(Courtesy photo)

Guided by a disciplined practice strategy and buoyed by increased client demand, Cozen O'Connor grew revenue per lawyer and profits per equity partner significantly in 2019.

The Philadelphia-based Am Law 100 firm grew revenue 9.4% in 2019, surpassing the half-billion-dollar mark to reach $517.3 million. At the same time, lawyer head count grew only modestly, driving a 7.9% increase in revenue per lawyer, to $767,000.

Likewise, the firm saw its profits jump, with net income of $173.2 million, an increase of 13.3% from 2018. Profits per equity partner grew by 9.9%, to $910,000, and the firm's profit margin grew by one percentage point, to 33%.

"We continued our unblemished record of one better year after another," CEO Michael Heller said.

The firm's head count grew by just 1.5% on a full-time equivalent basis, to 675 lawyers, while the equity partner tier grew 2.7%, to 190. That included nine people who were promoted to equity partner, two of whom are women and one of whom is of a minority race.

Asked how the firm managed to grow partner profits with a larger equity tier, Heller said no cost cutting was involved.

"We will always look to manage conservatively, but we don't look to enhance profits by cutting expenses. We look to enhance our profits by increasing our revenue, even if that means increasing our expenses, like marketing and business development," he said.

The firm did increase rates by more than 3%. Heller also noted that some investments in technology made in 2018 have been paying off "as planned." And, he said, both aggregate hours and hours per lawyer increased.

"It looks like we bucked a trend over the past year by increasing our hours per lawyer," Heller said. A recent survey by Citi Private Bank found that demand growth was less than head count growth industrywide in 2019.

While Cozen O'Connor's head count growth was small compared to recent years, Heller credited some organic growth and some acquisitions for the improvement in revenue, including a large group of labor and employment lawyers in California from woman-owned firm Miller Law Group. The firm also added lobbyists around the country, including several in Chicago, and a construction litigation group in Washington, D.C., in the fall.

"You will see us continue to look to increase the size of the firm through lateral groups, and some larger groups as well," perhaps up to 100 lawyers, Heller said, though he noted there are no current merger discussions ongoing that would lead to a transaction in the near future. Cozen O'Connor has no interest in doing "what some would call a merger of equals," he added.

He said the firm often gets phone calls from law firms with between 50 and 250 lawyers that are interested in pursuing a combination. "Our success is no longer the best-kept secret out there," Heller said.

He said the most successful practice areas in 2019 were corporate, real estate, commercial litigation and subrogation. He also noted activity in niche practices, including construction litigation, the firm's state attorneys general group, and its lobbying arm, Cozen O'Connor Public Strategies. The firm has continued to focus its strategy of growing on its specialty practices, he said, also including life insurance and annuities and institutional response.

Heller noted significant work across the firm's practices that contributed to revenue growth. Cozen O'Connor represented cannabis company Acreage Holdings in its $3.4 billion sale to Canopy Growth, announced in April. And it successfully argued before the Supreme Court in Manhattan Community Access v. Halleck, which was decided in June. And the firm represented Wells Fargo in a $575 million resolution with all 50 states and Washington, D.C., though that settlement was actually announced in the final days of 2018.

Looking ahead to the rest of 2020, Heller said, "When we look at our pipeline, we are cautiously optimistic that it will be another strong year."

As for future growth, Heller said Cozen O'Connor is looking to grow its commercial practices around the country. The firm is "always looking to build in the mid-Atlantic region," and constantly evaluates opportunities in the Midwest, Southeast and on the West Coast, he added.

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