Legal News

Not a Golden Year, But Bay Area Firms Held Their Own in ?09

By Ashby Jones

Law firms managements aren’t typically thought of as particularly savvy or forward thinking. They’re often slow to read trends and loathe to lead the market in anything. Too often, the criticism goes, they just want to keep their firms viewed as one of the pack. The nail that sticks up gets hammered down, etc.

But when it comes to managing through recessions, maybe we need to change our tune about law firm leaders. Maybe those same people who tread so cautiously during the good times have the right “risk profile” to manage through leaner times.

We say this because law firm earnings for 2009 are starting to trickle in. And while firms aren’t going to set any revenue records, it appears the firms didn’t do half-bad either.

Take, for instance, firms in the Bay Area, whose earnings tend to leak out earlier in the year than they do elsewhere. According to this story in the Recorder, many west coast firms are turning in news of revenue growth. Granted, as the story points out, it’s not double-digit growth, but it’s growth nonetheless. Reports Recorder reporter Amanda Royal:

Of eight firms surveyed, most saw single-digit changes in profits per equity partner. Two exceptions were Townsend and Townsend and Crew, which posted a surprising 15 percent jump in PPP even as revenue and head count fell, and Cooley Godward Kronish, which posted an 11 percent drop in PPP.

Should Cooley be worried? Law firm consultant Peter Zeughauser says not necessarily, firms with declines greater than 10 percent will have “plenty of good company.”

To the numbers, all provided by the Recorder:

Morrison & Foerster: Morrison & Foerster reported a 3 percent dip in revenue to $884 million and a 4 percent rise in PPP to $1.14 million.

Pillsbury Winthrop: Pillsbury maintained revenue per lawyer at $805,000. Head count and revenue shrank 7 percent, and profits per equity partner dipped 2.5 percent to $950,000.

Cooley: Cooley’s revenue dropped 8 percent drop to $507 million. PPP dropped 11 percent.

Littler Mendelson: Littler’s revenue was up 5 percent, though it made “smaller gains in revenue per lawyer and PPP.”

Sedgwick Detert: Sedgwick’s revenue dipped about 1 percent. And partner profits dropped 4 percent to $676,000.

Fenwick & West: Fenwick & West reportedly had a flat year, with PPP remaining at $995,000 for the second year in a row.

Townsend and Townsend: Townsend’s equity partner profits to $812,000, a 15 percent rise. Still, firm revenue dipped 2 percent to $161 million, as head count dropped 16 percent.

Full post as published by Law Blog - WSJ.com on January 25, 2010 (boomark / email).