LB146 global 50 writeups p40-49
29/6/04
7:24 pm
Turnover 2004
Page 40
Net income 2004 change from 2003
Revenue generation Costs + Profits per lawyer
profit margin
£100k
= REVENUE
per lawyer
£200k
£300k
£400k
PEP 2004 change from 2003
per lawyer £500k
The Global 50
1
Clifford Chance International, 406 equity ptnrs, 230 non-equity ptnrs, 2,945 total lawyers £950m
-2.9%
£226.5m
It hasn’t been a good year for CC, with PEP and turnover down. A raft of New York rainmakers, including Steve Newborn, Kevin Arquit and Leora Ben-Ami, left, taking with them an estimated £41m in fees. Already this year, most of the US West Coast team has defected too. Senior partner Stuart Popham says it was an expensive year for the firm, which moved to new premises in both London and New York.
2
£855.6m
-2%
£364.2m
= £323,000
£558,000
-12.7%
Debt and capitalisation situation Amount of capital in the firm: ranges from plateau partners who have £100,000, to first-year partners who have £40,000 plus undrawn profits. Overall, the minimum level must be £160m. Amount of debt: $150m bond issue. Debt facility: revolving loan facility drawn like an overdraft.
43%
£282k
£209k
= £491,000
Biggest billers Roger Aaron New York, M&A Peter Atkins New York, corporate Sheila Birnbaum New York, litigation David Fox New York, M&A and restructuring Morris Kramer New York, M&A
£995,000
-7%
Division of business 8% Europe 1% Asia 91% US
Baker & McKenzie International, 621 equity ptnrs, 438 non-equity ptnrs, 3,213 total lawyers £830.8m
17.6%
£225.2m
27%
£188k
Top five clients BP Hutchison Pepsi-Cola Shell Sony
£70k
= £259,000
£363,000
-8.6%
Investments made 2003/04 New offices: Vienna and Shanghai Hires: Health law group in Dallas (three partners and two associates) from Jenkens & Gilchrist. Mireille Dany, Regis Fabre and three associates from EY Law in Paris. Ten ITC and finance lawyers from Brobeck, Phleger & Harrison
Freshfields Bruckhaus Deringer International, 516 equity ptnrs, 0 non-equity ptnrs, 2,377 total lawyers £800m
0%
£343.1m
Chief executive Hugh Crisp began his term at Freshfields with the firm confronting stasis. Turnover is flat, and the recent conflict clash over Marks & Spencer has left Freshfields’ London corporate practice with considerable egg on its face. That said, the department has felt the effects of the pick-up in the market. ‘The final quarter of last year was one of our best for a while,’ confirms London corporate head Tim Jones.
5
£77k
Top five clients Barclays Citigroup Deutsche Bank JPMorgan Chase Merrill Lynch
Top five clients Cendant Citigroup Deutsche Bank Goldman Sachs JPMorgan Chase
Christine Lagarde is to stand down as chair of Bakers this year after five years in the role. She is leaving the firm in rude health: it topped 3,000 lawyers and revenues over $1bn for the first time during her spell in charge. Bakers has now established offices in the locations it needs – most recently Shanghai and Vienna. The next phase of development: strengthening each of its many outposts.
4
£246k
York, 366 equity ptnrs, 0 non-equity ptnrs, Skadden, Arps, Slate, Meagher & Flom New 1,743 total lawyers
Skadden may be America’s largest firm, but its view of global legal business is naturally cautious. ‘We have a similar approach to our international expansion as we did for our domestic expansion,’ Earle Yaffa, Skadden’s managing director, says. ‘We have to be a credible presence in the significant financial centres.’
3
24%
43%
£192k
Top five clients Deutsche Bank Goldman Sachs Hewlett-Packard Kingfisher P&O Princess
£144k
= £337,000
£665,000
-5%
Biggest billers Edward Braham London, M&A Jenny Connolly London, competition
Lois Moore London, M&A Mark Rawlinson London, M&A
Crisp facing stasis
Linklaters International, 339 equity ptnrs, 161 non-equity ptnrs, 2,400 total lawyers £720m
0%
Linklaters has had a tough year, with turnover remaining static at £720m and PPP falling by 9%. Last year it grew New York massively, and now needs to focus its attention on Italy after its alliance with Gianni, Origoni, Grippo & Partners fell through. Further investment will be in the Netherlands and Japan.
40 Legal Business July/August 2004
£227.2m
32%
Top five clients Citigroup CSFB Ernst & Young PwC RBS
£205k
£95k
= £300,000
£670,000
-8.7%
Investments made 2003/04 Hires: Paul Wickes, Amanda Gallagher, Mary Warren and Jim Warnot (litigation, NY) from Shearman & Sterling. David Deck (capital markets, Tokyo) from Shearman & Sterling. Marty Flics (restructuring, NY) from Latham & Watkins. Huw Baker (real estate, London) from CMS Cameron McKenna. Tim Schwarz (ITC, London) and Stephen Lucas (banking, London) from Clifford Chance.
LB146 global 50 writeups p40-49
29/6/04
6:22 pm
Turnover 2004
Page 41
Net income 2004 change from 2003
Revenue generation Costs + Profits per lawyer
profit margin
£100k
= REVENUE
per lawyer
£200k
£300k
PEP 2004 change from 2003
per lawyer
£400k
£500k
The Global 50
6
Jones Day National (US), 395 equity ptnrs, 203 non-equity ptnrs, 2,098 total lawyers £682m
12.7%
Major jury trials continue to drive revenues at Jones Day in the US. Beyond the States, it is somewhat different, although investment is going into litigation, particularly in Asia. Nevertheless, ‘In Europe and Asia, the transactional practice predominates,’ chair of Europe Wesley Johnson says.
7
£227.8m
33%
£217k
£649m
0.3%
£253.3m
16-20% of their annual individual profits. Amount of debt: None.
Top performing office New York, after hire of Pennie & Edmonds’ IP team.
Johnson transaction-led
39%
£162k
= £266,000
£104k
Top five clients Barclays Citigroup Deutsche Bank JPMorgan Chase Royal Bank of Scotland
£624,000
-7.6%
Biggest billers Stephen Gillespie London, banking Tony Keal London, acquisition finance Gordon Stewart London, restructuring
Latham & Watkins Los Angeles, 415 equity ptnrs, 49 non-equity ptnrs, 1,565 total lawyers £640.3m
6.0%
£327.7m
51%
£200k
= £409,000
£209k
Top five clients Carlyle Group CIBC CSFB Deutsche Bank Philip Morris
£790,000
3.9%
Investments planned in next 12 months The two key cities for growth are New York and London, with expansion also planned in Silicon Valley as the firm expands in venture and technology work. Latham is also exploring opportunities in China.
Sidley Austin Brown & Wood National (US), 288 equity ptnrs, 274 non-equity ptnrs, 1,421 total lawyers £574.2m
3.7%
£159.7m
28%
At Sidley, turnover is up 3.7% to £574m and profits up 2% to an average per equity partner of £554,000. London managing partner Drew Scott sums up 2003 as a year of expansion. As well as opening an office in Brussels and building IP on the West Coast, the firm took on high-profile London partners Debbie Carslaw and Mark Menhennet from Denton Wilde Sapte, and John Woodhall from Clifford Chance.
10
-1.7%
Allen & Overy London, 406 equity ptnrs, 45 non-equity ptnrs, 2,443 total lawyers
Latham & Watkins’ booming litigation practice drove significant revenue and profit growth. Asia’s project finance practice excelled, while corporate managed to keep busy and Europe was slow. ‘We are very mindful of our costs, and we continue to operate in a lean way,’ notes LeeAnn Black, the firm’s executive director. ‘We are disciplined in our expenditure, and our leverage was very good in 2003.’
9
£577,000
Debt and capitalisation situation Amount of capital: Partners contribute
Top five clients Bayer General Motors IBM Lehman Brothers RJ Reynolds
Allen & Overy accepts that last year was tough. Turnover was up by a meagre £2m and profits were down more significantly. There is, however, no desperate need for further investment in the business. Peter Watson, litigation managing partner in London, says: ‘There aren’t any geographical gaps that we feel we have to fill. We want to work on improving what we’ve got, in particular to strengthen our position in the United States. If the right opportunity arises we may also consider opening in another part of Germany.’
8
= £325,000
109k
£292k
£112k
Top five clients AT&T Citigroup General Electric Merrill Lynch Morgan Stanley
= £404,000
£554,000
2%
Biggest billers Thomas Albrecht: Chicago, structured finance David Carpenter: Chicago, antitrust Charles Douglas: Chicago, litigation Frederick Lowinger: Chicago, corporate Graham Penn: London, securitisation Norman Slonaker: New York, corporate finance
Mayer, Brown, Rowe & Maw National (US), 448 equity ptnrs, 49 non-equity ptnrs, 1,354 total lawyers £508.4m
Two years on from the merger, Mayer Brown is making good global progress. ‘Chicago is really busy, New York is firing on all cylinders and in London there is white heat coming off our construction and energy teams,’ says London senior partner Paul Maher.
8.2%
£256.9m
Top clients Bank of America BASF CIBC Dow Chemical
51%
Ernst & Young SBC Wal-Mart
£167k
£171k
Division of business Corporate/securities: 22% Litigation: 33% Finance/banking: 22% Tax: 10% Other: 13%
= £338,000
£574,000
17.8%
Debt and capitalisation situation Amount of capital: 30%-40% of capital invested.
Amount of debt: none – cash-based. Debt facility: in London, overdraft limit is £6m-£10m. In US, cash on deposit.
July/August 2004 Legal Business 41
LB146 global 50 writeups p40-49
29/6/04
6:22 pm
Turnover 2004
Page 42
Net income 2004 change from 2003
Revenue generation Costs + Profits per lawyer
profit margin
£100k
£200k
= REVENUE
per lawyer £300k
£400k
PEP 2004 change from 2003
per lawyer £500k
The Global 50
11
White & Case International, 324 equity ptnrs, 76 non-equity ptnrs, 1,689 total lawyers £502.8m
11.7%
£149m
30%
£497.2m
8.4%
£260.4m
52%
£455.7m
-2.4%
£168.1m
37%
£223k
Investments made 2003/04 New office: Beijing (May 2004) Key hires: Over 40 equity, local and contract partner laterals, including: Hermann Schmitt (Clifford Chance, Moscow); Howard Kleiman (Sidley Austin Brown & Wood, New York); David Goldstein (Akin Gump Strauss Hauer & Feld, New York).
= £468,000
£245k
£930,000
7.3%
Investments made 2003/2004 Merger: with Paris firm Serra Leavy &
Top five clients Citigroup General Electric Hicks, Muse, Tate & Furst Lehman Brothers United Health
£269k
Top five clients CSFB Deutsche Bank JPMorgan Chase Merrill Lynch Pechiney
Cazals in January 2003. New offices: Austin, Texas and Munich in early 2004.
£157k
= £426,000
Investments made 2003/04 New office: São Paulo Investments planned for next 12 months
£862,000
1.4%
Division of business 38% Europe 58% US 4% Asia
Mainly consolidating existing practices.
Kirkland & Ellis Chicago, 176 equity ptnrs, 207 non-equity ptnrs, 926 total lawyers £418.5m
2.7%
£207.3m
50%
Kirkland & Ellis’s profits now outstrip those of all but a handful of NYC’s legal community. Partner hires in 2003 included M&A specialist Stephen Fraidin from Fried, Frank, Harris, Shriver & Jacobson in New York, while in London the loss of banking partner Bronwen Jones has been offset by the hire of John Markland from Weil, Gotshal & Manges. ‘We’ve made a gradual, continued investment in our English law practice,’ says London head Stuart Mills.
15
-26.2%
Shearman & Sterling New York, 195 equity ptnrs, 35 non-equity ptnrs, 1,070 total lawyers
A new São Paulo office and a highly successful European practice ensure that Shearman & Sterling’s global stock continues to rise. The US arm is also on the up. ‘One of the areas we have been very active in is regulatory white collar issues, which have been booming in the past couple of years,’ notes senior partner David Heleniak.
14
£460,000
Weil, Gotshal & Manges New York, 280 equity ptnrs, 0 non-equity ptnrs, 1,063 total lawyers
Weil Gotshal’s European network makes a healthy contribution to the firm’s turnover, with the Paris office helping to land a lead role on Vivendi Universal’s disposal to GE’s NBC, one of the biggest M&A deals for the firm last year. In the US, the firm focused much of its efforts on building its antitrust team. ‘It made sense to expand antitrust to support and drive the expansion of the corporate practice,’ New York corporate partner Howard Chatzinoff says. Europe contributes 25% of global turnover.
13
= £298,000
£88k
Top five clients Coca-Cola Deutsche Bank JPMorgan Chase Morgan Stanley UBS Warburg
The last three years have been good for White & Case, both in terms of headcount, which is up 6.1%, and revenue, which is up 11.7%. ‘We’re watching developments at our Magic Circle rivals closely,’ says Duane Wall, White & Case’s global managing partner. ‘Those that have expanded abroad are having real trouble and we can capitalise.’
12
£209k
£228k
= £452,000
£224k
Top five clients Conseco General Motors Madison Dearborn Morgan Stanley United Airlines
£1,178,000
-1.8%
Investments made 2003/04
Mills gradual investment
San Francisco office. Hired Stephen Fraidin and Thomas Christopher from Fried Frank in US.
O’Melveny & Myers Los Angeles, 227 equity ptnrs, 18 non-equity ptnrs, 864 total lawyers £408m
8.3%
£180.1m
Europe has become a key concern for this West Coast-focused player. London has seen the hires of corporate partners Matthew Hudson from Coller Capital, John Daghlian from SJ Berwin and Andrew Carpenter from DLA. The firm has also recently opened in Brussels with the hire of competition specialist Ricardo Celli from Norton Rose. ‘Our target is to be 100 lawyers in London within five years,’ Hudson says.
42 Legal Business July/August 2004
44%
£264k
Top five clients AMD Citigroup Deutsche Bank Goldman Sachs JPMorgan Chase
£209k
= £472,000
£794,000
7.2%
Investments made 2003/04 New office: Brussels. Further growth there is planned. Hires: John Daghlian from SJ Berwin (private equity, London). Matthew Hudson joined from a venture capital fund to head the London office. Riccardo Celli from Norton Rose (Brussels, competition).
LB146 global 50 writeups p40-49
29/6/04
6:23 pm
Page 43
Turnover 2004
Net income 2004 change from 2003
Revenue generation Costs + Profits per lawyer
profit margin
£100k
£200k
= REVENUE
per lawyer £300k
PEP 2004 change from 2003
per lawyer
£400k
£500k
The Global 50
16
Wilmer Cutler Pickering Hale and Dorr £408m
1.5%
The target that the merged firm has set itself is to beat $700m in combined revenues through 2004. With turnover hitting $337m for Wilmer Cutler and $321m for Hale and Dorr in these latest results, this is eminently achievable. ‘We will want to beef up on straight corporate,’ co-managing partner Bill Lee admits.
17
£400.1m
5.5%
= £308,000
£113k
Top five clients Biogen Idec Deutsche Telekom General Electric SEC Wyeth
Lee beefing up corporate
£205.2m
51%
£261k
Top five clients DaimlerChrysler Deloitte & Touche Ford Motor Co Hewlett-Packard Merrill Lynch
£389.4m
-7%
£214.8m
55%
£173k
Division of business Employment and benefits: 20% Tax: 20% Corporate: 25% Private client: 10% Health 10%
£493,000
-5.9%
Biggest billers Charlene Barshefsky Washington, DC, intl trade Brandon Becker Washington, DC, financial svcs Gary Born London, international arbitration Dieter Lange London, corporate Bill McLucas Washington, DC, securities
£275k
= £536,000
£851,000
7.8%
Investments made 2003/2004 Hires: A total of nine laterals in 2003, including Squire Sanders & Dempsey partner Peter Alexiadis to open a new Brussels office. Samson growing core businesses
= £386,000
£213k
£682,000
-4.4%
Investments made 2003/04 Merger: With Carnelutti in Italy. New office: Brussels. Hires: Team from Clifford Chance in New York, including partners David Taub (corporate) and John Lutz (structured finance). They join Thomas McGavin (capital markets), who moved from CC in January.
Davis Polk & Wardwell New York, 145 equity ptnrs, 0 non-equity ptnrs, 658 total lawyers £381.9m
0.5%
£169.0m
While the corporate department remained busy as ever, it was the litigation team at Davis Polk & Wardwell that had a truly outstanding year. California, in particular, has really started to pay dividends. Increased investment in the Silicon Valley is likely, so expect to see several NY-based litigators swapping white shoes for sandals. In an otherwise strong 2003, only Europe proved sluggish for the firm.
20
£195k
McDermott, Will & Emery Chicago, 315 equity ptnrs, 277 non-equity ptnrs, 1010 total lawyers
The employment and benefits practice at McDermott, Will & Emery has provided a fillip during a disappointing economic cycle. The firm remains conservative about further global expansion. ‘We are looking to become global, though it’s not necessary to have a ship in every port,’ says chairman Harvey Freishtat.
19
37%
Gibson, Dunn & Crutcher Los Angeles, 241 equity ptnrs, 0 non-equity ptnrs, 747 total lawyers
This West Coast firm saw a further surge in profits in 2003. ‘It was our seventh consecutive record year in terms of profitability. Our strategy remains to grow the business in our core areas of complex business transactions and sophisticated litigation – both domestically and internationally,’ head of real estate in London Alan Samson says.
18
£149.8m
National (US), 304 equity ptnrs, 15 non-equity ptnrs, 1,326 total lawyers
44%
£324k
Top clients Bank of America Comcast JPMorgan Chase Morgan Stanley
£257k
= £580,000
£1,166,000
-1.5%
Division of business Oracle Roche The Royal Bank of Scotland The St Paul
4% Asia 9% Europe 87% US
Sullivan & Cromwell New York, 156 equity ptnrs, 0 non-equity ptnrs, 665 total lawyers £381.3m
-8.3%
‘What distinguishes us,’ says Sullivan & Cromwell’s chairman Rodgin Cohen, ‘is that we have pursued our strategy to be involved in the most interesting matters globally whilst staying true to our culture and tradition.’ Since the last quarter of 2003, the firm has noted a pick-up in financial activity that bodes well for the future.
£197.3m
52%
£277k
£297k
= £573,000
Investments made New offices: Sydney was the last
Investments planned in next 12 months
office to be opened, in 2001. Hires: Laterals in France and Germany.
No intention of opening new offices – growth will be organic.
£1,265,000
10.3%
Cohen staying true to tradition
July/August 2004 Legal Business 43
LB146 global 50 writeups p40-49
29/6/04
6:23 pm
Turnover 2004
Page 44
Net income 2004 change from 2003
Revenue generation Costs + Profits per lawyer
profit margin
£100k
£200k
= REVENUE
per lawyer £300k
£400k
PEP 2004 change from 2003
per lawyer £500k
The Global 50
21
Lovells International, 263 equity ptnrs, 69 non-equity ptnrs, 1,317 total lawyers £377m
0.5%
£137.6m
Cleary Gottlieb Steen & Hamilton £372.6m
5.3%
Cleary Gottlieb underwent a transformation in 2003, showing a steely determination to bolster its credible global position through rare lateral hires, particularly in Europe. ‘These were extraordinary pick-ups, not a new way of life,’ New York partner Richard Lincer says. The English practice is now a target for investment.
23
£153.2m
£264k
= £286,000
£104k
£523,000
-6.2%
Investments made 2003/04 New office: Shanghai Hires: Seven laterals Investments planned in next 12 months Opening in Madrid, strengthening and consolidating over next two years. Commitment to expand in the New York office, especially in fraud, asset tracing and litigation.
New York, 167 equity ptnrs, 0 non-equity ptnrs, 830 total lawyers = £449,000
£185k
£918,000
-4.7%
Biggest billers Daniel Braverman London, corporate finance Mark Walker New York, corporate finance Pierre-Yves Chabert Paris, capital markets/M&A Roberto Casati Milan, corporate finance Victor Lewkow New York, M&A
Lincer no new way of life
Morgan, Lewis & Bockius National (US), 272 equity ptnrs, 136 non-equity ptnrs, 1,208 total lawyers £372m
0.1%
£122.8m
33%
£206k
Investments made 2003/2004 Three acquisitions in the last 18 months: recently opened in California, Chicago and Boston.
Akin Gump Strauss Hauer & Feld £362.7m
-5.4%
£98.2m
Close connections to oil giant Lukoil have enabled Akin Gump Strauss Hauer & Feld to exploit the Russian economic recovery and oil boom. Financial restructuring has also been a key area, with the firm’s role in the WorldCom bankruptcy. ‘We are top tier for representing bondholders,’ London managing partner Fred Heller says.
25
41%
Top five clients Citigroup Crédit Agricole Goldman Sachs Russian state Texas Pacific Group
With Frankfurt, Brussels and London accounting for just 4% of overall turnover, Morgan Lewis will be looking forward to seeing what value the new Paris office will add next year. ‘The firm began in Philadelphia in the 1870s and has now grown to 18 offices around the world,’ says Peter Wallace, the regional co-ordinating partner for Europe.
24
£182k
Top five clients Alstom Deloitte/BCCI creditors Granada SABMiller Tube Lines
‘Considering the market, we’ve had a good year, and haven’t pulled back on investment. With 27 locations around the world, we’re a truly global firm,’ says Lovells managing partner Lesley MacDonagh. ‘We opened in Shanghai to complement Beijing, where we had an exceptional year, and we will open in Madrid soon to further our European profile.’
22
37%
27%
£216k
Top clients Lukoil WorldCom’s unsecured creditors committee
= £308,000
£102k
£451,000
-6%
Debt and capitalisation situation Works on cash accounting basis – at the end of the fiscal year cash is distributed. Expenses continue to run though, so because of the cash deficit they are financed with working capital line. The figure, however, is zero at the beginning and end of each year.
National (US), 214 equity ptnrs, 101 non-equity ptnrs, 1,227 total lawyers £80k
= £296,000
Debt and capitalisation situation Amount of capital in the firm: $50m Amount of debt: Small amount for IT enhancements, etc
£459,000
-7%
Division of business Litigation: 30% Corporate/ restructuring: 25% Energy: 25% Investment funds: 10%
Simpson Thacher & Bartlett New York, 145 equity ptnrs, 0 non-equity ptnrs, 637 total lawyers £357.4m
-1.4%
Turnover at Simpson Thacher is down just slightly to £357.4m, while average PEP dropped a little to £1.2m. Investment last year was in London and New York, where three high-profile partners joined the firm: Euan Gorrie from Allen & Overy and Stephen Short from Ashurst in the UK, plus Kevin Arquit from Clifford Chance in the US.
44 Legal Business July/August 2004
£174.6m
49%
£287k
Top five clients Blackstone JPMorgan Chase Kohlberg Kravis Roberts & Co Lehman Brothers Swiss Re
£274k
= £561,000
Top performing offices New York, Palo Alto, then London
£1,204,000
-2.1%
Division of business Corporate: 45% (including banking, M&A and capital markets)
Litigation: 30% Real estate, tax and other: 25%
LB146 global 50 writeups p40-49
29/6/04
6:23 pm
Turnover 2004
Page 45
Net income 2004 change from 2003
Revenue generation Costs + Profits per lawyer
profit margin
£100k
£200k
= REVENUE
per lawyer £300k
PEP 2004 change from 2003
per lawyer
£400k
£500k
The Global 50
26
Greenberg Traurig National (US), 231 equity ptnrs, 210 non-equity ptnrs, 1,100 total lawyers £355.1m
14.5%
£125.3m
‘We do not want to open in an over-heated market [in Europe],’ Greenberg Traurig’s CEO Cesar Alvarez says. Despite asserting that ‘London is something we definitely want’ in 2000, the firm’s 2003 European debut took place in Zurich and Amsterdam, deliberately targeting European countries with little US legal presence. So far, 2004 has already seen US expansion, with two new West Coast offices.
27
35%
£341m
6.6%
£122.8m
4.3%
Investments made 2003/04 New offices: Zurich and Amsterdam (first European offices) Hires: Four real estate partners from Chicago’s Altheimer & Gray, including rainmaker Corey Light. Three partners from the New York headquarters of Coudert Brothers: George Lee and Michael Kelly (securities) and Mary Voce (tax).
36%
£254k
= £397,000
£143k
Top five clients Bristol-Myers Squibb IBM News Corp/related companies Qwest Communications The Hartford
£432,000
9.9%
Investments made 2003/04 Offices: Munich Hires: Fully 30 laterals joined the firm last year
Pegg London is a core city
Morrison & Foerster San Francisco, 220 equity ptnrs, 48 non-equity ptnrs, 880 total lawyers £334.8m
-0.6%
£101.1m
30%
Top five clients Bank of America Fujitsu Hitachi UPS Wells Fargo Bank
£266k
£332.9m
2.3%
£125.2m
38%
= £380,000
£115k
£459,000
-1.6%
Debt and capitalisation situation Wetmore says: ‘We have a minimum capitalisation of 25% of net income and maximum of 50% of net income. We have no recourse debt. We have a revolving line of credit but don’t use it these days. In 2001, we took a non-recourse unsecured private placement – about $30m – for capital expenditure and to repay existing debt. It wasn’t to cover any single new office, but was for various elements of expansion, particularly in Tokyo and New York.’
Paul, Hastings, Janofsky & Walker
Paul, Hastings, Janofsky & Walker made further forays into the European market in 2003, with the launch of Paris and Brussels offices through merger with Moquet Borde & Associés, which was approved by the Paris Bar in April 2004. ‘We have had excellent results in all five departments,’ managing partner Seth Zachary says. ‘Litigation remained busy, as, surprisingly, did the transactional side.’
30
£543,000
Hogan & Hartson Washington, DC, 284 equity ptnrs, 108 non-equity ptnrs, 860 total lawyers
MoFo, with its focus on technology, had another strong year in a poor market. ‘Our net income level of $163m reflects a certain tech-sector slowness and that we didn’t cut back headcounts,’ says global chair Keith Wetmore. ‘We’re pleased to have added a lot of talented lawyers and are enjoying the benefits of the tech sector rebound.’
29
= £323,000
£114k
Top clients Chilean government George W Bush presidential campaign Telefónica
‘The firm recognises that London is a core city, the city to really make things happen,’ says Garry Pegg, managing partner of Hogan & Hartson’s London office. Turnover for the firm was up on last year, which was attributed to strong litigation and bank regulatory teams plus a ‘loyal and active’ corporate client base. The focus is now on developing the political and regulatory practices of the DC office.
28
£209k
£268k
National (US), 191 equity ptnrs, 16 non-equity ptnrs, 775 total lawyers £162k
Top five clients Boeing Citigroup General Electric Lehman Brothers Holdings Morgan Stanley
= £430,000 Investments made in 2003 New offices: Shanghai and San Diego
£656,000
4.6%
Division of business Corporate: 37% Dispute resolution: 25% Real estate: 18% Employment: 17% Tax: 3%
Holland & Knight National (US), 430 equity ptnrs, 250 non-equity ptnrs, 1,270 total lawyers £329.9m
-3.8%
£120.5m
Holland & Knight has no head office, though it was founded in Tampa and that is still where the managing partner sits. More overseas expansion is planned, but it will be cautious – New York head Jason Brown says it is ‘not something that will happen immediately’. Both turnover and PEP were down last year, by roughly 3% each.
37%
£165k
£95k
= £260,000
£280,000
-3.4%
Investments made
Division of business
The firm has two partners in Asia, with offices in Beijing and Tokyo. Other overseas offices are in Mexico City, Brazil, Venezuela and Israel.
Key practice areas are business law, private wealth services, public law and real estate, including environmental and land use work.
Brown no immediate expansion
July/August 2004 Legal Business 45
LB146 global 50 writeups p40-49
29/6/04
6:23 pm
Turnover 2004
Page 46
Net income 2004 change from 2003
Revenue generation Costs + Profits per lawyer
profit margin
£100k
£200k
= REVENUE
per lawyer £300k
PEP 2004 change from 2003
per lawyer
£400k
£500k
The Global 50
31
Foley & Lardner Milwaukee, 203 equity ptnrs, 239 non-equity ptnrs, 785 total lawyers £324.3m
-0.6%
£86m
27%
Though it emphasises its Midwest roots, Foley & Lardner’s key aim is to establish its footprint nationally. A new office in Silicon Valley and recent merger talks, albeit fruitless, with a mid-tier New York and Boston firm, Edwards & Angell, are indicative of this. Ambitions outside of the US remain scarce, although Ralf Böer, the firm’s CEO since 2001, who is credited with the firm’s recent expansion, is himself German-born. In dollar terms, revenue expanded by 6% in 2003.
32
£314.1m
8.7%
£311.2m
2.6%
£65.2m
21%
base for 12 lawyers, though none is based there permanently. Other: Launched a sports practice.
£318k
Top five clients First Data FleetBoston Financial Hyundai Merrill Lynch Raytheon
£105m
34%
Burch looking at non-US options
£424,000
0.8%
Investments planned in next 12 months Opened Silicon Valley office in January and plans to build life sciences and IP work there. Merger talks with 275-lawyer Edwards & Angell collapsed early in 2004. The merger would have given F&L entry into the NY and Boston markets.
£83k
= £401,000
£652,000
6.2%
Investments made 2003/04 New offices: Opened in Tokyo. Acquired Riordan & McKinzie, which brought corporate and private equity in southern California.
Hires: Two laterals from Brobeck, Phleger & Harrison, three finance partners from Cooley Godward, and the general counsel from Charles Schwab and UBS Paine Webber. 42 lateral partners and 76 lateral associates since January 2003.
£216k
£110k
Top clients Government of Ethiopia Philip Morris WorldCom Wyeth
= £327,000
£453,000
0.6%
Debt and capitalisation situation 20-25% of each partner’s budgeted net income (which changes from year to year) is required to remain invested in the partnership. Debt average is not material relative to annual revenue. Both of the firm’s term facilities are paid down to zero each year.
Eversheds National (UK), 173 equity ptnrs, 166 non-equity ptnrs, 2,062 total lawyers £296m
3.9%
Having gone through the process of financially integrating its UK offices and redefining the equity partnership, Eversheds’ financials are looking more than healthy. Targets were exceeded last year, and the firm’s entire workforce will receive a bonus this year. Eversheds is now investing heavily into its blossoming international business.
35
Investments made 2003/04 Offices: Opened a Tokyo support
= £413,000
Piper Rudnick National (US), 232 equity ptnrs, 153 non-equity ptnrs, 953 total lawyers
Piper Rudnick, a leading national firm, continues its rapid expansion across the US, and is eager to push through a transatlantic merger, with DLA as the favourite partner. ‘We are looking hard at the non-US side of the story,’ co-chairman Francis Burch confirms.
34
£110k
Bingham McCutchen National (US), 100 equity ptnrs, 150 non-equity ptnrs, 784 total lawyers
A good year for Bingham McCutchen, which saw its turnover rise by 8.7% to £314.1m and PEP up 6.2% to £652,000. According to firm chairman Jay Zimmerman, it has been a wonderful year for financial restructuring and litigation. ‘We also invested in private equity and acquired leading Californian corporate boutique Riordan & McKinzie,’ he says.
33
£304k
£55.4m
19%
£117k
Top five clients HBOS Jarvis Lloyds TSB Strategic Rail Authority Taylor Woodrow
= £144,000
£27k
Top performing offices Birmingham, because it services Taylor Woodrow. Cardiff does high-volume work and is consistently a strong performer.
£330,000
7%
Division of business Corporate: 22% Real estate: 21%, Dispute resolution: 19% Employment: 14% Commercial: 13% Legal systems: 11%
Winston & Strawn Chicago, 183 equity ptnrs, 194 non-equity ptnrs, 805 total lawyers £285.8m
-3%
‘We’re a national gone global’ says John L MacCarthy, global chairman of corporate at Winston & Strawn. ‘We’ve expanded on the West Coast of the States and now we’re looking at consolidating in Europe. Further offices aren’t out of the question – you should never let a good plan get in the way of an opportunity.’
46 Legal Business July/August 2004
£92.4m
32%
£240k
Top five clients GE Capital Finance Luxottica Group Philip Morris Verizon Wyeth
£115k
= £355,000
£505,000
6.5%
Investments made 2003/04 Merger: in San Francisco New office: London Hires: Eight laterals in the US Investments planned in next 12 months Further European offices a possibility.
MacCarthy national gone global
LB146 global 50 writeups p40-49
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6:23 pm
Page 47
Turnover 2004
Net income 2004 change from 2003
Revenue generation Costs + Profits per lawyer
profit margin
£100k
= REVENUE
per lawyer
£200k
£300k
£400k
PEP 2004 change from 2003
per lawyer £500k
The Global 50
36
Orrick, Herrington & Sutcliffe San Francisco, 142 equity ptnrs, 109 non-equity ptnrs, 638 total lawyers £277.8m
4.1%
£83.1m
Turnover at Orrick is up slightly at £277.8m, and PEP has risen a notch. The year 2003 saw the US firm continue its foray into Europe, opening offices in Milan and Rome. According to chairman Ralph Baxter, the expansion won’t stop there: ‘We are still looking at Germany and China.’ Last month, the firm acquired Clifford Chance’s San Francisco and Los Angeles offices.
37
£276m
0.4%
£275m
18.0%
Top five clients Citigroup Dow Chemical Pacific Gas & Electric Vivendi Universal Wyeth
=
£435,000
Division of business Finance 39.5% Litigation 24.5% Corporate 26%
£122.1m
44%
£172k
Top five clients American International Bayer El Paso Corp Exxon Mobil Memorial Hermann Hospitals
= £309,000
£137k
Debt and capitalisation Amount of capital in the firm: $60m Amount of debt: zero
£51.3m
19%
£168k
£585,000
0.3%
Top performing offices New York, followed by San Francisco.
£366,000
-9.3%
Investments made 2003/2004 There have been 15 laterals in the last year, focusing particularly on corporate, energy and public finance. Among the key hires was John Rawls, who represents Starbucks.
Top five clients Bank of Scotland Barclays Department of Health HBOS Montagu Private Equity
= £207,000
£39k
£274.7m
0.6%
£119.8m
44%
£279k
Top five clients ADP AOL Time Warner Carnival Citigroup Sumitomo
£475,000
3.5%
Debt and capitalisation situation Amount of capital in the firm: £24.7m Amount of debt: £7.4m Top performing office Brussels Fine TMT practice and Sabena insolvency has kept things ticking.
Knowles mergers won’t dilute
Paul, Weiss, Rifkind, Wharton & Garrison
Paul Weiss is best known for its practices in litigation, private equity and bankruptcy. The firm has restricted overseas expansion to London, Beijing, Hong Kong and Tokyo. In London, it remains committed to a US law strategy. ‘We have no plans to start practising English law,’ chairman Alfred Youngwood says.
40
£130k
DLA National (UK), 108 equity ptnrs, 190 non-equity ptnrs, 1,330 total lawyers
DLA is one of the world’s most acquisitive firms, having greatly enhanced its global presence while not diluting profits. ‘Our policy is to approve a merger on a non-dilution principal. We don’t expect DLA partners to earn less as a result,’ managing partner Nigel Knowles says.
39
£305k
Fulbright & Jaworski Houston, 334 equity ptnrs, 0 non-equity ptnrs, 894 total lawyers
Turnover at Fulbright & Jaworski is flat at £276m, while PEP is down some 9% to £366,000. Executive committee chairman Steve Pfeiffer says that in 2003 the firm took important early steps to build practice group strengths across the offices: ‘We focused on litigation and public finance in New York, and corporate in Dallas.’
38
30%
New York, 109 equity ptnrs, 0 non-equity ptnrs, 556 total lawyers
£215k
Division of business New York houses almost 90% of the firm’s business. The rest is centred on Washington, DC, London, Beijing, Hong Kong and Tokyo
= £494,000
£1,099,000
-5.3%
Investments made 2003/04 US hires: Kenneth Gallo (litigation) from CC, Kelley Cornish (bankruptcy) from Sidley Austin, John Nathan (litigation) from Fish & Neave, Joseph Simons (co-chair of antitrust) from the Federal Trade Commission.
Pillsbury Winthrop San Francisco, 145 equity ptnrs, 160 non-equity ptnrs, 748 total lawyers £273.4m
-1.4%
£62.6m
For 130 years, Pillsbury Winthrop has been at the heart of developments on the West Coast and saw Silicon Valley emerging as an economic force, acting for major players like Intel and HewlettPackard. ‘Our vision is to be fully global,’ says firmwide chair Mary Cranston. ‘We’ve invested heavily in laterals, but we’re not allergic to merger, so if the right opportunity came along we’d grab it.’
23%
£282k
Top five clients Biogen Idec Chevron Marubeni Matsui SBC
£84k
= £366,000
Division of business Energy 10% Industrials 17% Finance 19% IT/telecom 21% Bio/pharma 11% Consumer 10% Other 12%
£432,000
-8.8%
Investments made 2003/04 New offices Houston, Texas (Chevron is major client) in January 2003; West LA (for entertainment market) in March 2004.
July/August 2004 Legal Business 47
LB146 global 50 writeups p40-49
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6:23 pm
Turnover 2004
Page 48
Net income 2004 change from 2003
Revenue generation Costs + Profits per lawyer
profit margin
£100k
= REVENUE
per lawyer
£200k
£300k
£400k
PEP 2004 change from 2003
per lawyer £500k
The Global 50
41
Reed Smith National (US), 212 equity ptnrs, 222 non-equity ptnrs, 1,058 total lawyers £273.4m
30.6%
£73.5m
27%
£189k
Top five clients GE Capital GMEC Johnson & Johnson Mellon Morgan Stanley
Reed Smith is increasingly focused on life sciences, pharmaceuticals and leading financial institutions, and in 2003 those clients made up 60% of the firm’s top 50 clients. Managing partner Gregory Jordan says: ‘We’ve gained substantial momentum from mergers. In the last three years, we’ve sharpened our focus and the perception of the firm has changed. There’s been a transformation of the firm geographically and a move upmarket work-wise.’
42
£272.9m
-10.3%
£126m
£272.7m
-1.4%
£125.5m
5%
Allocation of profits Firmwide the highest earner nets $1.5m, and the firm has a spread of five to one, meaning bottom of equity is at $300,000. In the UK the bottom of equity is £285,000 and the top is £720,000.
46%
£199k
£170k
Top five clients BG Group Duke Energy Dynergy Shell Williams
= £369,000
£424,000
-0.6%
Investments made 2003/04
LaMaster serious London loss
An office in Dubai and a couple of partners in Washington, DC. Additions to Beijing.
46%
£203k
£173k
= £376,000
£504,000
0.8%
Investments made 2003/04 New office Brussels, launched by former Clifford
Top performing office
Chance antitrust partner Marleen Van Kerckhove.
Division of business (% of turnover) Bank regulatory 20% Telecoms regulatory 20% Life sciences 20% Antitrust 20%
Investments planned for next 12 months No major plans for global growth beyond London and Brussels.
Washington, DC
Hunton & Williams Richmond, 260 equity ptnrs, 80 non-equity ptnrs, 817 total lawyers £269.7m
-0.4%
£99.9m
‘We felt like that was a pretty good year,’ says Hunton & Williams managing partner Thurston Moore. ‘All of our practice areas, other than international projects, were up from the year before.’ Abroad, the Richmond-based firm is expecting to see particular growth in Asia and, having filed for a Beijing office, it could leave Hong Kong in the near future.
45
£347,000
Arnold & Porter Washington, DC, 249 equity ptnrs, 0 non-equity ptnrs, 725 total lawyers
After launching a new Brussels office in 2003, Arnold & Porter is remaining conservative about global expansion. ‘In the short to medium term we have not set out to have offices in every major centre in Europe, and Asia is not a high priority at the moment,’ London head Lee Narrow says.
44
= £258,000
Vinson & Elkins Houston, 297 equity ptnrs, 0 non-equity ptnrs, 740 total lawyers
It could be worse for Vinson & Elkins. Despite the inevitable fallout from the collapse of its largest client, Enron, managing partner Joseph Dilg is confident the firm has turned the corner. ‘It seems to be picking up quite a bit and we’re optimistic that this year’s revenues will be stronger than last year,’ he predicts. Nevertheless, high-profile departures in Europe, including London administrative partner John LaMaster, don’t auger well.
43
£69k
37%
£208k
£122k
Top five clients Dana Corp John Hancock Financial Services Philip Morris Standard Bank TXU
Heller Ehrman White & McAuliffe £266.6m
13%
Heller Ehrman loses very few lawyers, but it’s certainly gained them recently as it increases its global reach. Four years ago it had 400, now it’s got 730. ‘We had an incredible 2003, both in work and ability to attract extremely talented people to the firm, and as global markets improve we’re in a position to take advantage,’ global chair Barry Levin says.
48 Legal Business July/August 2004
£93m
35%
Top five clients Ernst & Young Microsoft Philip Morris Visa Yahoo!
£237k
= £330,000 Division of business by practice Commercial 40% Litigation 40% Regulatory 15% IP/IT 5%
£384,000
2.1%
Division of business by region 2% Asia 2% Europe 96% US
San Francisco, 219 equity ptnrs, 35 non-equity ptnrs, 731 total lawyers
£127k
= £365,000
£425,000
-10.3%
Investments made 2003/04 Merger: with Venture Law Group, San Francisco, adding 58 lawyers. Hires: 48 laterals since January 2003. Offices: Opened in Beijing in March 2004. Investments planned in next 12 months Offices: London and Munich. Also focused on China and the US, especially NY.
LB146 global 50 writeups p40-49
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Page 49
Turnover 2004
Net income 2004 change from 2003
Revenue generation Costs + Profits per lawyer
profit margin
£100k
= REVENUE
per lawyer
£200k
£300k
PEP 2004 change from 2003
per lawyer
£400k
£500k
The Global 50
46
King & Spalding Atlanta, 166 equity ptnrs, 49 non-equity ptnrs, 727 total lawyers £266.4m
3.3%
Having opened its doors in London for the first time in 2003, a 3.3% rise in turnover caps an eventful year for Atlanta-based King & Spalding. ‘It is very gratifying to do well in a choppy world economy,’ says chairman Walter Driver, who expects to welcome a number of high-profile London recruits in the near future.
47
£103.9m
£252.3m
10%
£626,000
4.3%
Investments made 2003 /04 New office: London Hires: Several new partners in private equity and corporate, including Stephen Culhane from Goldman Sachs. In London, Charles Alexander joined from Weil Gotshal and Roger McCormick from Freshfields.
Investments planned in next 12 months Continued expansion in London.
£99.8m
40%
£253k
= £418,000
£165k
Top five clients American Airlines Clayton Dubilier & Rice General Electric/NBC Goldman Sachs Providence Equity Partners
£780,000
7.8%
Investments made 2003 Hires: Peter Hockless (finance)
Evans M&A is improving
from Allen & Overy in London. Marwan Al-Turki (private equity funds) from Baker & McKenzie in London.
Dechert National (US), 162 equity ptnrs, 66 non-equity ptnrs, 747 total lawyers £251.5m
1.3%
£102.4m
41%
Fogel high-rising profit curve
£200k
£137k
Top clients Cephalon Inc Credit Lyonnais Securities Crown Holdings CVC Capital Ptnrs
= £337,000
£632,000
7.8%
GSK Philip Morris
Debt and capitalisation situation Amount of capital:
Standard & Poor’s Travelex Plc
£217,000 per partner. Amount of debt: None at the end of last financial year.
Milbank Tweed Hadley & McCloy New York, 103 equity ptnrs, 17 non-equity ptnrs, 453 total lawyers £247.7m
-2.5%
Litigation and restructuring work were the main drivers for Milbank in 2003. ‘The finance and corporate practices were OK last year, but they certainly didn’t knock the cover off the ball,’ says chairman Mel Immergut. The firm laid down good foundations in Europe with a new office in Munich and the recruitment of six Magic Circle partners.
50
= £366,000
£143k
Debevoise & Plimpton New York, 128 equity ptnrs, 0 non-equity ptnrs, 604 total lawyers
‘Compared to others we’ve had a high-rising profit curve since 1999,’ says Dechert’s London managing partner Stephen Fogel. PEP is now over the $1m threshold, up 7.8% on last year. Investment is key – with three new offices the firm is committed to strengthening its technology, real estate and finance and private equity practices.
49
£224k
Top five clients Brown & Williamson Chevron Coca-Cola General Motors UPS
London is steadily growing, but New York still dominates Debevoise’s practice. Although one of the world’s finest private equity firms, the public arena provided its most recent highlight deal – GE’s acquisition of Vivendi. ‘Generally, business has improved in M&A and securities work, and a large part of our practice is litigation, arbitration and regulatory enforcement,’ presiding partner Rick Evans says.
48
39%
£116.3m
47%
£290k
£257k
Top five clients Citigroup CSFB Deutsche Bank Goldman Sachs JPMorgan Chase
= £547,000
Top performing office New York Division of business Litigation 25% Corporate 25% Banking/finance 50%
£1,129,000
-5.2%
Investments planned in next 12 months Nothing concrete, although looking seriously at Beijing.
Slaughter and May London, 129 equity ptnrs, 0 non-equity ptnrs, 724 total lawyers £245.4m
1%
£108m
As the corporate market starts to come back, optimism slowly returns to Bunhill Row. As the firm’s roles on the GE/Amersham deal and the Canary Wharf takeover testify, Slaughters remains the firm of choice for UK M&A. Practice partner David Frank claims that the question marks over the firm’s strategy have dissipated. ‘Our business model now seems to be viewed as an acceptable alternative,’ he says.
44%
£190k
£149k
Top five clients Abbey Carlton General Electric Morgan Stanley MyTravel
= £339,000
Top billers Nigel Boardman London, corporate Stephen Cooke London, M&A David Johnson London, corporate Frances Murphy London, corporate William Underhill London, corporate
£837,000
-5.5%
Frank strategy is justified
July/August 2004 Legal Business 49