US financials: Milbank leads with 11% rise in turnover as Reed Smith and Cadwalader stall

Madeleine Farman looks at the front runners and non-starters as reporting season kicks off

As the US financial reporting season begins in earnest, Milbank, Tweed, Hadley & McCloy leads the pack for turnover growth, while Reed Smith and Cadwalader, Wickersham & Taft both suffered a drop in revenues.

As Legal Business went to press, Milbank was the frontrunner with the highest revenue growth, up 11% last year to $855m, up $84m on the $771m the firm generated in 2015. Profit per equity partner (PEP) also increased by a healthy 13% to $3.1m. This brings strong growth after a lacklustre 2015, when the firm showed flat results in some of its key markets, posting a rise of just 1% in both PEP and revenue terms.

Latham & Watkins reported its seventh consecutive year of growth, announcing a 7% rise in revenue to $2.8bn as the firm added $173m to its top line. The firm broke the $3m mark for PEP for the first time, while revenue per lawyer also rose by 2% from $1.22m to $1.24m.

Global chair Bill Voge said the firm’s priority remains London and continental Europe. ‘We continue to analyse gaps in our global platform and continue to fill them both internally and through lateral hires. Simply, we continue to do what we have historically done and make sure we have the experts to satisfy that demand.’

Also impressing with a significant hike, Weil, Gotshal & Manges posted a revenue jump of 9% to $1.27bn with PEP increasing by more than 22% to $3.1m. This is in contrast to 2015, when Weil posted a 1% rise in revenue to $1.16bn and comes after a prolonged period in which the firm had struggled to sustain growth.

‘We worked hard to manage out lawyers last year, which naturally results in less revenue.’
Sandy Thomas, Reed Smith

In contrast, Reed Smith saw a 4% drop in revenue last year, slumping from $1.12bn to $1.08bn, following a 3% fall in revenue in 2015. However, the firm saw a slight increase in PEP, recorded at $1.11m, up from $1.05m, while the number of lawyers fell by 5% from 1,618 to 1,537. Global managing partner Sandy Thomas said the fall in top line was due to a substantial cut of 81 lawyers from total headcount.

‘We worked hard to manage out lawyers last year, which naturally results in less revenue. However this is consistent with our strategy; if you look at the other metrics they are all up.’

The results follow the firm’s hire of what is understood to be the largest group of lawyers from collapsed King & Wood Mallesons EUME – a move that adds 10% to its European headcount. The US firm has hired 50 fee-earners, including 17 partners, three counsel, 22 associates, one jurist, seven trainees and nine other support staff.

Cadwalader also had a second year of falling revenue, confirming a 3% drop in turnover to $452m in 2016, against a 4% drop to $463.5m the previous year. However, PEP increased 3% to $2.1m, while overall headcount fell 2% to 438.

The shrinking revenue coincides with the closure by Cadwalader of its offices in Beijing and Hong Kong, which were announced in the autumn, with the firm also set to shut its Houston arm as it refocuses its efforts on its core Wall Street client base.

madeleine.farman@legalease.co.uk