Amid Merger Talks, Patton Boggs MP Touts Strategic Plan
Newberry acknowledges that the 9/11 litigation gave Patton Boggs a cushion at a time when many other Am Law 200 firms were laying off attorneys and staffers as the U.S. legal services market cratered amid the global economic downturn. Rather than worry about cuts the firm could have made in the past, Newberry—citing a report released this week by Citi Private Bank’s Law Firm Group—said Patton Boggs is focused on streamlining its operations to compete in a “difficult market for legal services” that’s plagued by an “oversupply of lawyers.”
Like many large firms hit hard by the worldwide recession, Patton Boggs has watched its gross revenue steadily slip from a high of $348.5 million in 2008, a year before the bottom fell out of the U.S. legal industry. Profits per partner also have dropped precipitously since 2010, while revenue per lawyer has mostly remained stable at roughly $660,000, according to Am Law 100 financial data.
Patton Boggs saw gross revenue fall 6.5 percent last year to $317.5 million, while profits per partner plummeted 15 percent to $735,000. The layoffs announced Thursday will save Patton Boggs about $5.5 million on top of the $14.7 million in savings the firm realized when it laid off 30 lawyers and 35 staffers in March.
“We want to get leaner and meaner,” said Newberry, noting the recent expiration of the financial severance packages the firm agreed to earlier this year. “I think we’re making some tough decisions while some of our competitors get weaker.”
Patton Boggs is hardly the only member of The Am Law 200 to slash its payroll this year. Arent Fox; Day Pitney; Dickstein Shapiro; Fried, Frank, Harris, Shriver & Jacobson; K&L Gates; Jones Day; Orrick, Herrington & Sutcliffe; Paul Hastings; Pillsbury Winthrop Shaw Pittman; and Wilson Sonsini Goodrich & Rosati have all conducted layoffs. (Orrick and Pillsbury are now engaged in their own merger talks.)
A merger, Newberry said, is one of several options available to Patton Boggs as it seeks to grow. In his mind, New York and D.C. are the “two legal capitals” of the U.S. legal services industry. And with Patton Boggs—which Newberry describes as residing at the “nexus of government, law and business”—already a Beltway powerhouse, a beefed-up New York presence is high on the firm's agenda.
Patton Boggs opened in New York and Newark in 2006 with the addition of 30 lawyers from Latham & Watkins, including current toxic torts and product liability practice chair James Tyrrell Jr., who took the lead in the 9/11 litigation. Neither office has ever gained real traction—Patton Boggs subleased space in New York last year to Zuckerman Spaeder—and the end of the 9/11 cases started a stream of defections from the two offices. Now, Newberry said, Patton Boggs is taking steps to reverse that trend.
Along those lines, Patton Boggs was one of several firms looking at a potential deal with Dewey & LeBoeuf ahead of that firm's eventual implosion. While a full-on merger never came to pass, Patton Boggs eventually took on a handful of partners from the now-defunct Dewey, including John Nonna, an insurance expert and former member of the U.S. Olympic fencing team who became managing partner of Patton Boggs’ New York office earlier this year.
In another sign of Patton Boggs' commitment to New York, Newberry cites the firm's launch late last month of a public finance practice with the addition of four lawyers from Edwards Wildman Palmer, including New York partner Alphonso Tindall Jr. While Newberry declines to comment about potential merger candidates in Manhattan, he says Patton Boggs is keeping its options open.
California, which boasts the world’s eighth-largest economy, Texas, home to a booming energy industry, and London are three other markets the strategic plan envisions the firm making inroads. Newberry said Patton Boggs has long wanted to open an office in Houston, as well as establish a base in London. A London office would likely benefit his firm’s four Middle East offices, given that much of the transactional work generated in the region requires English law expertise. (Patton Boggs picked up Dewey’s Riyadh office last year and has outposts in Abu Dhabi, Doha and Dubai.)