Taking the helm of a global law firm is no small feat at the best of times, much less so amid a global pandemic. However Hogan Lovells’ chief executive Miguel Zaldivar and his deputy Michael Davison, who assumed their roles last summer, had cause for cheer as the pair revealed a solid set of financial results, including a 31% surge in profit per equity partner (PEP) to $1.97m from $1.5m in 2019.
Global revenue grew a more sedate 3% to $2.3bn in 2020 compared with $2.25bn the previous year and revenue per lawyer (RPL) rose 4% to $884,000 from $850,000. Geographical performance has been broadly in line with last year’s output, with the Americas accounting for roughly 49% of total billings, EMEA 45% and Asia-Pacific 6%.
Practice-wise, corporate and finance brought in 41% of total billings; global regulatory and intellectual property, media and technology (IPMT) generated 31%; and litigation, arbitration and employment 28%.
Speaking to Legal Business, Zaldivar (pictured) noted: ‘The highlight of the year for me has been the new management team transitioning in the middle of the pandemic. We have hit the ground running and the firm has had its highest revenue and profit in history. The credit for that goes to the partnership.’
Explaining the substantial PEP increase, he said: ‘We are not an outlier in achieving double-digit PEP growth, many other firms have done this too. The main contributor was not a drop in equity partners. In 2020 we introduced a floor on compensation for some partners to act as protection to them without a financial risk to the firm. We decided that would be prudent, given the fluctuation in the market, and that has had the effect of increasing PEP.’
He praised Davison and teams around the world for their impressive financial discipline. ‘Our lawyers are doing timesheets daily and sending bills out every month. Clients have paid and cashflows have been positive and healthy. Michael has been the enforcer of the rules!’
But it has not all been plain sailing, as Davison admits. ‘We will look back on this as a uniquely challenging situation. We continued to operate but in a very different way and supported each other through, but it has not been easy.’ He pointed to a voluntary redundancy scheme that saw business services staff cut in the US and UK as a cost-saving measure.
The pair provided a long list of standout matters for the year, including in corporate and finance, advising Marvell Technology on its $9bn acquisition of Inphi and acting for Arm, the UK-headquartered multinational semiconductor and software design company of SoftBank , in its $40bn acquisition by NVIDIA.
The firm acted for ENRC on high-profile claims against the Serious Fraud Office and its former legal advisers and secured a major win for Uber on regaining its London licence and right to continue operating in London.
Looking ahead, Zaldivar insists the firm will continue to invest in the engines of London, Washington DC and Germany, as well as in the Paris office.
It is clear that, under new leadership, The US and Asia businesses will remain at the forefront of the firm’s ambitions. Concluded Zaldivar: ‘In the US we are challenging the partnership to be more successful in New York, California and Texas. We have to grow in the US. We plan to grow organically in Shanghai, Beijing and Hong Kong, adding more corporate lawyers. We want to be stronger in China. That is the future of Hogan Lovells.’