As it continued to shed lawyers for the fifth year in a row, Locke Lord saw gross revenue slip by 3.1% in 2019, while revenue per lawyer increased slightly.

Chair David Taylor said the small decrease in revenue is largely due to shrinkage in the total lawyer count—including the loss of a number of lawyers in the firm's Hong Kong office—and the fact that a contingency fee factored into 2018 financial results.

Taylor, who just completed his second year as chair of the Dallas-based firm, said he is focused on improving revenue per lawyer, which came in at $812,000 in 2019 and is up 1.5% from $800,000 in 2018. He called that increase a "good sign of healthy growth."

The firm reported to ALM Intelligence that it raised rates by more than 3% in 2019.

The firm posted gross revenue of $496.4 million in 2019, compared with $512.6 million the year before. Net income was $173.5 million in 2019, down 1.1% from $175.5 million in 2018.

But profits per equity partner (PEP) took a hit in 2019, slipping to $935,000, down 9.7% from $1.035 million in 2018. That follows a substantial increase in PEP a year ago. The swing can be attributed to a 9.4% increase in equity partners at Locke Lord in 2019—the equity tier grew to 186 partners from 170 in 2018.

"With the addition of equity partners, we knew our PEP would go down," Taylor said. He said the number of equity partners at Locke Lord increased in 2019 because some strong "next-generation" partners made more money, so according to Am Law 200 definitions those lawyers are now considered equity partners.

The nonequity partner count declined to 96, down 22.6%.

More broadly, Taylor said Locke Lord's revenue was attributable to a lower firmwide lawyer head count, which dipped to 611 on a full-time equivalent basis in 2019. The firm is 4.6% smaller than in 2018, a decline caused in part by the departure of lawyers in Hong Kong, including nine lawyers and paralegals that moved last fall to Holman Fenwick Willan.

With partner Gregory Burch remaining in charge of the Hong Kong office, Taylor said the firm maintains its license and its practice there, but is now "just managing it a little differently." He said Burch is assisted by lawyers from Houston, Chicago and Atlanta who also spend some time in Hong Kong.

"We are just trying to be strategic," he said.

While many Big Law firms are sizing up, Locke Lord's lawyer census has been on a downward trajectory since 2015, when it merged with Edwards Wildman Palmer, creating a 1,014-lawyer firm with 23 offices.

It is not unusual for firms to shed lawyers following a merger, but Locke Lord's lawyer count declined to 847 on a full-time equivalent basis in 2015, to 749 in 2016, and 664 in 2017. The shrinkage has slowed some, as head count dropped to 641 in 2018 and 611 in 2019.

Taylor said some of the decline was "normal attrition," but some was strategic as the firm concentrates on its strengths. Locke Lord opened an office in Brussels in 2019, but in recent years shuttered locations in Istanbul, Tokyo and Sacramento, he said.

"There may be areas geographically, from a practice standpoint, which may not work in the long run," he said.

The firm's lateral partner hires in 2019 include Eric Strain, an aviation litigator in New York; Steven Trybus, a pharmaceutical intellectual property lawyer in Chicago; corporate lawyer Robert Evans III in New York; and Eric Johnson, the Dallas mayor who joined as a public finance lawyer.

Overall, Taylor said, the firm's partners were happy with its 2019 performance.

Transactional practices were busy, he said. Energy lawyers worked on deals valued at more than $1 billion for clients including NextEra Energy Partners, Comstock Resources and Momentum Midstream. Private equity lawyers represented clients including Hastings Equity Partners, Tailwater Capital and the WildFire Energy management team.

Insurance was another robust area, he said, and the firm represented WellCare in its $17.3 billion merger with Centene. Public finance work was also robust, particularly in the Northeast, and commercial, financial services and intellectual property litigators were busy, he said.

Another growth area in 2019, Taylor said, was the privacy and cybersecurity practice in Los Angeles and San Francisco. He said the firm is advising clients on the California Consumer Privacy Act of 2019, which created new regulations related to how businesses deal with customer information.

Locke Lord has offices in 21 locations.

Taylor is excited about the start to 2020, noting that the firm just finished its strongest January ever. However, Locke Lord has lost some practice leaders to other firms already this year. The co-chairs of its global capital markets practice joined Winston & Strawn in Houston, and a co-chair of the construction law practice moved to Mayer Brown in Houston.

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.

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