Partner Profits

DLA Piper: Revenue and Profits Per Partner Down

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We have thoroughly examined DLA Piper’s new associate compensation system. While the firm has argued that its move to merit-based compensation is something more than a paycut, many associates disagree.
But unlike some firms that have seemingly used pay cuts and associate layoffs as a way to protect partner profits, it appears that DLA partners shared the pain felt by their employees. Or at least the firm didn’t cut deep enough to generate an increase in PPP despite declining revenue. Am Law Daily reports:

DLA Piper U.S.* reports that gross revenue declined nearly 14 percent in 2009, to just over a billion dollars. Revenue per lawyer (RPL) and profits per equity partner (PPP) fell only about 5 percent, due to cuts in the firm’s lawyer ranks.
*DLA Piper is structured as a set of alliances. These results reflect only the U.S. operation.

While the numbers add more circumstantial evidence that DLA’s compensation structure represents an attempt to cut expenses, at least the firm isn’t crowing about record profits while their employees suffer.
Don’t get me wrong, the firm is still happy with itself given a difficult 2009. Statements of success after the jump.


DLA Piper’s obligatory “we rock” quotes showed the power of positive thinking:

“DLA Piper weathered the economic storm well,” says firm chairman Frank Burch, “and our overall performance during this period was solid.” Burch stresses that, because the firm saw modest rises on every metric in 2008, its two-year RPL is down only 2 percent, and its two-year PPP is up 1 percent.
The other reason these measures held up is that the firm downsized. DLA laid off a total of 101 U.S. associates and 210 U.S. staff members in February and July of last year.

If decreased profits, salary cuts, and significant layoffs constitutes weathering the recession “well,” I’d hate to see what happens when a firm weathers the recession poorly.
But here’s the bigger question: will DLA Piper partners continue to ride out the recession with DLA, or will they look to jump ship? In January four partners left the firm. They complained that DLA Piper’s rates were too high for them to effectively serve their clients. But in light of these numbers, you have to wonder what role PPP played in their decision.
THE AM LAW 100: Revenue Plunges 14 Percent at DLA Piper-US [Am Law Daily]
Earlier: DLA Piper: Taking the Merit Based Model Out for a Spin
Departing DLA Piper Partners: High Rates (Not Associate Compensation) Responsible for Client’s Concerns

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