This morning, we wrote about the partners at DLA Piper sharing in the pain of 2009. The trend at many firms reporting 2009 numbers has been the revenue line heading south while the profits-per-partner line heads north. At DLA, however, revenue and PPP were down at the firm, so Elie gave them a shout-out for not cutting deeply enough.
But perhaps more striking is Covington & Burling: Last year’s revenue was actually up at the D.C.-based firm — but PPP was down.
Covington is über white-shoe, but this seems oh-so-radical-populist. What happened?
Covington & Burling had a strong 2009 by all accounts. Gross revenue jumped 9.79%, from $531 million to $583 million. Net compensation climbed 6.16%, to $250 million. The firm made a number of big lateral hires. And it had no reported layoffs of lawyers or staff and no deferrals of associate start dates.
It did so well that it was hiring rather than laying off, but that resulted in partner profits and revenue per lawyer falling:
But the firm also increased overall headcount by 16.34% (to 652.68 lawyers) and equity partner headcount by 15.3% (to 208.56). That explains, in part, why revenue per lawyer slid 5.29%, from $945,000 to $895,000. PPP fell by 7.69%, from $1.3 million to $1.2 million. The firm does not have nonequity partners.
As we’ve noted before, Covington used the recession as an opportunity to do some acquisitions, including a handful of IP partners from Heller Ehrman and a number of former Bushies.
Last year, the firm emphasized its resilience in a newsletter, writing:
We have not seen a need for any cutbacks in the size of our legal and non-legal staff. We have not frozen salaries. We have paid bonuses. We will welcome our incoming class for 2009 at the usual time this fall, and we will offer a full summer program.
The only cutbacks in 2009, apparently, were to partner profits.
Moving into 2010, the firm is being a little bit more conservative. It announced in November that salaries were frozen.
CLARIFICATION: As noted by a commenter, the salary freeze did not apply to Covington’s New York office. That’s good news for associate Mari Bonthuis, who recently bought a one-bedroom apartment with ample closet space for $748,500 (as reported in the New York Times).
Revenues Up, PPP Down at Covington & Burling [BLT]
BigLaw Profits: Up, Up, Up! [WSJ Law Blog]
Earlier: Nationwide Salary Freeze Watch: Covington & Burling
Covington & Burling Owns the Summer
Open Thread: The Good News
Crisis for some firms, opportunity for others