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Large firm view: 2012 revenue increases

An early look shows some wildly diverse — but mostly positive — 2012 financial results for some members of the MOney 20, Missouri’s highest-grossing corporate law firms.

Two firms, Bryan Cave and Polsinelli Shughart, boasted full-steam-ahead revenue growth through the additions of dozens of lawyers. Two others — Lewis, Rice & Fingersh and McDowell, Rice, Smith & Buchanan — nursed hangovers from previous years’ contingency fees that translated into revenue drops in 2012.

Bryan Cave Chairman Don Lents says expanded work and headcount led to revenue increases.

Overall, revenue was up more than down, with only four of the 13 law firms whose figures are available showing declines. Transactional work made something of a comeback, perking up the top lines of more than one firm.

Bryan Cave, the largest Missouri-based firm, grew revenue and profit by double digits from 2011 to 2012, thanks to a January 2012 combination with a 160-attorney Denver-based firm and “expanded work” from lawyers across the firm, Chairman Don Lents said in an emailed statement. In fact, revenue and headcount increased by almost identical percentages.

Bryan Cave’s profits per partner dipped by about 3 percent to $744,730, but the addition of the lawyers from Holme Roberts & Owen made for an “apples to oranges” comparison, Lents said. Profits per partner is the average amount an equity partner is paid of a firm’s profits.

Polsinelli Shughart gobbled up lawyers in Denver, Chicago, Dallas and New York, plus 26 in St. Louis, for a net addition of 77 attorneys, said Chairman Russ Welsh. The additions showed in revenue and profit, with revenue increasing 17 percent and profits going up by about 20 percent to $131.6 million. Welsh credited leverage, the number of attorneys per equity partner, and the expansion nationally of “practices in more sophisticated areas” for the profit upswing.

After a merger of Kansas City firms four years ago created Polsinelli Shughart, the firm left the city out of its growth plans, Welsh said.

“We have a lot of lawyers here,” Welsh said.

Leaders of both Lewis Rice and McDowell Rice said the firms benefited from contingency fees in 2011 that didn’t make an appearance in 2012.

Contingency fees inflated Lewis Rice’s revenue in 2010 and 2011, Chairman Tom Erb said. The lack of those fees dropped revenue by about 10 percent in 2012 to $71 million. But the firm’s “core recurring fee revenue” is up if the figures are adjusted for extraordinary fees, said Erb. He said a better baseline year comparison would be 2009: Compared with that year, Lewis Rice’s revenue was up 2 percent in 2012.

“On the five- to seven-year horizon, every year we’re up a little bit,” Erb said.

McDowell Rice, which last year debuted on Missouri Lawyers Weekly’s MOney 20 rankings, saw revenue drop 20 percent to about $14.5 million in 2012. The 35-attorney Kansas City firm had a big contingency fee in 2011, with another this year, Chairman R. Pete Smith said. The two fees stemmed from the same litigation, with the second fee delayed into this year because of an appeal, he said.

“This year the money is up around the range we had two years ago,” Smith said.

Carmody MacDonald, a similar-size firm on the other end of the state, stands out with a double-digit revenue increase. The firm “hit on all cylinders” adding work and collecting on it better, said Dave Luce, one of three managing partners.

Work picked up for the transactional group at Carmody MacDonald, which had been hit harder than litigation in the economic downturn.

“It’s a positive sign things are changing,” Luce said.

Transactional work also was a bright spot for Husch Blackwell. Among other major deals, the firm handled deals for Canada-based Algonquin Power & Utilities Corp. and Duke Energy with a combined total value of almost $2 billion, said Greg Smith, chief executive and managing partner.

Husch Blackwell emerged from 2011 doldrums with a 6 percent increase in revenue. Average profits per equity partner jumped nearly 20 percent. The firm had downsized its equity partner ranks by demoting 25 to fixed-income status, which can account for part of the increase because the profit pie is divvied up among fewer people. But increased revenue from almost all “organic growth,” rather than the addition of attorneys, was a real driver of the firm’s financial results, Smith said.

“We’re fortunate to have higher productivity amongst our partners,” Smith said.