Chamberlain, Hrdlicka, White, Williams & Aughtry, a Texas-based firm with a Pennsylvania presence, is projecting a rebound in 2014 after seeing declines in gross revenue, profits per equity partner and revenue per lawyer in 2013.
In 2013, the firm’s gross revenue decreased 2.5 percent from $73.3 million in 2012 to $71.4 million in 2013, and the revenue per lawyer (RPL) also dropped 4.3 percent from $672,000 in 2012 to $643,000 in 2013, according to numbers provided by the firm. The profits per equity partner (PPP) was also reported to have dipped approximately 13 percent from $808,000 in 2012 to $700,000 in 2013.
However, managing shareholder Wayne Risoli said 2014 has already seen strong growth in intellectual property and mergers and acquisitions work, and the firm saw net profits top $18 million through July 2014.
“2014 marries well with 2012, which we found to be our best year ever,” Risoli said. “We’re very excited about the same thing for our prospects this year.”
The firm saw strong growth in 2012, including a 13 percent jump in gross revenue and a nearly 20 percent increase in PPP.
According to Risoli, because of a change in the federal tax code in 2013, the last two months of 2012 saw a major uptick in business.
“It was a bit of a moving target before Jan. 1,” he said, adding that uncertainty about the tax changes led to most of the work. “It was an aberrationally up year because of all these written tax changes.”
The equity partner tier held steady at 42 from 2012 to 2013, according to Risoli. But, so far in 2014, that total has risen to 45 equity partners, Risoli said.
Consultant Joel A. Rose said many similarly situated firms are predicting that 2014 will close out with an overall upswing in business. He said an uptick in the national economy and an increase in trusts and estate planning, health care regulation and energy work has fueled confidence in 2014. He also noted that many firms have taken steps to reduce overhead and enhance their marketing tactics.
“The last several years, the economics of most of these firms have been down,” Rose said. “In relation to what has happened, 2014 should be a better year.”
Risoli noted that transactional work has jumped 12 percent in the past year, and several energy-based clients have been active with acquisitions and restructurings. Two new large clients with significant intellectual property needs have also fueled growth, and have led the firm to hire an intellectual property partner, Risoli said.
The total number of full-time equivalent lawyers rose from 110 in 2012 to 111 in 2013. So far in 2014, the firm has seen a roughly 8 percent jump to about 120 total attorneys, Risoli said. He said seven attorneys were added to handle new transactional and intellectual property work.
Chamberlain Hrdlicka was founded as a tax law boutique in the 1960s, but, over the past few decades, took steps to expand its capabilities into related fields.
According to Risoli, the firm saw an uptick in estate planning and employee benefits work, but the tax section remained a strong source of revenue for the firm.
He said the firm is starting to see more work with larger companies, but the firm’s “sweet spot” remains the middle-market companies that the firm has always focused on.
According to Philip Karter, a shareholder in Chamberlain Hrdlicka’s Philadelphia-area office, located in West Conshohocken, the office is following in the footsteps of the broader firm. Capabilities in litigation, estate planning, corporate and real estate have been added to the West Conshohocken office, but the tax work remains the most prominent practice area for the office, Karter said.
“We continue to look for synergistic practices that compliment our general business practice,” he said.
With losing two junior attorneys—one a trust and estates attorney and the other a tax associate—and seeing the addition of three laterals in the past year, the office has seen some turnover. But, according to Karter, the work has remained consistent.
Philadelphia currently has an underserved market when it comes to tax-based legal needs, according to Karter, and the West Conshohocken office has been working to increase its presence in the city.
“We hope to achieve more on that same front both by concentrating interest in Philadelphia and by bringing in other laterals,” he said. “We think there’s a need that hasn’t been filled in this particular market.”