Nelson Mullins Riley & Scarborough posted strong revenue and profit gains in the first full fiscal year after its milestone 2018 combination with Florida firm Broad and Cassel.

Revenue grew 7.9% to $557.99 million last year for Nelson Mullins, and net income jumped by 11.2% to $200.65 million.

That followed significant revenue and profit growth the prior year—a 27.5% revenue jump and a 14.1% jump in net income—after the merger with 150-lawyer Broad and Cassel closed on Aug. 1, 2018.

Revenue per lawyer and profit per equity partner had dipped by 3.6% and 9%, respectively, in 2018 as Nelson Mullins absorbed the time and expense of integrating such a large addition in lawyers. But last year both metrics rebounded, with a 3% increase in RPL to $754,000 and a sharp 15% increase in PEP to $1,145,000. The PEP increase—which came as the firm increased its nonequity partner ranks—pushed the firm back over the $1 million mark that it had first surpassed in 2017, the year before the combination.

Nelson Mullins' managing partner, Jim Lehman, said strong demand, including additional matters for the combined firm from the merger, aided the integration. "We had a lot of work to refer within the law firm, and that proved the thesis of the combination," Lehman said.

The Broad and Cassel merger, combined with the launch earlier in 2018 of an 11-partner Baltimore office, extended the South Carolina-based firm's footprint along the Eastern Seaboard from Boston to Miami and increased its size by almost one-third, to more than 700 lawyers when the deal closed on Aug. 1, 2018.

Lehman noted that much of the integration effort took place in 2018, after the Broad and Cassel merger took effect on Aug.1 of that year, so it did not drag down RPL or PEP in 2019.

"Any time you do a combination of this size it requires a lot of work by everyone," Lehman said. "Starting on August 1, 2018, we were able to gain momentum, so that by 2019 we were all moving together pretty well. The financial results support the conclusion that the merger is working well."

The Talent

Nelson Mullins continued to expand in 2019, growing to an annual average of 740 lawyers.

Nelson Mullins reported a net 5.9% increase in its total partnership for an annual average of 428 partners. The number of equity partners dipped by 3.3% to 175, while the income partner ranks increased by 14% to 253.

Lehman attributed the slight decrease in equity partners to a few departures and others shifting from equity to income status at age 67, in accordance with the firm's partnership agreement.

The notable increase in income partners, he said, was partly because Nelson Mullins added 35 lateral partners last year (including three as equity partners) who were spread across offices and not in any one large group as with the Baltimore addition in 2018. The firm also promoted 24 lawyers to partner internally.

What's more, some Broad and Cassel lawyers were promoted to income partner, Lehman said, adding that Broad and Cassel shifted from an all-equity to a two-tiered partnership structure like Nelson Mullins in 2018.

The Work

"Both the Florida and Baltimore additions brought on new talent that allowed us to do things we have not done historically or not done at the same level," Lehman said.

The merger deepened Nelson Mullins' real estate, health care and white-collar defense practices—all strong areas for Broad and Cassel—and extended its reach into Florida with Broad and Cassel's 10 offices there, concentrated in South Florida.

Lehman said the firm's corporate practices performed well, with very strong years for the health care and real estate groups. The firm handled multiple multifamily housing transactions for private equity firm Starwood Capital, and it represented Eli Lilly & Co. on the pharma giant's economic development deal with North Carolina and acquisition of a 100-acre site in Research Triangle Park to build a $474 million manufacturing plant.

Nelson Mullins' M&A team handled 109 transactions with a combined deal value of more than $6.7 billion, Lehman said, adding that tech, health care, energy, manufacturing and financial services were busy industries.

Nelson Mullins' banking practice continued to be busy, closing six bank mergers worth $4.92 billion, which pushed it up four spots to become No. 4 legal adviser in the 2019 S&P league table for the U.S. banking sector.

Lehman added that Nelson Mullins did not have a significant construction practice before the merger and that Broad and Cassel's practice gained work because of its lawyers' new ability to handle matters in other states. Public finance and affordable housing law are two other practices the firm has been able to extend beyond Florida, he said.

The firm also has gained litigation matters from the deal, Lehman said, such as multidistrict litigation in Miami, because of the deeper litigation bench nationally.

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