Haynes and Boone office sign (Photo: Rick Kopstein/ALM)

Following a slow start to 2019, Haynes and Boone could only do so much to catch up in the second half. The firm saw gross revenue decline by 1%, while revenue per lawyer increased 2.2% on slimmer head count.

"The first half ended up being very, very slow. You had a government shutdown … at the same time you saw the slowdown on the energy side," managing partner Timothy Powers said. But, he added, demand improved significantly during the second half of the year.

"The second half really ramped up in the M&A area," he said. Also in the latter half, the firm saw energy restructuring activity continue, a pickup in litigation, and strong activity in the appellate and financial services practices.

The uptick in restructuring work and litigation was a boon to 2019 results, but it didn't totally compensate for the early year slowdown, Powers said, because the firm is about 73% business and 27% controversy.

"No matter how busy our controversy side gets, if your business cycle is slow, it doesn't make up [for that]," he said.

Haynes and Boone, which is celebrating its 50th anniversary this year, posted revenue of $404.3 million in 2019, compared with $408.2 million in 2018. RPL came in at $777,000, up from $760,000 the year before, as total head count declined by 3.2% to 520. The firm increased billing rates by less than 3%.

Profits per equity partner inched upward $6,000, or 0.6%, compared with the year before. Net income was $127.6 million, down 3% from $131.5 million in 2018.

The 2019 financials contrast to 2018, when the firm surpassed significant multiple milestone—revenue moved over the $400 million mark, PEP topped $1 million, and RPL shot past $750,000. The firm stayed above all three of those marks in 2019, but didn't significantly improve them.

Haynes and Boone spent a good part of 2019 working on implementing its "2025 Plan" by investing significantly in technology, launching wellness programs—the firm signed the American Bar Association's Well-Being Pledge—enhancing its alumni program, and continuing to focus on diversity and inclusion, Powers said.

He said head count declined in part because of aggressive moves by out-of-state firms moving into the Texas market.

"We are constantly dealing with free agency, firms coming into town," he said, noting that Haynes and Boone has grown outside of Texas, such as in Charlotte, North Carolina, where it opened an office last year for banking work. Clients there include Bank of America and Wells Fargo.

The firm also grew in New York on the financial services side, and added insurance coverage litigators in Washington, D.C., Powers noted.

He expects the firm to direct attention to the West Coast this year to support its national practice. The firm has an office in Costa Mesa, California, but is eyeing San Francisco and Los Angeles, he said.

During 2019 in Texas, the firm represented Landry's and owner Tilman Fertitta in the acquisition of the Del Frisco's Double Eagle Steakhouses and Frisco's Grilles; advised Callon Petroleum Co. in the sale of certain noncore assets in the Midland Basin; represented Blucora in its acquisition of 1st Global, a tax-focused wealth management company in Dallas, and Stream Energy in the sale of its retail electricity and natural gas business to NRG Energy.

Lawyers also won a defense verdict in an intellectual property trial in U.S. District Court for the Eastern District of Texas for client HiCon, a Korean company sued by Plastronics Socket Partners, and successfully represented the board of trustees of the Dallas Police and Fire Pension System in litigation over the constitutionality of public pension reforms.

Unlike 2019, the firm had a strong start to 2020, Powers said, with January and February coming in as the best first two months of a year in the firm's history.

"All that said, we've hit that headwind of the new coronavirus. You've seen what that's done to the market," he said, wondering out loud what it will do to CEO confidence. Because of COVID-19, lawyers in the firm's office in Shanghai are working remotely, Powers added.

He also expects a "brutal election season" to have some impact on the market, but noted that the countercyclical practices of litigation and restructuring should be very busy this year.

Powers, who has been managing partner for six years, will turn 65 this year and is planning to step down from his position at the end of 2020. He said a committee will appoint his successor, who will likely be a partner already in a leadership role.

"There will be a very smooth transition of power," 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.

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