Nixon Peabody's offices in Washington, D.C. Photo: Diego M. Radzinschi/ALM

After multiple years of financial growth and a record-setting 2018, Nixon Peabody's financial performance declined in 2019, although firm management attributed the dip to a multimillion-dollar contingency fee in 2018 that added to its bottom line.

The firm's gross revenue of $505.5 million in 2019 was a 4.7% decline from its high-water mark of $530.6 million in 2018. Net income fell 11.1% to $175.1 million.

Revenue per lawyer, at $856,000, was down 2.1%, and profits per equity partner dropped by 3.7% to $1.447 million. Average compensation for all partners declined as well, to $756,000 in 2019.

Despite the decline, Andrew Glincher, Nixon Peabody's CEO and managing partner, said the firm exceeded financial expectations in 2019, citing a $22 million contingency fee in 2018 that rocketed the firm to its best financial year ever but couldn't be counted on for future years of financial success.

"We went into 2019 budgeting less money—our budget was $500 million [in gross revenue], and we exceeded that at $505.5 million," he said. Glincher added that excluding the contingency fee, the firm's 2018 profits per equity partner was $1,339 million, meaning 2019′s total increased 8% when comparing "apples to apples."

"If you take the contingency out of play, [2019] was essentially a repeat of last year," he said. "Across all cylinders, we are seeing great strength."

Glincher highlighted the firm's government investigations, white-collar, real estate and corporate mergers and acquisitions practices as the main drivers of success in 2019. The firm represented several parties involved in the Varsity Blues college admissions scandal, including former Stanford University sailing coach John Vandemoer. It is also representing the University of California in a direct patent enforcement campaign to protect the university's rights in the reinvention of the light bulb. The firm also advised TEGNA on $1.5 billion of M&A transactions.

Nixon Peabody added eight new partners in 2019, and Glincher highlighted the government work of three high-profile hires: former Department of Justice attorney Adam Tarosky; John Sandweg, former acting director of Immigration and Customs Enforcement and Department of Homeland Security general counsel; and the former chief of the Narcotics and Money Laundering Section at the U.S. Attorney's Office for the Northern District of Illinois, Chris Hotaling.

Overall, the hires were offset by firm departures, including an M&A trio that left for Kilpatrick Townsend & Stockton in August and an aviation attorney's move to Locke Lord. Nixon Peabody ended 2019 with 591 attorneys, a 2.6% decrease from 607 in 2018. It had 121 equity partners in 2019, 10 fewer than in 2018, and had 181 nonequity partners in both years.

Glincher said much of the firm's investments have gone to its C-suite and business development opportunities. The firm hired a new chief marketing and growth officer, Danielle Paige, in October and is reworking its recruiting to be more aggressive and internally focused. The firm is also in the market for a new pro bono director.

"We wanted someone outside the legal industry this time around, an we hired [Paige] because she had never worked in a law firm," he said. "She looks at things differently and is building a different team, and I really like that."

Looking ahead to 2020, Glincher said Nixon Peabody will continue to search for great talent and look to expand strategically in areas with increasing client needs, such as M&A. He said he would "definitely consider" merger opportunities and regularly has conversations about potential combinations, but would only be interested if it involved the right group to add value for Nixon Peabody's clients.

"We've come off a series of years, over the last five years, where our profitability has been unheard of," he said. "That strong activity has come into 2020—our hours are already up."