Baker & Hostetler offices in Washington, D.C. Photo: Diego M. Radzinschi/ALM

Baker & Hostetler chairman Paul Schmidt said every one of the firm's practice areas had boosted its revenue in 2019, fueling near double-digit growth over the past year.

"That makes for a very nice year-end discussion, when all practice groups are up," said Washington, D.C.-based Schmidt, who just completed his first year at the helm of the Cleveland-founded firm.

The firm, which brands itself as BakerHostetler, brought in over $732 million, up 9.8% from 2018. Net income increased by an even greater clip, rising 17.1% to just over $159 million, as the firm trimmed its head count across all categories of attorneys.

"We make sure we're operating in an efficient and effective manner," Schmidt said. "It's good to pay attention to that when things are good. We make sure we have the right people in the right place with the right workload."

The firm showed five fewer equity partners, five fewer non-equity partners, and 51 fewer total attorneys than the previous year, a 5.4% drop in total head count. Profits per equity partner reflected the decrease, climbing by 23.1% to $1.27 million. Schmidt said the contracting equity partner ranks largely stemmed from attorneys transitioning into senior partner status.

Schmidt attributed the firm's robust revenue growth to rising demand and strong hours billed across the firm. This included major large-scale litigation matters, strong transactional work and significant efforts on privacy and data protection. The firm created a new "digital assets and data management" practice group in January, bringing the total number of practices to six.

Illustrating the burgeoning demand for those services, Schmidt noted that the firm had helped clients respond to over 1,000 data breach incidents, including the massive Marriott breach, in the last year.

"The work we're doing there gives rise to counseling, incident response and class action," he said.

Meanwhile, the firm's litigators were busy across the country, representing the official committee of tort claimants in the Chapter 11 reorganization of PG&E Corp. in California, and players in the opioid multidistrict litigation out of Cleveland. The firm also notched a $74 million judgment in Texas on behalf of energy client Castex.

"We're getting recognized in the market for having the expertise, scale and depth to handle the largest and most complicated matters, particularly in litigation," Schmidt said. He added that the firm had been rewarded for its investments in e-discovery and other litigation capabilities, much of which came as a result of its longstanding work on recovering billions from Bernard Madoff's Ponzi scheme. A team of over 100 lawyers have thus far recovered over $14 billion and returned over $13 billion to customers.

Deal work was highlighted by E.W. Scripps Co.'s acquisition of eight television stations in seven markets from the Nexstar Media Group Inc., as well as transactions in the health care arena.

The firm was also able to capitalize on rate increases that surpassed 3%.

"Lawyers are anxious about rates, but our realization stayed constant," Schmidt said. "Even with a rate increase, I think that clients see the value they get from us on these major matters."

These clients are also increasingly asking about alternative fee arrangements, keeping the firm's client value team busy. The firm's geographical reach, with high-quality lawyers in both pricey and lower-cost markets across the U.S., has it well-positioned to compete in this area. But Schmidt said that these had yet to become a material part of its business.

"We have to be prepared to offer them, but at the end of the day, it seems that the clients are interested in evaluating that option, and then they revert to what they are used to," he said.

Looking forward, the firm has been aiming to put cash aside to prepare for office relocations and renovations, aided by a "small" 2% capital call in a strong year. And Schmidt is hoping to be able to announce an expansion within the U.S. later in 2020.

He's also looking to continue growing the litigation practice, adding privacy, white collar and antitrust attorneys to take advantage of its existing capabilities in large-scale litigation. The firm also is aiming to broaden its presence in middle market private equity transactional work, and other areas that make sense are specialized real estate and health care.

After a full year at the helm, Schmidt pronounced that energy is high and morale is good.

"People continue to be working hard and productive, and when they're working hard they're happy," he said. "The firm is really well poised for growth, and we've been very innovative. We're a firm on the move."

The 2019 financial figures reported in this story are preliminary. ALM will report finalized data for the Am Law 200 in The American Lawyer's May and June issues.

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