Hogan Lovells revenue climbs 6% as PEP stays static
Transatlantic firm fails to convert top-line growth into PEP gains
February 24, 2017 at 07:03 AM
4 minute read
Hogan Lovells' revenue climbed by almost 6% to $1.925bn (£1.53bn) in 2016, while profits per equity partner stayed flat during the year, which has seen many of the firm's competitors post significant growth.
The transatlantic firm generated roughly 52% of its turnover in the Americas, with London and continental Europe making 41% and Asia and the Middle East another 7%.
London revenue growth slightly outperformed the firm globally, rising 7% to £282m.
Globally, revenue per lawyer grew by 2% to $738,000 (£588,106), with Hogan Lovells adding the equivalent of 93 full-time lawyers last year, taking its total lawyer count to 2,609. The firm has around 800 partners, with global PEP staying roughly flat at $1.253m (£998,506).
Stephen Immelt, Hogan Lovells' firm-wide CEO, noted a growth in total billable hours across the firm that kept pace with the revenue increase.
"We increased headcount because we thought the work was there, and the work was there," he said. "There's increased demand for what we're doing and that's in a market where everybody seems to be flat."
Billable hours per lawyer dipped slightly, according to Immelt. While the firm raised its billing rate more than 3% last year, it won't raise rates more than that this year.
Talking about the impact of Brexit on activity levels, Immelt said: "I don't think anyone has been immune to the effects of Brexit – people put all their deals on hold."
Deal work that dropped off in London in the middle of the year has picked up slightly since the end of 2016, he said.
But the firm also suffered from the decline of sterling in international exchange rates, with Immelt saying revenue growth would have been around 2% higher than reported had exchange rates remained consistent.
Hogan Lovells opened no new offices in 2016, though it moved some back-office operations to Louisville. It made 40 lateral partner hires globally, while 16 partners left the firm for other legal jobs. "I'm pretty comfortable with our footprint," Immelt said. "I don't see a need to open five or 10 new offices."
The firm would like to do more work in India, however – at the moment a closed market for lawyers from other countries. Hogan Lovells' other areas of expansion this year may be in energy law and life sciences, and intellectual property transactional work, according to Immelt.
Major deals for Hogan Lovells in 2016 included advising SABMiller when Anheuser-Busch InBev acquired it for $107bn (£85.26bn); advising Dell in the $3.1bn (£2.47bn) sale of its tech services division; and advising Lockheed Martin on a $5bn (£3.98bn) plan to spin off and sell an information systems business.
In other practices, the firm has emphasised the size of its regulatory department. It helped US-based Carnival Corp get licences to sail cruise ships to Cuba last year, and worked for Maersk, the world's largest shipping company, on an investigation in Europe.
In litigation, Hogan Lovells represented the health insurance provider Anthem on class action suits and multiple government investigations.
The firm also noted several pro bono successes. It worked pro bono on a $24m (£19.12bn) settlement for black Secret Service agents who accused the government of discriminatory hiring practices. In US offices, total pro bono work clocked in at 85 hours per attorney.
The year also closed with the formal retirement of its long-time leader, Warren Gorrell Jr, who was responsible for much of original Washington DC firm Hogan & Hartson's expansion into corporate deal work, and its 2009 transatlantic merger with legacy Lovells in the UK.
Immelt said the $9m (£7bn) expansion of its back-office operations into Louisville was a big investment.
"We're making a number of investments that were important for the long-term health of our business," he explained.
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