‘Universal slowdown’ adds up to a less dynamic year but Kirkland becomes first $4bn law firm

Thomas Alan finds revenue growth tempered at many US firms with 2019 proving a sterner test for the global elite

It would have been difficult to match the rampant advances of US firms among the Global 100 in 2018 and so it has proven. A handful of the largest players endured quieter years with uncertainty identified as the primary culprit, but the big picture is still one of global growth, as Kirkland & Ellis became the first law firm in the world to hit $4bn, just two years after breaking the $3bn barrier.

While Kirkland managed revenue growth slightly slower than the blistering pace it set in recent years, it has kept its crown as the world’s highest-grossing law firm, with global turnover up 10% to $4.15bn. It led on an array of major deals throughout 2019, including advising pharmaceutical research company AbbVie on its proposed $86.3bn acquisition of Allergan alongside Debevoise & Plimpton, Davis Polk & Wardwell and Weil, Gotshal & Manges.

Meanwhile, Latham & Watkins upped its global revenues 11% for the second consecutive year to $3.77bn, while profit per equity partner (PEP) rose just shy of 10% to $3.78m, an improvement on last year’s 6% rise.

‘There was a universal slowdown in M&A last year, but we are positioned to deal with things like that well.’ Tamara Box, Reed Smith

The performance was driven by a series of lucrative mandates. The firm’s list of European deals in 2019 included work on the liquidation of travel group Thomas Cook, advising EQT on the financing for the acquisition Nestlé’s $10bn skincare business, and Interswitch on its partnership with Visa. Global deals included advice to Mellanox Technologies in its $6.9bn sale to NVIDIA Corporation.

‘2019 was a standout year across the board,’ said global chair Richard Trobman. ‘London had a spectacular year. The office grew at a faster rate than the firm did [globally]; it grew well in excess of 15%.’

In a gift for its outgoing chief executive Steve Immelt, Hogan Lovells saw modest improvements in 2019, with revenue rising 6% to $2.25bn, compared to a 4% rise over 2018. PEP, meanwhile, rose a healthier 9% to just over $1.5m, despite the firm growing its equity ranks by 13 to 536. Elsewhere, Gibson, Dunn & Crutcher continued its striking 24-year streak of revenue growth – up 10% this time to break the $2bn barrier.

However, it is clear from the US results so far that 2019 revenue growth was generally harder to come by than in 2018. White & Case underwent a slower year globally, upping global revenue 7% to $2.18bn, a marked decease on the firm’s 14% hike over 2018. PEP went up 8% to $2.59m, albeit against a drop of ten equity partners to 332 worldwide. In the City, revenues fell 4% to $337m after uncertainty in the initial public offering and M&A markets resulted in a difficult start to 2019.

‘Globally, project finance continued its run of form,’ says White & Case executive committee member Oliver Brettle: ‘Capital markets in the US did very well; the overall performance in the US was very strong, particularly in New York, as per our strategy.’

Paul Hastings also posted a slower rate of revenue growth globally, with turnover rising 4% to $1.26bn compared to last year’s 9% rise. Sidley Austin was another that lost pace, failing to surpass last year’s 9% growth as its top line increased 5% to $2.34bn.

Reed Smith, however, did manage to improve on last year’s performance. Firmwide revenues rose 6% to $1.25bn, while PEP was just behind, growing 5% to $1.32m.

‘We’re a full-service business in most of our offices. We don’t want to be a support to clients in boutique or niche areas,’ says Reed Smith EMEA managing partner Tamara Box. ‘We are beautifully hedged when things go up and down. There was a universal slowdown in M&A last year, but we are positioned to deal with things like that well.’

For insight on elite US firms’ performances in London, see ‘Vantage points’.

thomas.alan@legalease.co.uk

Global 100 – 2019 results disclosed so far