Barnes & Thornburg Budgeting Push Pays Off in Record Revenue
Gross revenue jumped 7 percent last year at Barnes & Thornburg, where a push to use budgets and legal project management has grown to encompass 20 percent of the firm's work.
March 09, 2018 at 05:11 PM
4 minute read
Over the past few years, Barnes & Thornburg has developed a budgeting program known as BT ValueWorks that one-third of its partners are using to provide certainty to clients on their bills. It is being used currently for $80 million worth of work, a full 20 percent of the firm's revenue.
Something else is becoming predictable at Barnes & Thornburg. It has set revenue records for 19 straight years dating back to 1999, the latest year data is available from The American Lawyer.
Last year, gross revenue at the Indianapolis-based Am Law 100 firm grew nearly 7 percent, to $395.5 million, as profits per equity partner also rose 6.8 percent, to $905,000, according to preliminary data for the Am Law 100. Revenue per lawyer grew 7.5 percent, to $747,000, as head count at Barnes & Thornburg stayed basically flat at 529 lawyers.
The firm has an impressive profit margin—52 percent—with is partly related to its rather low leverage. Its leverage, the number of lawyers minus equity partners per each equity partner, shrunk from 1.34 associates per partner in 2016, to 1.27 in 2017.
Robert Grand, Barnes & Thornburg's managing partner, said the firm's financial results are in part a reflection of its growth in the past few years in Dallas, Los Angeles, Minneapolis and other cities.
Los Angeles, an office opened in 2011, now has nearly 50 lawyers, making it the firm's third biggest outpost. There are 17 lawyers at Barnes & Thornburg in Dallas, where the firm set up shop in 2015. This month, Barnes & Thornburg opened a San Diego office after recruiting former Cooley venture capital partner Troy Zander.
“What we've done in the past several years is move this to a national firm with a number of opportunities in markets that are hot,” Grand said.
As for its budgeting program, Grand said BT ValueWorks has been well-received by clients who appreciate billing certainty and also insight into those staffing certain engagements. Grand said clients can see the number of diverse and women lawyers working on their matters through the program. And partners fearful that a budget will constrict their practice or their billings have learned otherwise, he said.
“It's not what it's perceived to be—in the sense of a negotiation [on price]—it's much more of a dialogue,” Grand said. “And once people understand that, they realize it's OK. They've got a budget. They've got an idea of the resources they will need. And they know what is important. And lawyers tell me it's helpful to go into a meeting and say they know what they did in 15 other deals like this.”
Grand said the firm hired 17 laterals last year and has already added 15 this year, including seven in Minneapolis alone comprised of a four-lawyer family law team from Minneapolis' Lindquist & Vennum; intellectual property litigator Bruce Little; and two restructuring partners from Fox Rothschild.
Grand said lateral recruiting has been a strong focus of his, but stressed the importance of having a team of professionals committed to integrating those partners with their new colleagues and helping them market themselves once they join the firm.
“If you're winning, take credit for winning, because when you're losing they're going to blame the hell out of you,” Grand joked. “But I've got to say we're doing pretty well in that situation [of lateral recruiting]. We've been very aggressive.”
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