Dechert was able to increase its net profit in 2012 while growing partner ranks and footing the bill for significant international expansion thanks to an 8.6 percent increase in gross revenue last year, the firm said.
After four years of decline in gross revenue from 2007 through 2010, the metric has grown for the past two years. Dechert's gross revenue of $671 million in 2011 rose to $729 million in 2012, according to numbers gathered by Legal affiliate The American Lawyer.
The firm maintained the same 44 percent profit margin year over year while seeing its net profit rise 6.5 percent from $298 million to $317.5 million. Profits per equity partner (PPP) dipped less than 1 percent from $2.11 million to $2.1 million, but the firm increased the equity partner tier by 7.1 percent from 141 to 151 equity partners.
After expanding into five new markets — Almaty, Kazakhstan; Dubai; Chicago; Tbilisi, Georgia; and Frankfurt, Germany — and adding 29 lateral partners in 2012, the firm saw a 7.5 percent increase in attorney headcount.
The total number of lawyers rose from 747 lawyers in 2011 to 803 in 2012. The nonequity partner tier grew 7.6 percent from 105 to 113.
Dechert Chief Executive Officer Daniel O'Donnell said there was no question the rise in headcount contributed to the rise in revenue, but he said that wasn't all of it considering those attorneys joined over the course of the year and there is often a 90- to 120-day cost associated with laterals before they start generating revenue for the firm.
The jump in revenue was due in large part, O'Donnell said, to strength across all of the firm's core practice areas. The highest growth areas in 2012 were portions of the corporate practice, such as private equity transactions and corporate deals in the energy space, the firm's finance practice in the real estate securitizations and structured finance space, and international dispute resolution, O'Donnell said. Those three areas grew at faster rates than any other practice, though O'Donnell noted the white-collar defense and investigations, financial services and commercial litigation practices all continued to be strong.
O'Donnell said individual lawyer productivity was about flat year over year. Dechert's revenue per lawyer (RPL) grew about 1 percent from $900,000 to $910,000. Firms with multiple offices outside of the United States — the most profitable market for legal services — tend to take a hit on RPL. O'Donnell said Dechert has been slightly affected by that phenomenon as it has expanded outside of the states. But he said that was less of an issue in 2012 because the firm's offices outside of the United States had a stronger year than they ever had, particularly in London and Paris.
Beginning in 2011, Dechert stopped the practice of prepaying some of the next year's expenses. So the firm did not prepay any of 2012's expenses or take any of 2012's profits and put them toward 2013 expenses.
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