Profits soar for law partners
Cutting jobs, costs helped preserve bottom line at some big firms
Senior lawyers at three of Boston’s biggest law firms had their most profitable year ever in 2009, despite widespread job losses in the city’s legal industry.
Bingham McCutchen, Fish & Richardson, and WilmerHale all said they recorded the highest average profits per partner ever in 2009. Meanwhile, some other firms reported better-than-expected financial results.
The results came during a year when more than 200 lawyers and a similar number of support staff at Boston’s five largest firms lost their jobs. Market insiders say the cuts were intended to protect the profit payments made to senior lawyers, or partners, who are paid based on the a firm’s profits. There is fierce competition among law firms to achieve higher average profit per partner, which can increase because a firm has higher profits or fewer lawyers.
“What we’ve seen in 2009 is that profits held up well because of significant cost saving measures,’’ said Brion Bickerton, a legal recruiter for search firm Major Lindsey & Africa. “Those measures were the difference between profits being up, and profits being down 10 to 20 percent.’’
Bingham McCutchen said that gross revenue increased 12 percent to $850 million, while profit per partner was up about 2 percent to an average of $1.45 million. The firm, which employs some 2,000 people across the globe, laid off 39 employees in 2009, including 16 lawyers.
Chairman Jay Zimmerman said Bingham’s success is a result of its focus on restructuring and insolvency work, a boom area during a downturn, and continued expansion in its offices in Europe and Asia. It also benefited from a merger with tax law specialist McKee Nelson in August, which boosted income.
“We’ve had our best year ever,’’ Zimmerman said. Still, “like most firms, we have been prudent in terms of our expenses.’’
Fish & Richardson, which has more than 400 lawyers nationwide, also cut back its staffing levels in 2009, laying off a total of 100 staff and lawyers, as well as changing its strategy to refocus on the firm’s core practice - intellectual property. Several lawyers left when the firm closed its corporate practice as a result of this strategy in August.
Because of the cost cutting, and a rise in demand for intellectual property advice, Fish & Richardson’s gross revenue was up 4.7 percent to $417 million, while profits per partner rose by nearly 20 percent to $1.34 million.
“It was a painful year for everyone,’’ managing partner Tim French said. “Everybody had layoffs but everybody has grown in other areas by focusing on what they do best, or on where there are opportunities.’’
Meanwhile, WilmerHale, which employs some 934 lawyers across the United States, said revenue fell by 1.5 percent to $941 million in 2009. But average profits per partner rose 7 percent to $1.16 million. The firm laid off 57 employees in October.
Not all Boston law firms reported higher profits per partner, although financial results were better than predicted by many legal commentators.
This week, Goodwin Procter said that revenue and profit per partner were both down around 3 percent to $658 million and $1.3 million, respectively. It is one of the top 50 firms in the nation and one of Boston’s largest commercial firms, with more than 500 attorneys in the city.
At Edwards Angell Palmer & Dodge, which employs some 220 attorneys in Boston, revenue dropped 8.7 percent to $287.5 million, although the firm has not yet released a profit per partner figure. Goodwin cut 59 lawyers and 70 staffers last year, while Edwards Angell laid off 25 attorneys and 35 staff.
Initial results from Foley Hoag show a 5 percent drop in revenue to $146 million, and profit per partner also fell 5 percent to $800,000. However, the 90-partner outfit, which carries out corporate and litigation work for commercial clients such as biotechnology company Inverness Medical Innovations, did experience an uptick in workflow during the last few months of 2009. Foley Hoag laid off 32 workers, or 6 percent of its staff, last year.
Joint managing partner Adam Kahn said: “The year got better as it went on and we closed strongly. We expect that, given the shift in momentum, 2010 will be better than 2009, although the economic climate remains very difficult for the legal industry and many of our clients.’’