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MoFo gets record PPP after de-equitizing 15% of partners
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Date: January 7th, 2006 3:59 PM Author: Bull headed avocado kitchen indirect expression Full article with Bay Area PPP and revenue chart at http://www.bmacewen.com/blog/pdf/BayAreaTopTen2005Results.html
Climbing the Charts: The Top Grossers
Marie-Anne Hogarth The Recorder 01-06-2006
2005 was a good year for Bay Area firms. Some worked at making it appear even better.
For the first time since the dot-com bust, all 10 of the Bay Area's highest-grossing firms recorded revenue gains in 2005. Four firms saw double-digit increases, but most showed more modest improvement. Two firms reported leaps in revenue per lawyer. A handful of firms dramatically boosted profits per partner, but much of the boost came from shifting partners from equity to non-equity status. Three firms saw PPP decline.
Morrison & Foerster, the revenue leader, saw its top line grow 16 percent. Orrick boosted revenue 14 percent. Pillsbury Winthrop reported a 33 percent gain in revenue, but it came from its merger with 350-lawyer Shaw Pittman. Pillsbury's revenue per lawyer remained flat, and profits per equity partner dipped, even though the firm ended up with fewer equity partners after the merger than it had before.
Pillsbury wasn't the only one shrinking its equity ranks. MoFo more than doubled the size of its non-equity tier this year, a move that goosed its profits per equity partner above $1 million for the first time.
Heller Ehrman reported 19 fewer equity partners and 27 more non-equity partners than in the previous year. With revenue up just 1 percent, the move helped the firm report a 3 percent increase in profits per equity partner. Average compensation for all partners, meanwhile, fell 3 percent. Still, Heller led the pack in revenue per lawyer, a key measure of a firm's financial health.
Perhaps the biggest story of the year is at Thelen Reid & Priest where revenue was up 16 percent, revenue per lawyer up 22 percent, and profits per partner up a whopping 44 percent, to $850,000. Thelen, too, shrank its equity partner class.
Wilson Sonsini's fiscal year doesn't end until Jan. 31, but the firm expects to lift revenue 8 percent, its first increase since the bust. Wilson also reported fewer equity partners, helping push profits per partner up 13 percent to $975,000. It doesn't have a non-equity tier.
Law firm leaders attribute the generally positive results to a surge in corporate work and continued strength in litigation practices.
Cooley Godward Chief Executive Officer Mark Pitchford said Valley firms were finally seeing their practices fully engaged across the board.
"If firms were telling you that on the business side [a few years ago], they were blowing smoke. Litigation was the steady-state driver," he said. "Now what you've seen is litigation staying engaged and the business practices, over the last 18 months, recovering to a nice level."
Still, the three tech-centered Silicon Valley firms posted only slight gains in total revenue and revenue per lawyer. At Cooley and Fenwick, revenue was up 3 and 4 percent respectively.
The Bay Area top 10 saw a few changes this year. Pillsbury shot from No. 4 to No. 2. Gray Cary Ware & Freidenrich, which was No. 8 last year, fell off the chart after becoming part of international behemoth DLA Piper Rudnick Gray Cary. That allowed Sedgwick, Detert, Moran & Arnold to sneak into 10th place. |
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Date: January 7th, 2006 4:58 PM Author: multi-colored base background story Stupid question: Are those gross or net profits? Because that's a shitload of money. (http://www.autoadmit.com/thread.php?thread_id=334778&forum_id=2#4758474) |
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Date: January 7th, 2006 5:26 PM Author: bistre naked dilemma aren't profits net by definition (http://www.autoadmit.com/thread.php?thread_id=334778&forum_id=2#4758673) |
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Date: January 7th, 2006 5:30 PM Author: opaque casino deer antler To a lay person profits are net, to a business person you must specify (http://www.autoadmit.com/thread.php?thread_id=334778&forum_id=2#4758702) |
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Date: January 7th, 2006 5:31 PM Author: multi-colored base background story Profits can be gross. (http://www.autoadmit.com/thread.php?thread_id=334778&forum_id=2#4758706) |
Date: January 7th, 2006 5:30 PM Author: white community account locale Probably a dumb question but what does "PPP" stand for? (http://www.autoadmit.com/thread.php?thread_id=334778&forum_id=2#4758697) |
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Date: January 7th, 2006 5:30 PM Author: multi-colored base background story Profits per partner. (http://www.autoadmit.com/thread.php?thread_id=334778&forum_id=2#4758700) |
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Date: January 7th, 2006 6:04 PM Author: floppy space wrinkle How the fuck do you just "de-equitize" a partner?
Wouldn't that person go nuts and shoot up the office? |
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Date: January 7th, 2006 6:07 PM Author: Bearded Theater Stage If the de-equitee has his/her own book of business that deserves equity, they don't go nuts they go across the street. If not, they deal with it. (http://www.autoadmit.com/thread.php?thread_id=334778&forum_id=2#4758981) |
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Date: January 7th, 2006 6:08 PM Author: vibrant impressive boltzmann "How the fuck do you just 'de-equitize' a partner?"
By vote per the partnership agreement. |
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Date: January 7th, 2006 6:14 PM Author: Bearded Theater Stage Over the summer I was told that the entire partnership might not do it, but the compensation committee or management committee does the dirty work. But you're right that the partnership agreement probably provides for it. (http://www.autoadmit.com/thread.php?thread_id=334778&forum_id=2#4759035) |
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Date: January 7th, 2006 6:12 PM Author: chartreuse party of the first part garrison whats the point of being a non-equity partner? (http://www.autoadmit.com/thread.php?thread_id=334778&forum_id=2#4759022) |
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Date: January 7th, 2006 6:13 PM Author: floppy space wrinkle you can tell people you're a partner (http://www.autoadmit.com/thread.php?thread_id=334778&forum_id=2#4759026) |
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Date: January 7th, 2006 6:14 PM Author: chartreuse party of the first part garrison hahaha really? is that it? (http://www.autoadmit.com/thread.php?thread_id=334778&forum_id=2#4759031) |
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Date: January 7th, 2006 6:14 PM Author: stimulating carmine goal in life spot pretty much.
And you get to make associates feel like shit.
Look at it this way, you can either be an owner (equity partner) or employee (non-equity partner, associate, counsel). That and tenure are the only distinctions. |
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Date: January 7th, 2006 6:15 PM Author: chartreuse party of the first part garrison wow...that IS pretty awsome! (http://www.autoadmit.com/thread.php?thread_id=334778&forum_id=2#4759045) |
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Date: January 7th, 2006 6:15 PM Author: Bearded Theater Stage When you go hunting for business you can say you're partner not associate. Plus its nicer for the psychology of the "partner." (http://www.autoadmit.com/thread.php?thread_id=334778&forum_id=2#4759046) |