2018 was a growth year for most of Missouri’s largest firms.
A year ago, Missouri had eight law firms with $100 million or more in revenue. Today, Spencer Fane’s phenomenal growth has increased that count to nine.
Polsinelli, Husch Blackwell, Stinson, Thompson Coburn and Armstrong Teasdale all saw higher revenue as well, with Polsinelli and Stinson in particular reporting significant increases compared to 2017.
Bryan Cave Leighton Paisner, of course, is much bigger than the legacy Bryan Cave firm was, but even adjusting for the effects of the merger the firm still grew.
Only two large firms lost revenue. Lathrop Gage saw a significant decline, though it was less drastic than in the previous year. Shook, Hardy & Bacon dropped slightly, allowing Husch to displace it as the third-largest firm in Missouri.
Missouri Lawyers Media’s MOney series takes a two-tiered approach to firm financials. Those with $100 million or more in gross revenue are ranked by size, with comparisons of year-over-year changes in profit, revenue per lawyer, profit per equity partner and other measures. For firms below the $100 million threshold, we do not provide explicit rankings but instead we provide a series of short profiles on a selection of law practices of various sizes to provide a detailed view of Missouri’s legal community.
Strictly speaking, many of Missouri’s large firms no longer can be described as “Missouri-based.” Between major mergers and distributed leadership, what were once local firms now have regional or even global footprints, of which their Missouri offices play only a part.
Yet it’s also clear that Midwestern billing rates and the cultures of St. Louis and Kansas City play a huge role in who these firms are and how they hope to thrive in a big legal market.
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St. Louis-based Bryan Cave has been Missouri’s biggest law firm by revenue for years, and merging into a global legal operation certainly hasn’t hurt.
Following the April 2018 merger with London-based Berwin Leighton Paisner, today’s Bryan Cave Leighton Paisner roughly has doubled the size of legacy Bryan Cave in 2017. The firm had $899.4 million in revenue in 2018, and $335.9 million in profit.
Yet Chairwoman Therese Pritchard said the new firm still saw a 1 percent increase in revenue and a 5 percent uptick in profit, compared to the combined financials of the old firms.
“From what I’ve heard from other chairs, the first year can be tough even to break even,” she said. “An increase in profitability of 5 percent we consider to be a real success.”
The merger had its obvious distractions — Pritchard said integrating the two firms’ systems was a particular challenge, the kind that can “inhibit progress and irritate our lawyers.” As those issues recede, Pritchard said the firm’s goal is to be “the most connected law firm in the world,” to clients and the industries the firm serves, between its more than 1,400 attorneys and through technological innovation.
With major operations in the U.S. and Europe, Bryan Cave Leighton Paisner is indeed a global firm, but Pritchard said that doesn’t diminish Missouri’s role.
“St. Louis and Kansas City are incredible, important offices,” she said. “St. Louis is really an engine of this firm. It always has been. It always will be.”
The past year has been historic for Polsinelli.
Chase Simmons formerly succeeded longtime firm Chairman Russ Welsh at the beginning of 2019. Bookending that long-planned transition was the acquisition of two new offices — Seattle in 2018 and Miami in February of this year.
Simmons said those additions fulfilled a long-held plan to have a presence in every financial center in the United States, though it has none overseas.
“Seattle and Miami were two regions of the country where we had holes in the map, and they’re really the last holes in the map,” he said. “Will we open more offices in the future? Maybe. Is there something in our strategic plan right now saying we need to? No.”
That doesn’t mean Polsinelli, Missouri’s second-largest law firm by revenue and its largest by headcount is done growing. Certainly 2018 was a healthy year, with revenue up 8.1 percent to nearly $513.6 million and profits up 7 percent to $226.4 million.
“We’ve probably got a few more years of growth ahead of us to be the right sizes in the right places,” Simmons said.
Simmons said the Seattle and Miami expansions were driven by the needs of the firm’s practice groups. Seattle focuses on health care, while Miami serves as a base for real estate and financial services. The firm expects both offices to expand eventually to full-service operations.
Office expansions, rather than new acquisitions, may be the model in the future. Despite Polsinelli’s growth during the year, Simmons said that growth always has been in the service of client needs.
“If that means we need to be bigger, we’ll be bigger. If it means we need to be smaller, we’ll be smaller,” he said.
After a slight decline in revenue in 2017, Husch Blackwell came back in 2018 with 1.3 percent growth, putting it at $353.5 million in revenue and making it the third-largest law firm in the state.
“I think we’d categorize it as a solid year,” said Paul Eberle, Husch Blackwell’s chief executive.
Profit, however, was down 3 percent to $138.1 million. Yet profit per equity partner rose 3.9 percent to $592,300. Eberle attributed that to an increase in the number of nonpartner attorneys versus partners.
Eberle also said Husch has seen an increase “of some note” in contract rates that had been relatively flat for the last three to four years.
“Headcount is up, rates are up, productivity is up,” he said. “That bodes well for the year.”
The firm now is well past the 2016 merger with Wisconsin-based Whyte Hirschboeck Dudek. For Eberle, that means “moving past conversation about the combination and really delivering on some of the reasons for the combination.” 2018 saw a less dramatic though still significant acquisition of 14 lawyers from Gardere Wynne Sewell in Texas, expanding the firm’s reach in that state.
Eberle said more additions could be in the firm’s future.
“There are a whole bunch of markets up and down our footprint that we’re not in today that we could see the possibility of being in in the future,” he said.
Yet he noted that it’s more important to find talented lawyers in the firm’s areas of focus, such as transportation, health care, real estate and technology.
“The metrics all are back-end measurements of how you’re doing for your clients,” he said. “What we really focus on is really understanding what our clients need.”
Madeleine McDonough sees 2018 as a year with no dramatic shifts that now has set the stage for a lot of growth.
“We viewed 2018 as an investment year, not necessarily a return year,” said McDonough, the firm’s chair. “But I think this coming year and the next one we’ll see some of the benefits of that.”
The firm’s revenue slipped a hair to $348.1 million, down 0.7 percent from the prior year. Profit, at $147.6 million, was down 1.1 percent.
Yet McDonough notes that Shook, Hardy & Bacon has added 30 new attorneys so far in 2019. It also recently opened a Los Angeles office, its third in California. McDonough said the group of lawyers is in “perfect alignment with our strategy,” working on issues such as that state’s data-privacy laws.
Shook is known primarily for product-liability litigation, but McDonough said it increasingly has branched into other areas of top-tier litigation in fields such as science, health, technology, IP and environmental litigation. That has enabled the firm to begin assisting product-liability clients in other areas.
“We’re able to help them with more of their business in a knowledgeable way, and it’s been fantastic,” she said. The firm tried 23 cases to verdict last year.
“We deepened our brand, strengthened our brand, got ready for growth,” McDonough said.
At the time that it was racking up 7.2 percent revenue growth and a 16.6 percent increase in profits, the firm was known as Stinson Leonard Street. But in late April it officially simplified its name to Stinson LLP.
The new name isn’t just shorthand, said Managing Partner Mark Hinderks. Following the 2014 combination of Kansas City-based Stinson Morrison Hecker with Minneapolis-based Leonard, Street and Deinard, the firm had a mantra of “One firm.” Though Hinderks remains in Kansas City, the firm doesn’t consider any particular office to be its headquarters.
“We made enough progress on that. We felt it was time to recognize that single brand,” Hinderks said. “We wanted to do this at a time when it was not just aspirational but when it was descriptive.”
The firm had $263 million in revenue and $137.1 million in profit in 2018, making it the “best year in our current configuration by far.”
“Pretty much everything that could go right did go right,” he said.
The firm also saw expansion in 2018. It acquired 14 attorneys from Dallas-based Lackey Hershman, expanded its presence in Denver and merged with the St. Louis intellectual property firm Senniger Powers.
Hinderks, however, said those additions came relatively late in the year.
“Most of the growth we had in 2018 was organic. It wasn’t from the additions,” he said. “We hope to realize more growth from those additions in 2019.”
In 2018, Missouri’s sixth-largest firm crossed the $200 million mark. With $203 million in gross revenue and well more than $600,000 in revenue per lawyer, Chairman Tom Minogue was pleased.
“Big picture, we attribute that to the strength of the economy,” he said. “When the economy does well, professional service firms do well as well.”
The firm’s main drivers are health care, corporate M&A and class-action litigation, with work ranging from international trade to helping bring the XFL to St. Louis. Other practice areas range from staid areas such as agriculture to emerging practices involving blockchain and cannabis.
Minogue said he expects the good economy to continue to provide work in 2019.
“Those kinds of fundamentals auger well generally and should continue to auger well for professional services firms for the near-term to mid-term future. Beyond that, I’m not sure anybody has any crystal balls, if you will,” he said.
Thompson Coburn maintains major offices in Los Angeles, Washington, D.C., and Chicago. That combination of offices in “money center cities,” Minogue said, works well with a headquarters based in more modestly priced St. Louis.
The firm also saw a 7.4 percent increase in profit per equity partner, to nearly $577,000. Of Missouri’s largest large firms, Thompson Coburn has the largest proportion of partners to overall attorneys.
“We tend to be a career-oriented place, and we promote a fair number of people to equity partner,” he said.
Lathrop’s revenue in 2018 fell 5.5 percent to $124.3 million. It was the largest drop among Missouri’s nine largest firms, and it comes on top of the firm’s 10 percent loss in 2017. Profit fell as well, down 2.8 percent to $47.5 million.
At the same time, the firm increased revenue per lawyer by 7.5 percent and profit per equity partner by 11.4 percent. Managing Partner Cameron Garrison said that reflects the firm’s focus on its priorities.
“We’re embracing the modern demands of clients, understanding the pressures they’re under and the changes they need in pricing and staffing and how you work the matters,” he said. “We see ourselves being very progressive in that arena.”
With 205 fulltime equivalent lawyers in 2018, Lathrop Gage has the smallest headcount of Missouri’s nine largest firms. Most prominently, it closed its 13-lawyer Springfield office last summer. At the same time, the firm acquired a boutique law group in Los Angeles, grew its IP practice in Boston and in early 2019 opened a Dallas office.
Garrison in particular cited the Los Angeles approach as emblematic of Lathrop’s path. The office primarily focuses on insurance-recovery and product-liability matters, which Lathrop regards as among its differentiator practices. All seven of the Los Angeles lawyers have joined since October 2017, rebuilding an office that had effectively closed.
“The success in Los Angeles is really reflective of building around these strengths the firm has,” Garrison said.
Armstrong Teasdale had the roughest year of any of Missouri’s large firms, though not for financial reasons. The firm’s managing partner, John Beulick, died Dec. 19.
Despite that tragedy, the firm’s revenue and profit both grew by more than 3 percent compared to the prior year, rising to $120.7 million and $58.3 million, respectively.
David Braswell, who was elected in February to succeed Beulick, said the leadership transition was “seamless for our clients.”
“I think we didn’t miss a beat with the services we provided,” he said. “I think there was a general sense at the firm when we lost John that we had a strong leadership team in place with our executive committee and our chairman, and we were well positioned to carry on.”
Profit per equity partner, however, declined nearly 5 percent to $594,500. Braswell attributed that to the firm’s expanded equity-partner ranks, which grew by eight in 2018.
Braswell said the firm makes no effort to restrict the ranks of its equity partners, saying that talented lawyers deserve to be rewarded.
“We consider ourselves to be a meritocracy,” he said.
In September, Armstrong Teasdale opened an office in Philadelphia, marking the firm’s first expansion to the East Coast. The move was followed with an office in New York. Both are led by former federal prosecutor Richard Scheff.
Braswell said the East Coast operations give the firm “boots on the ground in some of our clients’ backyards” while allowing Armstrong to retain its Missouri-based advantages.
“We can support those offices with attorneys here in the Midwest at lower rates and compete for sophisticated work in places like Philadelphia and New York and offer that competitive advantage to our clients,” he said.
Based on its 2017 revenue, Spencer Fane just missed the $100 million cutoff used by our MOney series to rank firms. But it was clear that at the rate the firm was growing, it wouldn’t miss the mark for long.
In 2018, Spencer Fane’s revenue grew 22.5 percent to nearly $111.7 million, and profits rose 30.5 percent to $54.8 million. Those figures aren’t a one-year fluke; it comes on top of 24 percent growth the prior year.
In fact, Chairman and Managing Partner Pat Whalen said 2018 is perhaps a better indication of the firm’s fundamentals. The earlier growth figures came partly from its 2016 combination with Denver-based Berenbaum Weinshienk.
Spencer Fane opened new offices last year as well, with two locations in Texas, and it added offices in Tampa and Minneapolis early this year. But Whalen said those additions aren’t reflected in the 2018 financials, due overwhelmingly to talent coming to the firm and to client demand.
“This is probably a more balanced combination of organic growth in addition to talent growth than an outright combination,” he said.
Whalen knows those numbers won’t last forever and that such growth is unusual in a legal market where demand generally is flat. Six years ago, the firm charted a growth plan it hoped to achieve by 2020. It actually hit its goals in 2018. Now, it’s looking at what’s in store for the next five to six years.
“We didn’t want to say, ‘Oh we’ve arrived two years early, let’s give ourselves two years off,’” Whalen said. “So we’re already deep in the throes of building that plan, whether it’s additional growth or additional industries. Whatever that looks like is yet to be determined.”
Editor’s Note: This story has been updated to correct an error in Spencer Fane’s 2018 profits.