After what the firm described as a "solid" 2016, Reed Smith held profits per equity partner (PEP) and revenue per lawyer (RPL) steady amid declines in headcount and overall revenue.

Revenue dropped 4.3% from $1.123bn (£895m) in 2015, to $1.075bn (£856m) in 2016. Total lawyer headcount declined by 5.1% from 1,618 lawyers in 2015, to 1,536 in 2016.

Global managing partner Sandy Thomas (pictured) said the firm's objective for 2016 was to grow PEP RPL while managing headcount. That began with a round of layoffs early in the year, when the firm shed 45 lawyers in the US, Europe and the Middle East.

"We ran a smaller firm by 5% during 2016 and that's obviously going to have an effect on revenue, which it did," Thomas said. "We'll keep up our discipline and pay close attention to calibrating headcount with demand."

RPL was flat, increasing 0.7% to $700,000 (£558,000) in 2016. PEP was also flat, increasing by 0.5% to $1.11m (£884m). That follows a 2015 in which the firm saw PEP drop by 8.3% from the year before.

Net income decreased by 3.8% from $340.5m (£271m) in 2015, to $327.5m (£261m) in 2016.

Thomas said that in addition to the headcount decline, the exchange rate had an effect on revenue, due to the firm's high concentration of work in the UK, although he could not quantify the foreign exchange effect.

The firm looked to cut real estate costs during the year, shrinking a number of offices in terms of square footage per lawyer. The firm finished renovations in New York, Washington DC Virginia. It also worked to control costs by relying on staff lawyers and an e-discovery group that can scale up and down with demand, Thomas said.

While demand was relatively flat industry-wide in 2016, Thomas said 2017 has started strongly for transactional practices, and litigation work seems to be holding steady.

Thomas said he expects to continue making investments in the firm's core sectors of life sciences, financial services, energy and natural resources, shipping and media. He also said real estate has become a major focus for the firm, so investments in that practice will continue.

"There are several global practice groups with a really big footprint in London and Europe that have done very well," he said. "One is the energy and natural resource group, which has a big core in London, and a particularly strong commodities practice which had a really good year, aided by how it joins up with our Singapore and Houston practices in particular. The shipping practice, which also has a large core membership in London as well as Paris, had a very strong year in a tough market."

The firm started 2017 with the addition of 50 lawyers from King & Wood Mallesons (KWM) in London, Paris and Germany. Thomas said the firm has accounted for those additions in its headcount management strategy.

"We are keeping an eye on making investments that are in keeping with the overall firm strategy," Thomas said. "The European additions from KWM are a group of really great lawyers, which have given a us some important capability additions. The financial regulatory lawyers are a premium-level team, which plugs into the global financial industry group. I'm expecting really high quality lawyering and just a huge degree of cross-selling."

Another deal the firm had considered in 2016, but which ultimately fell through, was a potential merger with Pepper Hamilton. The talks became public in the spring, and ended abruptly in late April.

The firm is not looking to restart talks with Pepper Hamilton, he said, but is open to other potential mergers. "We have a lot of experience with successful mergers," Thomas said. "That is an analysis that we are always making: where can we grow by combination?"