Gibson Dunn Posts Double-Digit Revenue Gain in 23rd Straight Year of Growth

Gibson, Dunn & Crutcher's offices in Washington, D.C. (Photo: Diego M. Radzinschi/ALM)

Gibson, Dunn & Crutcher has posted its 23rd straight year of revenue growth, taking in more than $1.8 billion in 2018. It was also the firm's 22nd consecutive year of profitability, with net income reaching almost $1.1 billion.

Along with the near 11 percent growth in revenue, the firm also lifted its profits per equity partner by 3.2 percent to $3.35 million.

"We look for sustained performance, not just wonderful years," Gibson Dunn chairman and managing partner Kenneth Doran said of the firm's steady upward trajectory.

He attributed much of the strong growth to recent investments, including moves into Frankfurt in 2016 and Houston in 2017, as well as to a partnership that has expanded through promotions and lateral hires.

Last year the firm saw a net increase of 10 equity partners and nine nonequity partners, with the overall number of partners growing to 378, a 5.3 percent increase.

One highlight was the firm's acquisition of a four-lawyer corporate and private equity team from Kirkland & Ellis that came aboard in May, led by Washington, D.C., partner George Stamas. The firm also added veteran U.S. Supreme Court advocate Allyson Ho in Dallas from Morgan, Lewis & Bockius, after her husband left the firm for a seat on Fifth Circuit. In Palo Alto, California, Gibson brought on IP deal maker Carrie LeRoy from White & Case and securities litigator Michael Celio from Keker Van Nest. The firm also picked up multiple lawyers in Hong Kong and London, including Mayer Brown's former global corporate and securities practice co-leader, Jeremy Kenley.

With regard to the firm's performance in 2018, Doran pointed to impressive results across the board. "Litigation was strong, corporate was even stronger, up 17 percent," he said.

On the litigation side, significant matters included the ongoing representation of Facebook in all civil litigation arising out of reports of alleged misuse of user data by Cambridge Analytica, and a U.S. Supreme Court victory that opened the door for legal sports betting in New Jersey and throughout the United States.

Noteworthy transactional work included advising Concho Resources in the $9.5 billion acquisition of oil and gas company RSP Permian, guiding Toyota in a $1 billion investment in Southeast Asian ride-hailing app Grab Holdings Inc., and representing PepsiCo in its $3.2 billion acquisition of SodaStream International.

"The growth was exciting because it was so built into the firm across practice areas and across geographies," Doran said of his firm's overall 2018 performance. "It's part of a long trend that has withstood many, many big upsets in the global economy, from the bursting of the dot-com bubble, through 9/11 and the Great Recession."

Doran pointed to capital markets work as one area that was flagging, but he suggested that was due to wider trends in the global market, notably uncertainties stemming from Brexit.

"In London we've done quite well," he said, "but people are concerned about what might happen to business transactions and real estate values. It could have a chilling effect on people's long-term bets."

Houston, the firm's newest office, performed especially well in its first full year, Doran emphasized, thanks to the overall strength of the Texas market and the bounty of energy work that the firm was connecting to existing offices in Dallas, Denver and New York, where the focus is on renewables.

"We're in the early days, but it's a very competitive market," he said. "The established Texas firms and most of the stronger U.S. firms are there in one way or another."

Doran said that no immediate expansions or new practices were on the horizon, but noted Gibson Dunn was open to adding the right talent, particularly on the corporate side. A future merger is also highly unlikely.

"If there were a unique opportunity I've never seen—a smallish boutique that would be helpful to get us into new practice or new markets—I'd consider it," he said. "But I've never seen such a firm, so there's been no discussion."

Doran reported market-specific rate increases that exceeded 3 percent in 2018. The use of alternative fee arrangements is also on the rise, if only modestly.

"If we can be creative and align our clients interests with ours, it's only for the better," he said. "In terms of requests for proposals, it's almost always asked about and we're happy to talk about it."

But often it's the client, not the firm, that ultimately elects to rely on the traditional billable hours format.

Expenses also climbed from the associate salary increase that went into effect July 1, combined with special bonuses paid out later that month. These ultimately came out of partners profits.

"It's the cost of doing business," Doran said. "There's no ability or effort to off-lay it elsewhere."

The firm is well positioned for the coming year, he added, pointing to its lack of debt and its firm foundation of capital. Contribution requirements have remained steady over the last decade.

"We’re well positioned for 2019, which will be another super competitive and challenging year, as 2020 will be," Doran said. "But we've got the right team and the right focus, so I'm optimistic."