of matters, particularly in the banking and mortgage industries.
Over the course of 2012, Ballard Spahr added nine lateral partners across a variety of practice areas and continued to deal with what had previously been described by the firm as an overcapacity issue. The net result was a 1.3 percent increase in headcount from 473 attorneys to 479 in 2012. The firm’s sole partner tier grew less than 1 percent from 227 partners to 229 partners.
Partners brought home more on average in 2012. The firm’s PPP rose 4.7 percent from $530,000 in 2011 to $555,000 in 2012. Ballard Spahr was also able to increase its net income by 6.3 percent from $120 million to $127.5 million.
Stewart said the firm was more disciplined with its expenses in 2012 in terms of where it spent money on sponsorships, its rent and the amount of office space it uses. Ballard Spahr is subletting some of its office space in Washington, D.C., and Salt Lake City and has reduced space in Denver and Philadelphia.
The firm’s Philadelphia headquarters will move from 10 floors to seven-and-a-half by the end of 2014. The real cost of the remodeling in Philadelphia as well as the cost savings from reduced rent will not be felt until next year, with additional cost savings being realized in the years following, Stewart said.
During the course of the recession and years since, Ballard Spahr didn’t experience much in the way of wild swings in either direction financially, Stewart said. Because of that, Ballard Spahr might not be where other firms are, but he said he is "comfortable" with the firm’s growth.
"I think the numbers reflect the strength of the firm because the growth was across the board," he said of 2012′s financial performance.
When it comes to 2013, Stewart said he expects more of the same. He said he doesn’t expect M&A to rise to the level it did in the fourth quarter of 2012. While there are a few very large deals happening in the market, the rest of the corporate world is still waiting to see what will happen, he said. Stewart said he expects the white-collar defense and litigation practices to remain strong.
Ballard Spahr will look to grow the consumer financial services practice, the IP group in the West and its regulatory capacity in Washington. A New York office is also on the horizon, Stewart said.