The initial numbers to emerge from the US reporting season indicate a relatively resilient performance in 2012 for the world’s largest legal market.
A series of firms have so far posted headline financial results, including Latham & Watkins, Quinn Emanuel Urquhart & Sullivan and White & Case, with the majority achieving growth in profits and fee income.
Latham reported growth of 3.4% with the top five US firm’s revenue hitting $2.23bn, up from $2.15bn for the 2011 year. PEP also grew 7.4% to $2.44m and the firm reported an increase of 2.4% in revenue per lawyer, which hit $1.1m in 2012.
Though a slowing on Latham’s standout 11.6% income growth the previous year, the performance will be seen as a solid early showing for one of the bellwether firms in big ticket advisory work. It also looks likely to comfortably keep the 2,000-lawyer firm in the global top five in revenue terms.
London corporate partner Mike Bond, who also sits on Latham’s executive committee, told Legal Business: ‘The results are better than we expected. [Latham has a] strong and diverse national practice in the markets where we operate and the strength of our network gives us a leading edge in cross-border work for clients. London is a reflection of the firm’s overall performance.’
White & Case also enjoyed a robust year posting 4% growth in turnover and a 15% hike in partner profits. Revenues grew to $1.39bn while average global PEP hit $1.7m. Revenue per lawyer also increased by 4% to $728,000.
There were more dramatic results from Quinn, with the disputes specialist sustaining its top-quartile growth for yet another year to achieve a 14% increase in global revenues to $820.7m. Quinn’s London arm also grew 20% to generate £27.5m. The iconoclastic West Coast practice has hugely raised its global profile in recent years, achieving profitability to challenge Wall Street’s most storied firms.
O’Melveny & Myers, meanwhile, achieved a 5% rise in revenue to push its top line to $818.5m, with PEP rising 20% to $2.06m.
‘The results are better than we expected. Latham has a strong and diverse practice’
Mike Bond, Latham & Watkins
The US top 100 saw revenues increase by 5.3% for the 2011 financial year, taking group revenue to $71bn, though the double-digit growth typical in pre-banking crisis years shows no signs of returning for 2012.
But while initial 2012 results suggest a resilient performance for America’s leading firms, a number of observers take a more downbeat view, questioning transparency in the US reporting and the propensity for struggling practices to confirm their results later.
Dan DiPietro, chairman at Citi Private Bank’s Law Firm Group, said although the results illustrate a strong performance from US firms, there are concerns as to whether this is sustainable. ‘A collection push and a rush to complete deals in the last quarter of 2012 helped generate the solid results, while survivorship bias [eg partners joining from Dewey & LeBoeuf] may have also helped to increase revenues as many partners from the failed firm would have taken their clients to their new firms.’
Bruce MacEwen, president of US consultants Adam Smith, Esq, said: ‘We have not really got to the bottom of how US firms have really done. There is an increasing divide in the market and many firms are taking short-term measures so while numbers look fine for the time being, this method is unsustainable in the long term.’