Despite facing considerable reverses in the wake of the 2008 banking crisis – which saw a sharp fall in revenues and profits in its 2009 financial year – the US-based Latham & Watkins looks to have settled back into a solid upward track.
The Los Angeles-bred firm had another robust year in 2012, reinforcing its position among the global elite with a 6% growth in net profits to over $1bn. After achieving top quartile growth for the 2011 financial year, revenue growth was this time more subdued, rising 3% to $2.22bn while profit per equity partner (PEP) rose by 8% to $2.4m. In the last full boom year of 2007, Latham posted revenues of $2bn, against PEP of $2.27m.
During that time Latham has edged up from the seventh largest law firm in the world to third, with only Skadden, Arps, Slate, Meagher & Flom generating higher net income.
2012 was a relatively steady period for Latham, which didn’t launch a new office during the financial year but did make a significant move in Germany in May 2013 after announcing the recruitment of three partners in Dusseldorf from Shearman & Sterling.
Other strategic hires saw the firm recruit capital markets partner Okko Behrends in Germany from Clifford Chance (CC). The firm has continued to invest in its London arm, which is now the fifth largest foreign-owned practice in London and the second largest in revenue terms, generating a turnover of £125m in 2012, a growth rate of 4% on the previous year.
City expansion has been backed up this year with a series of major hires, including litigation partner Simon Bushell from Herbert Smith Freehills, CC private equity head David Walker and Norton Rose finance partner Dean Naumowicz.
During the 2012 financial year, Latham recruited a total of 21 partners externally, a modest figure for a 600-partner practice.
‘As it’s a challenging market, we were pleased with our results, but it is the strength of our global platform that is driving our revenues and our ability to execute cross-border deals, so it’s nice to see that our investments have paid off,’ says Andrew Moyle, a partner in the London office and a member of the firm’s executive committee.
In terms of deals, Latham has been involved in some high-profile mandates. The firm advised on Manchester United’s IPO on the NYSE. The firm also advised Watson Pharmaceuticals on its €4.25bn acquisition of the Actavis Group. This deal made Watson the third largest global generics company, with expected revenues of approximately $8bn.
‘If there are only three deals out there, we always want to be one of the three firms to get the call. This is our focus,’ says Moyle.
The firm continues to map out distinct territory for a US-bred practice in combining substantial scale and global reach with the upper market focus usually associated with smaller Wall Street leaders. So far this strategy has delivered, with Latham unquestionably being one of the most successful global law firms of the last 20 years.
Nearly a third of Latham’s lawyers are outside the US and it has maintained offices in many major markets for over a decade. Given this experience of the Asian market, the firm is mindful of the potential pitfalls of over reliance on Asia.
‘We have learnt the importance of having a long-term commitment to a region – some firms out there are seeing Asia as a panacea to their problems in Europe and it’s a mistake for firms to think Asia is an easy target to make a quick buck,’ says Moyle.
The firm’s practice ranks strongly in The Legal 500, with 177 recommendations for 2012, against 145 three years ago. The firm – which is the highest ranked practice in The Legal 500’s US edition, has a total of 45 top-tier recommendations globally, up from 35 three years ago.