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Most firms entered 2019 with strong growth at backs

2019 was a solid year for Missouri’s largest firms. In hindsight, it probably will seem spectacular.

Of the nine firms with $100 million or more in revenue, eight saw revenue increases, and six increased their profit as well. The six largest firms — Bryan Cave Leighton Paisner, Polsinelli, Husch Blackwell, Shook, Hardy & Bacon, Stinson and Thompson Coburn — maintained their places in Missouri Lawyers Media’s MOney rankings.

Lathrop Gage (which has since become Lathrop GPM) moved from seventh place to ninth place. That’s not because the firm had a bad year — far from it — but rather because Armstrong Teasdale and Spencer Fane each grew enough to overtake it.

But after a promising start to 2020, the firms now face a dismal economy during the COVID-19 crisis. It’s too early to say what effect the pandemic will have, but 2019’s financial figures are a reminder of happier times.

1. Bryan Cave Leighton Paisner

With more than $869 million in revenue and profits of $324.4 million, BCLP remains Missouri’s biggest law firm by a long shot. Yet revenue and profits both were down 3.4 percent from the prior year. Revenue per lawyer and profits per equity partner also declined. BCLP was the only large firm in Missouri to see a decline in revenue compared to the prior year.

Steve Baumer, a St. Louis-based partner who succeeded Therese Pritchard as firm co-chair last year, said those declines were to be expected. It’s been just two years since the April 2018 merger between St. Louis-based Bryan Cave and London-based Berwin Leighton Paisner that created today’s global firm.

“There were distractions from the merger,” Baumer said. “We were very happy at the end of the year that we had gotten through the large heavy lifting on the integration projects.”

Lisa Mayhew and Steve Baumer

BCLP co-chairs Lisa Mayhew and Steve Baumer. Photo courtesy of BCLP

Last year, BCLP reported a 5 percent increase in profit compared to the combined financials of its legacy firms. As a result, despite this year’s decline the combined firm remains more profitable than its predecessors were on their own.

Baumer pointed to “bright spots” where the firm saw revenue growth in mergers and acquisitions, corporate and real estate finance, structured debt and commercial litigation in the United States. He also said the firm enjoyed a strong first quarter.

With the pandemic now marring the second quarter at a minimum, Baumer said BCLP has focused on the safety and well-being of its employees around the world and has a “through-cycle mentality” about the economic downturn.

“Certainly we have more moderated views of what 2020 might look like overall from a financial perspective, but we think we are very well positioned to take advantage of the opportunities that we think are likely to be presented to us,” he said.

2. Polsinelli

Missouri’s second-largest firm grew 13 percent in 2019 to $580.4 million in revenue. Profit increased even more steeply to $275.8, a 21 percent change. Profits per equity partner grew an astonishing 28 percent to nearly $948,000, marking the highest per-partner level among Missouri’s nine largest firms for the year.

It was also, not coincidentally, a year in which Polsinelli didn’t add any new offices. It didn’t have to: In 2019, the firm fulfilled a long-term plan to have a presence in every financial center in the United States.

“While you’re never done building a company because things evolve constantly, we really were able last year to use our platform to the fullest potential, and our clients really responded,” said Chairman Chase Simmons.

Polsinelli has no offices overseas, but it is dipping its toes into international practice. Its Miami office, which has been operating only since early 2019, recently added a Latin America practice to represent businesses and families who are conducting business there.

“Miami is the capital of Latin America, so that’s the place to be,” Simmons said.

Increasingly the firm is concentrating on areas where its top-performing practices overlap, combining, for instance, its health care, real estate and corporate practices in representing the senior living industry.

“A lot of our growth has been in those areas where multiple things that we do really well are relevant to a client or an industry segment,” he said.

Simmons said Polsinelli intends to keep growing organically in the areas where clients are demanding services.

“That can be a little less risky and [more] profitable, and I think we saw some of that last year,” he said.

3. Husch Blackwell

Missouri’s third-largest law firm saw one of its best performances in years. Revenue in 2019 grew to $380.3 million, up 7.6 percent compared to 2018. Profits were up 8.3 percent to $149.6 million.

Paul Eberle, Husch Blackwell’s chief executive, attributed the growth kick to the firm’s 2016 merger with Wisconsin-based Whyte Hirschboeck Dudek.

“2019 really delivered on many of the goals of that combination,” he said. “Greater depth, greater industry focus, greater geographic reach.” Earlier this year, the firm opened a small office in Salt Lake City and expanded its office in Madison, Wisconsin.

Eberle also said Husch has embraced alternative fee arrangements and creative pricing built around taking on entire portfolios of work for clients who are seeking to save money and streamline the number of law firms who do their legal work.

“We saw a lot of success with a lot of large portfolio business that came in last year because of our ability to really understand the costs and the profitability and the structure that the client needed,” he said. “In many cases we’ve been the beneficiaries of new work from large clients who are looking for their law firms to do more for them.”

Eberle said that, given the pandemic and the economic downtown, the firm has revised its financial outlook for the year. Having had an excellent year, Husch now hopes to keep it.

“We came into this year with a plan to be north of $400 million,” Eberle said. “I think that plan certainly has been revised down. If we could finish the year flat to last year, $380 million — that would be a real significant win for us.”

The firm will have new leadership next year to address some of those challenges. Catherine Hanaway, a former U.S. Attorney for the Eastern District of Missouri and former speaker of the state House of Representatives, will succeed Greg Smith as Husch’s chair in April 2021.

4. Shook, Hardy & Bacon

Missouri’s fourth-largest firm saw a modest uptick in revenue in 2019, rising 1.6 percent to $353.5 million. Yet profits fell by a similar amount, falling 1.3 percent to $145.7 million. Revenue per lawyer and profits per equity partner also were down.

Firm Chair Madeleine McDonough still saw the overall results as positive. During 2019, the firm opened offices in Atlanta, Boston and Los Angeles and expanded operations in Philadelphia. McDonough noted that many of the new hires arrived later in the year, so the revenue the firm intends to gain didn’t show up during the calendar year.

“It was really intended to put us in a good place for 2020 and beyond, and I’m very glad we did — especially given all the things going on in 2020,” she said.

Shook continues to build on its reputation as a litigation firm, particularly in products liability, IP, complex commercial and environmental litigation. McDonough said the firm promoted 12 partners last year and brought on a total of 70 new attorneys, some of them colleagues with whom the firm has worked for years on other matters.

“Other lawyers from other firms, including much larger firm and some smaller firms, have thought our platform worked better for their particular areas of practice,” she said.

Of course, it’s not easy to be a trial firm at a time when courthouses have been closed for months. McDonough said Shook’s trial teams have been using that time to prepare to pick juries even as they explore settlement talks. It’s not clear which method of resolution will prove most prevalent during a pandemic.

“I think each side of any litigation looks to this period of time to see what makes most sense strategically — should we press ahead or should we try to resolve earlier?” she said.

5. Stinson

Mark Hinderks, the managing partner of the state’s fifth-largest law firm, entered 2019 with modest expectations only to see them exceeded.

Stinson’s revenue grew 2.3 percent to $269 million, and profits grew six-tenths of a percent to $137.9 million. Hinderks said those numbers built on the firm’s best-ever financial year in 2018, which largely was based on contingency fee matters and other things that weren’t necessarily repeatable.

“We were less certain about 2019, but it turns out 2019 was better for us than 2018,” he said. But 2019 saw no backsliding.

“We checked every box. We had more noncontingent production than we budgeted, we had more contingent fee [revenue] than we expected, we had less expense in every category than we expected,” he said. “Pretty much everything that could go right did go right.”

Hinderks felt optimistic going into 2020, and the firm had a good first quarter. The pandemic-triggered downturn has tempered that optimism, and the firm continues to monitor collections as clients feel the squeeze.

Hinderks, who became managing partner in 2010, is entering his last year of leadership. Stinson announced in May that Allison M. Murdock, the firm’s deputy managing partner, will become its managing partner effective July 2021. Hinderks and Murdock helped to oversee the 2014 merger of Stinson Morrison Hecker and Minneapolis-based Leonard, Street and Deinard that resulted in the firm’s current form, as well as its 2018 merger with the St. Louis intellectual property firm Senniger Powers.

6. Thompson Coburn

Missouri’s sixth-largest firm finished the year with $209.5 million in revenue, up 3.2 percent from the prior year. Having first crossed the $200 million in 2018, Thompson Coburn seems likely to stay there.

Profits were effectively flat at $108.9 million, but the number of equity partners modestly declined, allowing profits per equity partner to tick up 2 percent to $587,000.

“The economy was hitting on all cylinders, we’ve got a diversified practice and most of those practices were hitting pretty well,” Chairman Tom Minogue said. “Professional services firms are derivative of how things are going.”

Of course, the economy isn’t exactly running hot anymore. Nonetheless, Minogue said the firm is well positioned to survive the downturn, as it has taken great care to manage expenses and has no debt.

“We think the combination of that — conservative financial management and a diversified portfolio — positions us to work our way through this to the other side in a sound and orderly way,” he said.

Demand in areas such as commercial finance, bankruptcy, employment and public finance has increased during the pandemic, he said.

“Anyone who’s doing that sort of work has just seen an explosion of work,” Minogue said.

Just before the downturn, the firm in March opened a new office in Dallas. Minogue said it was the first time firm leaders had admitted new partners and conducted orientation via videoconference.

“You’re doing some of the same things, but you’re doing them in a very different way,” he said.

The firm also is preparing for a transition in leadership. Minogue steps down as chairman in July and will be succeeded by Roman Wuller.

7. Armstrong Teasdale

Armstrong’s revenue grew 13.3 percent in 2019 to $136.8 million, launching it up one notch to the No. 7 spot on the MOney list.

Managing Partner David Braswell called it a “tremendous year for our firm,” driven largely by growth on the East Coast. Armstrong opened its Philadelphia operation in late 2018, followed quickly by the New York office in January 2019. As a result, that growth was captured in the 2019 financial year.

“That’s by design,” Braswell said. “We try to hire laterals toward the beginning of our fiscal year, we try to bolt on strategic acquisitions if possible at the beginning of the year. There’s a lag between the revenue those folks bring and the costs they bring, so you want to try to recover as much of that costs through revenue as you can.”

Braswell also chalked up the success to improvements in operating efficiencies, such as better monitoring of costs and management of projects that are operating on flat-fee arrangements.

“Part of it was strategic acquisitions, and part of it was just internal operating efficiencies we realized during the year,” he said.

Those strategic acquisitions continue with the addition of a Salt Lake City office in April, further expanding the firm’s national footprint. Braswell said those moves have put the firm in a strong position that has allowed it to avoid furloughs and layoffs seen at other firms.

“I think it’s possible at least that some of those measures were taken because they weren’t operating as efficiently as they should have going in,” Braswell said. “We were operating like a lean machine going into COVID-19, and that’s enabled us to maintain the folks that we have and not engage in any of those cost-cutting measures.”

8. Spencer Fane

Spencer Fane’s position in the yearly MOney rankings tells the story of its growth. Two years ago, it didn’t quite make the $100 million cutoff. Last year, it debuted at ninth place on the list. This year it jumped up a notch to No. 8.

The firm’s recent meteoric growth leveled off a bit in fiscal 2019. Firm revenues increased 17.1 percent to $130.8 million. That’s the single best performance by a large Missouri law firm in 2019, though it is less than the 22.5 percent from 2018 or the 24 percent growth the year before that.

Profits in 2019 grew by nearly 20 percent to $65.6 million, though they grew more than 30 percent the prior year.

“We were gratified by those numbers,” said Chairman and Managing Partner Pat Whalen. “We don’t manage to the numbers, we don’t try to engineer numbers. We very much view those numbers as an effect of what we’re focused on. They’re not what we’re focused on.”

Instead, the firm has spent the last year expanding its operations in Texas and opening offices in Tampa and Minneapolis. That diversification, plus the firm’s lack of debt, has allowed it to navigate the pandemic relatively unscathed, Whalen said.

Spencer Fane also spent a lot of time in 2019 clarifying the firm’s shared values. Four of its standards —collaboration, empowerment, resiliency and having fierce resolve to win for its clients — might appear on any firm’s list. But the firm’s top professed trait — humility — seems out-of-place in the hard-charging legal world.

Whalen insists it is not.

“If you’re not humble in your interactions with your clients, you cannot truly be an extraordinary lawyer, and if you’re not humble in your interactions with your colleagues it’s very difficult to have a workable, strong culture within the firm,” he said.

9. Lathrop GPM

Lathrop’s two-spot tumble to ninth place is, in a word, unfair. After a 10 percent revenue loss in 2017 and a 5.5 percent reduction in 2018, the firm turned things around. In 2019, revenue grew 2.4 percent to $127.3 million. The firm was finally growing, just not as fast as some of its fellow firms.

Of course, those numbers apply just to Lathrop Gage. As of January of this year, the firm completed its combination with the Minneapolis firm Gray Plant Mooty, resulting in today’s Lathrop GPM.

“We were happy with the financial performance of the firm, but most of all we’re ecstatic about finalizing the combination with Grey Plant Mooty and the formation of Lathrop GPM,” said Managing Partner and Chair Cameron Garrison.

Legacy Lathrop had bolstered its Los Angeles and Boston operations, and it opened a Dallas office in early 2019. Garrison said that growth allowed it to enter the combo in strong financial shape.

“They were two very strong firms that were doing really well coming together to provide an even better platform for our clients,” he said.

When the merger was announced last October, the combined firm was projected to consist of approximately 400 attorneys and have gross revenue of approximately $210 million. Such a revenue figure, if realized, could put Lathrop GPM in sixth place in next year’s MOney rankings.

Of course, the pandemic might well throw a kink into those plans. Garrison said the firm has concentrated on areas such as insurance recovery and labor and employment during the downturn. He also said that, rather than derail the integration of the two firms, it actually has helped.

“The ways that everybody has come together to weather this situation as a combined firm is something I’ve been just blown away by,” he said.