Pepper Hamilton saw its revenue jump by 5.4 percent in 2013, despite what CEO Scott Green characterized as an “investment year” for the firm. The firm’s revenue grew from about $354.5 million in 2012 to $373.5 million in 2013.
Green said that growth was largely attributable to the firm’s white-collar litigation and investigations group, which doubled its revenue in 2013.
Pepper Hamilton has been focused on growing that practice over the past few years.
The firm acquired former FBI Director Louis Freeh’s law firm, Freeh Sporkin & Sullivan, and his consulting firm, Freeh Group International Solutions LLC, in 2012.
Freeh is now chairman of the firm.
In February of last year, the firm hired two white-collar attorneys from Ballard Spahr. Gina Maisto Smith, who spent a good chunk of her time at Ballard Spahr representing the Archdiocese of Philadelphia in its review of allegations of sexual abuse by priests, and Leslie Marie Gomez both joined the firm’s Philadelphia office as partners.
Green said the firm’s white-collar practice was particularly busy in 2013 investigating the claims administration in BP’s settlement with victims of the Gulf oil spill.
A federal judge appointed Freeh to head up that probe last July.
Green said the firm’s health effects litigation and intellectual property litigation practices were both busy in 2013 as well.
With regard to the latter, the firm opened a Silicon Valley office in November with three intellectual property partners from Goodwin Procter.
The office, located in Redwood City, Calif., is the firm’s third California office after Los Angeles and Orange County.
Gregory S. Bishop, who specializes in complex patent litigation, joined as partner in charge of the new Silicon Valley office.
Thomas F. Fitzpatrick joined as co-chair of the firm’s IP litigation practice, working with existing practice co-chairmen Paul J. Kennedy, a Philadelphia partner, and Goutam Patnaik, a Washington, D.C., partner.
And Andy H. Chan joined as a partner in the IP department.
Green said that while the Silicon Valley office is still young, the new hires are already working on matters for the firm, including helping to prepare for several trials scheduled for the end of February.
One practice area that finished 2012 on a high note but did not maintain that upward trajectory throughout 2013 was corporate transactional, Green said, describing the practice as “lumpy.”
According to Green, the firm started the year strong, representing Managed Health Care Associates Inc. in its acquisition by Roper Industries Inc. for about $1 billion.
But the practice slowed down dramatically in the summer months, a slump Green attributed to the fact that much of the corporate work that kept attorneys busy at the end of 2012 was part of a one-time, tax-driven phenomenon.
Green said the firm staffed up to meet the demand and was able to keep its corporate attorneys busy during the first quarter of the year thanks to the Managed Health Care Associates transaction, but once the work dropped off in the second quarter, the firm found itself overstaffed in that area.
“In July, we were wondering whether we were making the right decision” by not cutting headcount, Green said, but added that when transactional work picked up again in the third and fourth quarters of 2013, the firm was glad to have those lawyers.
Late in the year, the firm was involved in the $43 million initial public offering for TetraLogic Pharmaceuticals, the $154 million sale of Peoples Financial Services to Penseco Financial Services, and IBM’s acquisition of Fiberlink Communications.
“We’re very busy and are again being challenged for resources,” Green said.
Overall, the firm added 17 attorneys to its ranks in 2013, growing its headcount by 3.4 percent, from 493 lawyers to 510 lawyers.
Meanwhile, the firm’s revenue per lawyer rose by 2.1 percent, from about $720,000 in 2012 to $735,000 in 2013.
The firm also grew its profits per equity partner (PPP) by about 3.6 percent, due to the combination of a 0.8 percent increase in net income, from about $132.5 million to about $133.5 million, and a 2.5 percent drop in its equity partnership tier, from 157 attorneys to 153 attorneys.
Meanwhile, the firm’s nonequity partnership tier grew by 14.5 percent, from 62 attorneys to 71 attorneys.
But Green said that shift in the partnership ranks is due to the firm’s “unique system,” in which partners are determined to be either equity or nonequity based on their annual compensation.
According to Green, the firm does not elect equity partners. Instead, attorneys become equity partners once they cross a certain threshold of annual compensation.
Last year, Green explained, the line was $475,000, so any partners who were paid less than that dropped into the nonequity partnership tier.
According to Green, partners’ annual pay is set by the firm’s compensation committee and based on each partner’s productivity in a given year.
Assessing 2013 as a whole, Green said the firm was pleased with its performance and is now positioned to have a strong year in 2014.
“2013 was very much an investment year and we still did OK,” Green said, adding that, because of those investments, he’s “optimistic that we’re going to have a really good 2014.”