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Latham rampant for second year running as surging City growth helps revenue hit $3.7bn

Latham & Watkins has reported its second consecutive year of double-digit growth as its revenue surged to $3.768bn in 2019 while profits per equity partner (PEP) hit $3.78m.

The results announced today (26 February) mean the Los Angeles-bred giant has improved its performance for the fourth year in a row, with the 9.5% surge in PEP outpacing the 6% increase achieved in 2018.

An unsurprisingly bullish chair Richard Trobman (pictured) predicted that such growth will become the new normal at Latham: ‘We expect to see growth rates in line with what we have seen in the last couple of years,’ he told Legal Business. ‘Our business model is strong, we have a clear strategy and a great culture.’

Latham added $381m to its top line in 2019, an increase of 11% on 2018, while net income rose 16%. Revenue per lawyer was up by a very credible 4% to $1.385m as Latham grew its legal staff 7% to 2,720 and partner headcount 8% to 790.

The firm does not officially disclose revenue for its London arm but Trobman said it grew at a much faster pace than the firm globally, hiking revenue ‘well in excess of 15%’. The firm’s 98-partner City office is now believed to generate in the region of $450m, bolstering its reputation as one of the most potent foreign practices in the high-end UK legal market.

Trobman said that Latham’s Asia Pacific business grew at its fastest rate ever and the US was ‘incredibly strong’. ‘Not only are we seeing significant growth, but profitable growth. What we are proud of is that what’s driving that growth is our ability to continue to utilise our global platform, work together as a team, collaborate and support one another.’

He pointed to the fact that the firm’s top 50 clients engaged Latham’s lawyers from on average 23 offices around the world, up from 19 offices in 2018.

The firm’s list of European deals in 2019 included work on the liquidation of travel group Thomas Cook, advising EQT on the financing for the acquisition Nestlé’s $10bn skincare business, and Interswitch on its partnership with Visa. Global deals included advice to Mellanox Technologies in its $6.9bn sale to NVIDIA Corporation.

The firm also made some significant laterals in the City in Linklaters’ insurance partner Victoria Sander and Clifford Chance’s infrastructure and real estate veteran Stephen Curtis in 2019. Even more significant were the moves at the start of 2020 as Latham renewed its push into London’s public M&A space with the hire of Freshfields Bruckhaus Deringer’s rising star Sam Newhouse and expanded its City emerging company capabilities through Taylor Wessing’s Mike Turner and Bird & Bird’s Shing Lo.

The 2019 results mean Latham has added $1.16bn to its top line in five years, growing revenue 44% and PEP 30% on $2.61bn and $2.9m in 2014, when it became the highest-grossing law firm in the world and the first to ever pass the $2.5bn revenue mark. The firm has doubled both revenue and PEP between 2009 and 2019.

‘We are in this for the long haul,’ concluded Trobman. ‘We are going to continue to invest in the same way that the partners who came before us did.’

The results temporarily make Latham the highest-grossing law firm in the world. Yet US rival Kirkland & Ellis, which is expected to announce its own 2019 financials shortly, only needs to marginally improve its 2018 figures to remain ahead; the Chicago giant last year reported turnover of $3.76bn. Unsurprisingly, indications from Kirkland are that the outfit will this year become the first law firm in the world to break the $4bn barrier.