US law firm partners pocket bumper $3m profits

Via Financial Times

Top tier partners at a slew of US law firms firms pocketed record profits of $3m on average last year as a host of bumper litigation and corporate dealmaking boosted their coffers.

US firms have started reporting their annual results, with many notching up double-digit revenue increases in 2019 that helped drive record partner profits.

Last year was marked by a series of US megadeals including Bristol-Myers Squibb’s $93bn takeover of rival drugmaker Celgene. Companies also responded to the disruption wreaked by tech giants such as Google and Amazon by striking deals, and US law firms benefited in particular from a surge in domestic M&A. An increasingly tough stance from competition regulators also generated work.

Philadelphia-based Dechert sent its top partners home with profit shares averaging $3m for the first time for its 2019 financial year, an increase of 10.2 per cent on the $2.7m profit per equity partner they generated the previous year. Dechert, which advised Airbus on the world’s largest-ever corruption settlement, posted an 11.1 per cent rise in revenue in 2019 to $1.14bn.

Law firms pay their most senior partners in profit shares instead of salaries — a closely-watched metric of a firm’s financial health. Few can compete with the likes of private equity powerhouse Kirkland & Ellis, whose partners took home profit per equity partner of $5m on average in 2018. The firm has not yet reported 2019 figures.

Atlanta-based King & Spalding’s top-tier partners also received a record-breaking $3m on average last year, up from $2.84m the previous year. The firm generated global revenues of $1.34bn in 2019, up 6.1 per cent.

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In London, litigation specialist Quinn Emanuel grew its London revenue by a fifth to £100.6m last year, making it the first litigation boutique to break the £100m barrier in the UK. The partnership, which has 19 partners in its London office, generated a profit of £67.2m, up 11 per cent on the previous year.

Quinn Emanuel’s London senior partner Richard East said Brexit and the rise of populist leaders such as US President Donald Trump had resulted in a growing wave of large commercial disputes, as companies fought back against law changes.

Not all US firms experienced stellar growth in their London offices. Cadwalader, Wickersham & Taft posted a 4 per cent drop in revenue last year, to $41.3m.

The dip in revenues was outweighed by a rise in global revenues and profits, however. The firm’s equity partners generated profit per equity partner of $3m, an increase of 11 per cent on the previous year.

Managing partner Pat Quinn said 2019 was “another outstanding year for the firm”.