WilmerHale grows partner profits and trims headcount after 'terrific' year
US firm's revenue stays flat as PEP rises 3% to $1.86m
March 29, 2017 at 05:49 AM
4 minute read
The original version of this story was published on Law.com
Wilmer Cutler Pickering Hale and Dorr pruned lawyer headcount but kept revenue stable in 2016, as high profile clients across the US turned to the firm to keep regulators and courtroom adversaries at bay.
The US firm's revenue stayed about flat at $1.1305bn (£909m), down less than 1% from 2015. Revenue per lawyer increased slightly, from $1.255m (£1.01m) in 2015 to $1.275m (£1.03m) in 2016.
Partners in the all-equity firm earned average profits of $1.86m (£1.5m) last year, up about 3% from 2015. The firm's profit margin and ratio of partners to associates were unchanged.
Robert Novick, who shares firmwide managing partner duties with Susan Murley, called it a "terrific" year and noted that the firm has increased profits per partner every year for a decade. That has been key a measure of success, he said.
"With a world in which work has been flat to declining and work commoditises over time, you are naturally going to focus on the talent at the highest levels and make sure that that's preserved," he said.
Even with income growth, the firm had more expenses. WilmerHale stomached a one-time boost in associate salary costs when it retired a merit-based compensation system and returned to a lockstep scale. Then, the firm matched the $180,000 (£145,000) associate salary scale midyear. Combined, those changes cost the firm an extra $20m (£16m).
Yet "it doesn't trouble me at all", Novick said about the added expenses. "Whatever the market demands to get the best talent is where you have to be. Our revenue per lawyer and our profits per partner continue to increase because for us – and I think this is true for many firms – it's about talent."
The firm got smaller throughout 2016. WilmerHale had 20 fewer full-time lawyers than in 2015, with 887. The equity partnership decreased by 10 to 270 lawyers. WilmerHale has no non-equity partner tier.
Novick said some of the departed lawyers didn't fit the firm's high margin model. "This is an industry where some people's practices aren't sustainable on a platform that's changing, that's becoming more profitable, that relies on certain high value work. So you see people leave firms to go find a place that's more appropriate for the kind of practice they have," Novick said. "We had some of that."
He mentioned the departures of lawyers in Germany, which included WilmerHale's former Frankfurt office managing partner and two other partners who joined Squire Patton Boggs' intellectual property and litigation practices in December. Other reductions came from retirements, he said.
The firm already has significant clients from the West Coast, including Palo Alto-based Theranos, the medical testing company that faces corporate sanctions and Justice Department and Securities and Exchange Committee investigations. Boies Schiller & Flexner and Theranos separated in November, and WilmerHale took over the lion's share of the work.
WilmerHale also represented long-term client Apple, for whom partner William Lee serves as lead trial counsel, in a major intellectual property dispute with Samsung and won a $120m (£97m) ruling at the US Court of Appeals for the Federal Circuit.
The firm also noted its decade-long representation of software company Demandware, which reached "the culmination of a client relationship" with that company's $2.8bn (£2.3bn) sale to Salesforce.
While WilmerHale did not highlight it in its annual letter to clients, the firm has also advised Ivanka Trump and her husband Jared Kushner on their fledgling White House careers. Regulatory department leader Jamie Gorelick has advised both of Donald Trump's family members on how not to breach federal ethics rules. The firm also counselled now Secretary of State Rex Tillerson as he prepared to leave Exxon Mobil and sought Senate confirmation.
Though WilmerHale boasts several top lawyers from Democratic administrations, Gorelick and Mayorkas included, Novick said the firm isn't partisan.
"I think we actually have more balance in the firm than people perceive," he said.
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