Shearman & Sterling held its headline financial numbers steady or nearly so in 2012, with gross revenue inching up 0.3 percent, to $752 million, profits per partner ticking down 2.6 percent, to $1.52 million, and revenue per lawyer dipping 0.6 percent, to $895,000, according to The American Lawyer's reporting. At the same time, the firm suffered a 12 percent decline in net income, to $240.5 million.
Despite the mixed results, M&A star Creighton Condon, who took over as the firm's senior partner when his predecessor, Rohan Weerasinghe became Citigroup's general counsel in April, has an upbeat tone when discussing the New Yorkbased global firm's strategy going forward.
"We've seen steadily improving performance over the course of the year, and we have tremendous momentum," says Condon, who describes the net income figure as a trailing indicator of Shearman's health. "We have a good, positive strategy and the mood of the firm is quite strong."
Last year was uniformly positive for the firm's disputes, projects, and leveraged finance practices, according to Condon. On the M&A front, he says, strong years in France and Latin America, and a robust fourth quarter in the United States, London, and Italy, were offset by the slowdown in China and much of the rest of Europe.
Strategically, Condon says, Shearman is not interested in a pursuing a merger with another firm and is instead accelerating a series of initiatives begun in 2011 that are aimed at sharpening the focus on core clients and practices (M&A, disputes, projects, leveraged finance, and regulatory). Gaining weight in litigationwhich accounted for 24 percent of the firm's revenue last yearis another goal. Toward that end, Shearman recently promoted three new dispute partners.
Discussing what he considers other key indicators of health, Condon says that Shearman's balance sheet is strong (the firm, he says, has no long-term and extremely little short-term debt); its partnership is young (41 partners have been promoted since the start of 2009); and it remains an attractive destination for lateral partners (23 have joined over the same period).
In 2012, the numbers show that Shearman's equity partner ranks declined 10 percent, to 158, with eight laterals arriving and 15 departing. The notable arrivals included Shanghai project finance specialist Sean Wang from White & Case and Lawrence Hill, who served as head of tax disputes and a member of the executive committee at the now-defunct Dewey & LeBoeuf. Weerasinghe left for a firm client, as did Christa D'Alimonte, who joined Viacom Inc. as deputy general counsel. In addition, the first half of the year saw Shearman lose a pair of respected M&A partners in Greater China, Gregory Puff to Akin Gump Strauss Hauer & Feld in Hong Kong, and Ling Huang to Cleary Gottlieb Steen & Hamilton in Beijing.
The firm's strong year in dispute resolution was highlighted by an international arbitration award of more than $2 billion won for Dow Chemical Company in compensation for Kuwait Petroleum Company ducking a joint venture deal during the financial crisis, and its work on behalf of Daimler AG in fending off a lingering claim for more than $4 billion brought by the Chrysler bankruptcy estate (the final dismissal came in January 2013). In terms of capital markets work, Shearman managed both the largest IPO in Mexican history and Mongolia's virgin sovereign debt offering. The firm also ranked as top lender law firm by volume in U.S. syndicated lending for M&A in 2012, with 97 transactions valued at $133 billion according to Thomson Reuters Loan Pricing Corporation.
Late in the year, Shearman's projects group negotiated a landmark agreement with Cameroon for a $4.5 billion mine, port, and railway. And in the firm's signature M&A department, a $4.3 billion Italian aviation purchase for General Electric Company anchored a flurry of deals announced in the fourth quarter.
"We've reversed the downward trend in our revenue line," says Condon, "and I'm pretty optimistic that we'll be improving results meaningfully in 2013."
This report is part of The Am Law Daily's early coverage of 2012 financial results of The Am Law 100/200. Click here to see an interactive chart comparing this firm's 2012 finances to other Am Law 100 and Second Hundred firms whose finances The Am Law Daily and its sibling publications have reported on to date. Final rankings and full results for The Am Law 100 will be published in The American Lawyer's May 2013 issue and on AmericanLawyer.com. The Am Law Second Hundred will be published in the June issue.