A highly symbolic year for DLA Piper, with the rapidly-assembled business services juggernaut becoming the world’s largest law firm in revenue terms with income up 9% to $2.44bn, while profit per equity partner (PEP) was up by 6% to $1.3m.
The 1,300-partner firm – which now has nearly 80 offices worldwide – also made ground in pushing up the value chain, a key aim behind the 2011 appointment of former Linklaters head Tony Angel as global co-chair. Profit per lawyer (PPL) was up 10% annually to around $150,000 as the number of lawyers decreased by 3% to 4,036 firm-wide.
Co-chief executive Sir Nigel Knowles says that the firm has been focused on ‘right-sizing’ its practice and taking a closer view on profitability throughout the year. DLA launched a review of its UK practice in 2012, which led to the closure this spring of its ten-partner Glasgow office and the centralisation of its UK document-production team, which is expected to lead to around 100 job losses. The firm has recently divested its 50-strong defendant insurance arm with the last of the team moving to Mills & Reeve’s Birmingham office from 1 July.
‘We’ve known for some time that we don’t have the profit per lawyer we deserve and we’ve put a lot of energy into improving that,’ says Knowles.
As part of its attempt to upgrade its practice, DLA has put more focus on developing its London arm, which is generally regarded to have had an uneven run since the 2008 banking crisis. This is in contrast to the firm’s New York office, which has progressed in recent years.
Despite the shift in focus, Knowles maintains the firm is intent on maintaining a distinctive global model rather than attempting to copy traditional legal leaders that are driven by transactional work.
‘We don’t ever want to be regarded as a global elite, like a Magic Circle firm, we want to be the leading global business law firm and I think we are increasingly able to say our strategy and the implementation of that strategy show that we’ve called the market right but, more importantly, what we’ve called right is what clients want,’ he says.
The firm, which maintains two profit pools for its US and European/international businesses, saw revenue split fairly evenly between the US (49%) and EMEA and Asia (51%). Following its integration with Australian ally Phillips Fox in 2011 it now generates around 13% of revenues from the wider Asia-Pacific region, where it has nearly 650 lawyers.
Despite its scale, the firm has only recently begun investing in earnest in South America, launching a Mexico office in February 2012 with a four-partner team recruited from US practice Thompson & Knight. The firm also expanded its reach in Africa in 2012, widening its network of referral firms with five new additions: Rwanda’s Equity Juris Chambers; Uganda’s Sebalu & Lule Advocates; Botswana’s Minchin & Kelly; Juristconsult Chambers in Mauritius; and Ethiopian practice Mehrteab Leul & Associates.
Knowles told Legal Business that growth in DLA’s global network will inevitably slow in the years ahead but highlighted its practice in Turkey – where the firm launched in Istanbul in 2010 – which has gone on to be the largest law firm in the country. In January, the firm also launched an office in Seoul and sealed an alliance with Indonesian law firm Ivan Almaida Baely & Firmansyah in May 2013. The firm is now looking to Canada, where Knowles says it hasn’t yet found the right match. ‘We’re never going to open as many offices in the future as we have in the past,’ says Knowles.
Likely to impact on the 2013 figures is DLA’s decision in May last year to move to an all-equity partnership, though given the flexibility of DLA’s compensation system this will impact primarily on its performance ratios rather than the firm’s underlying finances. The shift – which reflects a previous move in its US business – last year generated around £30m in capital contributions from the near 500 non-equity partners in the DLA international side of its partnership. Comments Knowles: ‘It is underlying profitability and the ability to pay at market rates that is more important than the misguided vanity of PEP.’
With the help of process-oriented Angel, Knowles argues that the firm is now compellingly positioned globally. ‘I would not exchange our firm for any other in the market right now. We’re in great shape.’