Articles and Speeches
A Rebuilding Year: Their recovery may be weaker than The Am Law 100's, but Second Hundred firms say it's all part of the plan
June 1, 2011
In The American Lawyers' AmLaw 200 2011 released June 1, 2011, Nelson Mullins Riley & Scarborough LLP ranked as the 128th largest law firm in the nation based on 2010 gross revenue, up from 135th in 2009, representing a 10.1 percent revenue increase over the time period. The following is an excerpt from an article from The American Lawyer quoting Managing Partner David Dukes.
By Victor Li
At first glance, it might appear that the economic recovery stopped with The Am Law 100.
While the nation's 100 highest-grossing firms rebounded from a disastrous 2009 by posting healthy gains in 2010--a 4 percent increase in gross revenue, a 4.4 percent rise in revenue per lawyer, and an 8.4 percent pop in profits per partner—gains at the Second Hundred were less robust. The Second Hundred's total gross revenue rose 2.2 percent, to $17.46 billion in 2010 from $17.08 billion in 2009, while average revenue per lawyer increased just 1.5 percent, to $579,749 from $570,999. Average profits per partner rose 3.4 percent, to $665,665 from $643,580.
But don't break out the black bunting for the Second Hundred yet. Much of The Am Law 100's gains were built on cuts in head count—average head count was slashed by 2.7 percent, while the number of equity partners fell by 0.9 percent, and the number of nonequity partners dropped by 1.7 percent ["Back in Black," May].
So where did those lawyers go? Often, it turns out, they went to the Second Hundred. Total Second Hundred head count grew by 0.7 percent in 2010, to 30,123 from 29,915, and partner numbers showed even more pronounced gains. Second Hundred equity partner ranks rose 2.7 percent, to 9,714 from 9,461, and the number of nonequity partners went up by 4.6 percent, to 5,805 from 5,548. In fact, lawyer head count was the one area where Second Hundred firms outpaced their Am Law 100 counterparts in 2010.
"The pool for lateral partners is as deep as I've ever seen," says Ogletree, Deakins, Nash, Smoak & Stewart managing shareholder Kim Ebert, whose labor and employment firm has been in expansion mode, opening five offices in 2010. Last year the firm picked up Am Law 100 partners from Winston & Strawn, McGuireWoods, Perkins Coie, and Holland & Knight. "We acquired several talented partners last year, and there are some very strong partners having conversations with us right now," Ebert says. Labor and employment lawyers are better off at a specialized firm than at a top general practice firm, Ebert says, since they can build their practices without needing to keep rates high and compete with other practice groups for resources.
Other Second Hundred firms followed Ogletree's lead. Last year David Dukes, managing partner of Columbia, South Carolina's Nelson Mullins Riley & Scarborough, saw an opportunity to build up several of his firm's practice areas, particularly corporate, labor and employment, and intellectual property, and eagerly dove into the pool of lateral recruits. "Last year was probably our best lateral recruiting year in a decade," says Dukes, whose firm added partners from DLA Piper, Duane Morris, and Seyfarth Shaw.
Dukes says that Second Hundred firms' lower billing rates are a big draw for laterals: "We have more flexibility on minimum billing rates than some Am Law 100 firms I'm familiar with, and that's beneficial for younger laterals who are still building up a client base and might be working with start-up companies or companies in the early stages of development, as opposed to ones in the Fortune 500." In addition, Dukes says, older laterals looking for more flexibility with their practices might feel more at home at his firm than at an Am Law 100 shop. "By necessity, Am Law 100 firms have to be more rigid in some of their practices," Dukes says.