William Hartnett, chairman of Cahill Gordon & Reindel. Courtesy photo

Boosted by strong performance in its leveraged finance and general corporate practices, Cahill Gordon & Reindel's revenue and profits rebounded last year, recovering from the firm's 7% decline in 2018.

Cahill's gross revenue rose in 2019 rose by 7.6% to $387.8 million, similar to 2017 levels, while the firm pushed up its average profits per equity partner by almost 12%, to nearly $3.84 million, surpassing 2017 numbers.

Cahill chairman William Hartnett said the firm's reputation as the "gold standard" for lender-side representations on high-yield bond work paid off in 2019, growing net income to $243.8 million, up 14.6%. The firm grew its bottom line, even with a net increase of two equity partners.

"I viewed '18 as an anomaly in the high-yield market, and I expected that to bounce back, and it did," Hartnett said.

Hartnett pegged the firm's billing rate increases around a modest 2% and said there were no aberrations, such as a high volume of receivables coming into 2019, that skewed the firm's financial performance. The results were driven by "blood, sweat and collections," he said.

Revenue per lawyer grew 9.6% at Cahill last year, from $1.24 million to $1.36 million. While the equity partnership grew slightly, overall head count dropped about 2.1%, meaning that even as profitability grew—the firm's margin rose from 59% to 63%—leverage dropped. Hartnett said Cahill managed to "control" expenses, too, although he said it was more "nickels and dimes" than in any major category, such as rent.

He said Cahill's biggest investments have been in its lawyers. "We have 30 partners who are fluent in leveraged finance [and] we have great associates coming up through the ranks. The only investment you can make to maintain the position we have maintained through 40 years is through the quality of your lawyers," he said.

"One thing we are not is complacent," he said. "We don't believe we have a monopoly on talent and marketing skills."

The firm's work on high-yield bonds, high-interest loans and other leveraged transactions is a key driver of business, accounting for 60% to 70% of all its corporate work, Hartnett said. Cahill lawyers worked on more than $84 billion of bond deals and nearly $200 billion in leveraged loans in 2019, compared with $50 billion and $245 billion, respectively, in 2018, according to statistics from Refinitiv Loan Connector.

That wasn't the only growth area, however. Hartnett said the firm had a "very strong year" in middle-market mergers and acquisitions, representing strategic buyers and sellers in certain transactions and lenders in other leveraged deals. He said partner Kimberly Petillo-Décossard has been recognized for her work in the field.

The firm's litigation department, led by Herb Washer, had good results but also helped fill the business pipeline for 2020, Hartnett said. He praised its work for Credit Suisse: in September, one judge threw out a class action against the investment bank over exchange-traded notes that suing investors had claimed were too risky, while in a case over foreign exchange rate-rigging, the bank partly defeated a class certification effort. That same month, two other civil suits accusing the bank of anti-competitive behavior were tossed.

The firm's first two months of 2020, particularly in corporate work, have been very busy, Hartnett added. While the novel coronavirus could hurt the economy, he sounded a tone of cautious optimism.

"I'm looking for double-digit bottom-line growth for 2020," he said.

The 2019 financial figures reported in this report are preliminary. ALM will report finalized data for the Am Law 200 in The American Lawyer's May and June issues.