Busy Litigation Docket, Big Deals Drive Gains at O'Melveny & Myers
In a year that saw long-running merger talks with Allen & Overy finally end up nowhere, the firm grew revenue by 4.3% and boosted profits per equity partner by 2.4%.
February 25, 2020 at 02:42 PM
5 minute read
The original version of this story was published on The American Lawyer
O'Melveny & Myers posted its fifth straight year of revenue increases in 2019, growing its top line by 4.3% to $835.3 million.
The firm's net income rose 4.9% to $396.1 million, a 47% hike over the last five years. Profits per equity partner climbed 2.4% to $2.32 million, while revenue per lawyer expanded by 5.2% to $1.25 million.
"There was just a broad amount of above-the-fold work," said New York-based chairman Bradley Butwin. He noted that O'Melveny's share value, a crucial internal metric that determines how individual partners are compensated, also increased for the fifth straight year, growing by 48% over that interval.
Butwin added that rising demand was the biggest driver for the firm's growth, while rate increases were "relatively modest" compared to the rest of the market.
"With the upticks in net income and gross revenue, a good chunk of that is simply based on the fact that people are busier," he said.
The firm's litigation work was buoyed by two significant trial efforts. In February, a federal appeals court affirmed its victory on behalf of AT&T and Time Warner, which sought to preserve their $100 billion merger against opposition from the U.S. Department of Justice. Then, in May, serving as J&J's national litigation counsel, the firm took the country's first opioid case to trial, where it limited Oklahoma to 2.6% of the $17.7 billion it had sought.
The firm's litigators have another 38 cases slated to go to trial in 2020, including a bellwether opioids trial in New York in March and a California trial in June. "Those are massive cases," said Butwin, "and they're among the most important and highly publicized litigation in the nation."
On the corporate side, Butwin emphasized that the firm's dealmakers had closed a total of over 300 deals in 2019 with a combined value of over $150 billion, with over 20 exceeding $1 billion. Standouts included advising ViacomCBS in its acquisition of a 49% stake in Miramax and guiding longtime technology client Finisar Corp. in its $3.2 billion sale to II-VI Inc.
Bankruptcy lawyers are guiding the government of Puerto Rico through its restructuring of more than $70 billion in public-sector debt and $50 billion of pension obligations and they've been retained by the governor of California in utility Pacific Gas and Electric's Chapter 11 proceedings.
Butwin said that O'Melveny's strengths in both restructuring work and litigation place it in a safe position in the event of a potential recession in the coming years. The firm also enters 2020 with a higher level of inventory than its start of 2019, which in turn exceeded the previous year, along with a number of new matters.
"I'm pleased that we have the wind at our sails kicking off the new year," he said.
The firm's head count in 2019 was largely stable, as the number of total partners stayed fixed at 178, while the total number of lawyers dropped about 1% to 667. Key lateral hires included former U.S. Deputy Solicitor General Michael Dreeben, who joined the firm with 106 Supreme Court oral arguments under his belt; Lisa Monaco, a former Homeland Security and counterterrorism adviser to President Barack Obama; Jeff Norton, a senior corporate finance partner who returned to the firm after serving as U.S. co-managing partner and head of banking at Linklaters; and Anna Pletcher, former assistant chief of the U.S. Department of Justice's Antitrust Division in San Francisco.
Moving Forward Alone
Any reckoning of O'Melveny & Myers' 2019 must take into account a deal that wasn't completed: the firm's proposed merger with Magic Circle firm Allen & Overy. The firms said they would be halting discussions in September, 18 months after talks became public.
Nearly six months later, Butwin repeated that ending the conversations was a "mutual" decision. But he said the process was not without benefits.
"We're working together on the service of our shared clients," he said, noting that by learning more about each other's capabilities, the firms have more to offer these entities.
One benefit of the merger to O'Melveny would have been a substantially enhanced presence in London. Several partners and lawyers left that office since merger talks began, and the firm's website now lists just four partners, four counsel and one associate there.
Butwin said O'Melveny is looking to add London attorneys in areas that complement the rest of the firm's platform: restructuring, disputes, investigations and M&A. Members of the firm's senior management team are heading across the Atlantic next week to talk to prospects in the lateral market.
Growth in New York is also a priority; Butwin said he expects to be able to announce several corporate partners joining there in the coming weeks. And the firm could also stand to be bigger in Northern California.
And even without a blockbuster merger, Butwin is heartened by another year of record financial performance.
"The focus continues to be executing on our strategic plan," he said.
The 2019 financial figures reported in this story are preliminary. ALM will report finalized data for the Am Law 200 in The American Lawyer's May and June issues.
Read More
O'Melveny Posts Record Income, Profit Growth in 2018
After Failed Merger Talks, What's Next for O'Melveny?
O'Melveny, California's Top Litigation Department, on AT&T-Time Warner and Collegiality
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