DLA Piper shrugs off impact of cyberattack to post rising revenue and PEP for 2017
Firm cites 'extraordinary' response to ransomware attack as PEP hits new heights amid efficiency drive
April 03, 2018 at 06:59 AM
6 minute read
DLA Piper has posted rising revenue and profits per partner (PEP) for 2017, despite the damaging effects of the major cyberattack that knocked out the firm's systems last summer.
The firm saw revenue rise 7% to $2.63bn (£1.87bn) during the calendar year, while PEP hit a second consecutive record annual high, climbing 6% to $1.76m (£1.25m).
The performance marks an improvement on DLA's mixed results in 2016, when the firm posted a rare drop in revenue, in part due to significant currency fluctuations.
During 2017, total lawyer headcount fell slightly from 3,616 to 3,609, leading to a 7% increase in revenue per lawyer (RPL) to $730,000 (£520,000).
Meanwhile, the total number of equity partners rose 4% to 404, as non-equity partner numbers fell from 817 to 801.
At the bottom line, net income grew 10% to $709m (£505m), while the firm's profit margin climbed one percentage point to 27%.
DLA co-chair Roger Meltzer told Legal Week: "We achieved all of this in the face of the cyberattack. When you think about a firm coming together and putting all our systems back together, with no material client loss and being able to reset ourselves to the point where we can achieve these kind of growth numbers, that is pretty extraordinary."
The firm fell victim to the 'Petya' ransomware attack that spread across the globe in June and disabled the firm's IT and communications systems. Insurance brokers said the resulting upheaval could have have seen the firm incur costs "in the millions".
Looking at the firm's overall performance, Meltzer and global co-chief executive Jay Rains attributed the growth to higher value mandates in litigation, corporate and regulatory, as well as greater operational efficiency.
Rains said: "Globally, the firm continues to do a good job of controlling expenses, as an organisation of this scale should. We've done a much better job of that. The quality of work we are getting continues to improve, which is reflected in the net income.
"The easiest way we control expenses is using our platform. We have service centres in Warsaw and Tampa. It has consolidated lots of services, our pitch proposal teams and pricing teams, leading to higher levels of productivity. Ten years ago, every office had its own pitch and proposal team."
Internationally, London-based global co-CEO Simon Levine highlighted western Europe and all of the Middle East and Asia as strong performing regions, while adding that the firm's Australia arm had come into profit for the first time in three years.
"Across the international business, we have had a very fortunate situation over the past few months with all our regions being strong and beating budget. Probably the strongest places have been the UK, Germany, France, the Middle East and Asia. The biggest turnaround has been Australia, which is in profit. For three years it was not at all in profit."
The Australia upturn came after DLA shut its doors in Canberra as part of a series of closures around the firm's international network. That closure left it with four Australia bases in Sydney, Melbourne, Perth and Brisbane.
In early 2017, the firm also pulled out of Berlin and Georgian capital Tbilisi. The Berlin base was acquired by DWF, while Dentons took over the Tbilisi office.
By practice, Levine said litigation, regulation and arbitration had had a particularly strong year but that in several regions, real estate and finance work levels had been sluggish.
"In some parts of the world, real estate has been weak – it has really differed, and it has been more up and down in finance as well. In the UK specifically, real estate and finance have certainly not been as active as corporate, litigation and IP. That is a function of where the money is going at the moment, which tends to be corporate and technology ventures."
He added that the UK business had not experienced any "adverse effects" from Brexit and he did not expect that to change in the short term. "I don't think it will be a relevant factor for another year and a half."
However, Brexit-related currency fluctuations did hit the firm's top line in 2016. Rains explained: "Last year, because the pound had fallen off severely after Brexit, when we converted pounds into US dollars we saw a negative impact. This year, we have seen relative indifference as the pound has not been impacted."
During the year, DLA added 150-lawyer Danish firm LETT to its Nordic verein, following the addition of Finnish firm Peltonen LMR in 2016. It also expanded its Africa presence in June, with the addition of law firms in Senegal and Tunisia to its network on the continent. The move came after it had added eight-partner Lagos firm Olajide Oyewole to its the network in May, handing the firm its first presence in Nigeria.
Other notable developments included the shock exit in November of international senior partner and global co-chair Juan Picon to join US rival Latham & Watkins. He was replaced earlier this year by London corporate partner Andrew Darwin, who saw off competition from seven other contenders to secure the leadership role.
Separately, DLA Piper has also announced its 2018 new partner promotion round, making up 62 new partners, including 10 in the UK.
The bulk of the promotions are in the firm's global litigation and regulatory practice (16), followed by corporate with 14 promotions.
Eight of the UK promotions are in London, with one each in the Birmingham and Sheffield offices. The overwhelming majority of the promotions are in the US, which gains 19 new partners, with 18 in Europe, two apiece in Asia Pacific, Latin America, the Middle East and Australia, with a further promotion in South Africa.
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