Davis Polk sees double-digit revenue and PEP rises for 2016 as partner profits hit $3.75m
US firm's revenue rises 10.3% to reach $1.18bn
February 15, 2017 at 05:23 PM
5 minute read
Davis Polk & Wardwell saw healthy growth in revenue and partner profits in 2016, despite capital markets headwinds and uncertainty in European and Asian markets.
Revenue rose 10.3%, reaching $1.18bn (£947m), while profit per equity partner (PEP) at the 907-lawyer firm grew 12.5% to $3.75m (£3m), according to preliminary reporting by The American Lawyer. These gains come after a relatively flat year in 2015.
"It was our best year ever," said managing partner Thomas Reid (pictured). He said the firm saw "above normal strength in restructuring, leveraged finance and M&A".
Reid cited Davis Polk's work advising French company Technip when it was acquired by Houston-based FMC Technologies to create a $13bn (£10.4bn) English oilfield services company, as an example of the firm's strength in cross-border deals last year.
The firm also had roles on two of the top 10 largest bankruptcies of 2016, according to a list compiled by Jones Day. Arch Coal turned to Davis Polk when it filed for Chapter 11 protection early in 2016, and the firm has also been advising senior leaders in the bankruptcy of Peabody Energy.
Davis Polk also won a lead role in Bonanza Creek Energy's bankruptcy proceeding, which was filed last month. Documents filed in that proceeding showed that the firm earned $6.8m (£5.5m) in 2016 from Bonanza Creek Energy in restructuring, financing, capital markets, M&A and corporate governance work.
Lawsuits over Facebook's initial public offering continued in 2016, Reid said, keeping some of the firm's litigators busy. In May, partner James Rouhandeh was named Am Law Litigator of the Week for his role representing Proskauer Rose when it was accused of aiding Allen Stanford's $7bn (£5.6bn) Ponzi scheme. Davis Polk also advised Cisco Systems and AstraZeneca on Foreign Corrupt Practices Act investigations by the US Securities and Exchange Commission and the US Department of Justice.
Reid said demand was "pretty stable" at the firm in a year when it rose just 0.1% industry-wide, according to a report released on Monday (13 February) by Citi Private Bank. Demand increased in restructuring but declined in the firm's capital markets practice.
"Capital markets is a large part of our firm," Reid said. "In the beginning of 2016, the signs ahead were challenging. Nonetheless, the strength of those practices we had meant that they did well, regardless of how strong the markets were."
Partner numbers once again remained flat at 154. Reid said that while several partners retired, the firm made 11 new partners last year and one lateral hire in Ronald Cami, who joined after leaving his role as general counsel at the private equity firm TPG. Cami had previously been a partner at Cravath Swaine & Moore.
This year is off to a good start for the firm, which is advising consumer products company Reckitt Benckiser on its $17.9bn (£14.4bn) acquisition of Mead Johnson Nutrition Co, and Baker Hughes on its $32bn (£25.7bn) combination with General Electric's oil and gas business.
Reid said the firm will only hire opportunistically in 2017, keeping lateral activity rare. Howard Shelanski joined this year after most recently serving in the White House Office of Information and Regulatory Affairs.
Elsewhere, fellow US firm Akin Gump Strauss Hauer & Feld has posted a 5.4% revenue rise to $980m (£784m) for 2016, after spending much of last year focusing on building up its core practice areas.
The firm began last year under the basic premise that its strategy would be to focus on its strengths, said Akin Gump chair Kim Koopersmith. "I think that's paid off," she said.
Revenue per lawyer was up 4.6%, from almost $1.1m (£880m) in 2015 to $1.15m (£920m) in 2016, while a decrease in the number of equity partners – from 210 in 2015 to 196 last year – helped PEP jump 9.7% to $2.1m (£1.68m).
Despite the tumultuousness and uncertainty on Capitol Hill, Akin Gump held on to its title as the nation's highest-paid lobbying firm, pulling in $36.2m (£29m) in 2016, down from $39.4m (£31.5m) the year before, according to a report last month.
"Having very strong regulatory practices and [the] leading, largest policy practice was a definite virtue for the firm," Koopersmith said.
The firm also brought in international trade practitioners to help Akin Gump bridge trade activity involving the US, UK and European Union after last summer's Brexit referendum.
Jasper Helder, the former chair of Baker McKenzie's Europe, Middle East and Americas international trade practice group, joined Akin Gump's London office in the beginning of December. Kevin Wolfe, who led the Obama administration's export reforms efforts, also joined the firm's international trade practice last month in Washington DC.
Koopersmith noted that the firm's financial restructuring and energy groups were also strong performers in 2016. Akin Gump absorbed a high profile financial restructuring team in London and Frankfurt in late 2014, from now defunct Bingham McCutchen. Nonetheless, Akin Gump saw gross revenue for its London arm dip to $87.9m (£70.3m) last year, down from $91.4m (£73.2m) in 2015.
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