In a year of four mergers, including its largest combination yet, Fox Rothschild managed to grow revenue per lawyer and profits per equity partner, as it continued to spread its national footprint.
"We’re able to do more in different places and clients perceive us as being able to do that," firmwide managing partner Mark Morris said.
The Philadelphia-based Am Law 100 firm saw gross revenue increase by 12.8% from fiscal 2017 to fiscal 2018, to $507.5 million. RPL was up 6.6%, to $645,000, as the firm saw its total head count increase by 5.8%, to 787.
(Year-end figures for Fox Rothschild do not exactly match the firm's numbers reported in The American Lawyer, which are compiled before the firm's fiscal year ends March 31.)
The firm also managed to grow its profits, bringing in net income of $155.7 million, an increase of 20.8% since 2018. Profits per equity partner increased by 3%, to $695,000, even as the equity partnership swelled by 17.3%, to 224 partners.
Average compensation for all partners also increased by an equal percentage to total head count—5.8%—to $602,000.
Fox Rothschild moved up one spot in national rankings by revenue, coming in 74th in the 2019 Am Law 100 based on estimated gross revenue for 2018 as of two weeks before its fiscal year-end.
While the firm ultimately beat that estimate by $9.5 million, its Am Law 100 ranking would still be 74th based on gross revenue of $507.5 million. Ogletree, Deakins, Nash, Smoak & Stewart, at 73rd, had gross revenue of $509.8 million.
Despite double-digit revenue growth, Fox Rothschild’s upward movement in the rankings was much slower than in recent years.
The firm jumped into the Am Law 100 in 2015, placing 95th that year after it grew revenue by 10% from 2013 to 2014. It grew revenue by another 10% the next year, jumping up another 10 spots in the rankings. It jumped up five more spots in the 2017 rankings, and another five in the 2018 Am Law 100.
Morris said rates increased by 3% to 4% in 2018, and the 6.6% RPL growth outpaced growth in expenses per lawyer.
"I think our operations are more streamlined, our hours increased both at the associate and partner level," he said. "We actually just got more productive … that’s the main reason why those statistics are as good as they are."
Practices that showed growth included the cannabis law group, privacy and data security, construction and litigation, Morris said. "There really was no weakness" among practice groups firmwide, he added.
Some litigation wound up and major transactions closed, leading to fee recoveries, but none of those made an unusual impact on the firm's finances, he said.
In its four mergers throughout the year, Fox Rothschild added lawyers in Chicago, Delaware and Denver, where it already had offices, and established a new foothold in the Southeast by acquiring North Carolina-based Smith Moore Leatherwood. In all four cases, Morris said, "expectations were met" in terms of productivity.
He said other lateral hires as a whole were about 95 percent as productive as expected, meaning they "basically are doing what they said they were going to do." In addition to its lawyer head count growth, Fox Rothschild also filled a key C-suite role at the end of its last fiscal year, hiring Holly Lentz Kleeman to fill the vacancy.
As the firm has grown, Morris said, Fox Rothschild has made an effort to decrease square footage per lawyer in its offices, ideally to 500 or 600 per lawyer. The firm also launched a data retention program, he said, which aims to cut data storage costs and eliminate unnecessary paper files.
"I think over time it will save us millions of dollars," Morris said. "We run a pretty lean operation to begin with."
At the same time, the firm has taken a closer look at its alternative fee arrangements, and hired an intake manager to make sure those arrangements are appropriate. Morris said work is being done on an alternative fee basis "more than ever before," and realization has actually improved slightly in the midst of that trend.
Building Out Existing Offices
This year, Morris said, Fox Rothschild will be focused on the best ways to budget those matters and stick to the budget, and will likely implement a matter management training program for attorneys.
"We try to be responsive to what clients want," he said. "They want to be your partner. They're not trying to take advantage of you."
Morris said the firm is planning new space in Chicago and Dallas, and an expansion of its Pittsburgh office. No other mergers are imminent, he said, but the firm will continue to seek opportunities for beneficial combinations.
"The real upside for the firm is not just expanding geographically, but adding lawyers with productive practices in existing markets," Morris said. "We don’t have any plans at all to enter a specific market. That’s not something we’re looking to do."
That said, he added, there are markets where the firm isn't present, and if the right opportunity were to arise, "we would look at it very carefully."
With regard to growing the existing offices, Morris said the infrastructure investment doesn't change, making it much easier to get the next 30 lawyers than the first 30.
"The real juice in the lemon ... is to continue to grow that way," he said.