The Am Law 100, the Early Numbers: Baker & Hostetler's Madoff-Fueled Run Slows
After three years of extraordinary growth tied to its work on Bernard Madoff–related litigation, Baker & Hostetler saw its financial performance level off last year, according to The American Lawyer's reporting. While the firm's gross revenue rose a still-healthy 6 percent, to $540 million, its profits per partner were essentially flat at $935,000.
“It was a solid year for us,” chairman R. Steven Kestner says. “We saw some growth across all practice areas, with the strongest being litigation and employment. Our non-Madoff work was up 14 percent.”
That solid year followed a spectacular run during which Baker & Hostetler benefited tremendously thanks to its role as counsel to Irving Picard, the firm partner serving as the trustee liquidating Bernard L. Madoff Investment Securities. The sprawling assignment has boosted the firm's overall financial performance to the point that gross revenue and profits per partner both surged 16 percent on average each year from 2010 through 2012. In 2012 alone, the firm reaped $157 million in Madoff-related fees, 30 percent of its total revenue for the year.
Last year, with the Madoff work tapering off, Baker & Hostetler took in $86 million from the engagement, according to documents filed with the court. The firm does not comment on its fees, which are paid by the Securities Investor Protection Corporation and do not come from Picard’s recoveries for investors. To date, those recoveries total $9 billion.
Baker & Hostetler's gross revenue might have been higher in 2013 if not for its agreement last August to turn over $41 million to the Howrey bankruptcy estate. The Chapter 11 trustee tasked with recovering money for that defunct law firm's creditors maintained that the estate was entitled to portions of two contingency fees totaling $92 million that Baker & Hostetler received after it hired 11 Howrey partners working on a major antitrust case involving the dairy industry. Kestner declined to comment on the Howrey settlement.
The firm's revenue per lawyer rose 7 percent last year, to $675,000. Its overall head count decreased by 12 lawyers, to 798, while the equity partnership added four lawyers, for a total of 151. The firm ended 2013 with 207 nonequity partners, three more than the year before.
Baker & Hostetler's head count is set to rise this year with the addition of 68 lawyers coming aboard from Philadelphia-based intellectual property boutique Woodcock Washburn. The merger between the two firms, which was announced in November and took effect Jan. 1, will give Baker & Hostetler new offices in Seattle and Atlanta, in addition to Philadelphia.
This report is part of The Am Law Daily's early coverage of 2013 financial results of The Am Law 100/200. Final rankings and full results for The Am Law 100 will be published in The American Lawyer's May 2014 issue and on AmericanLawyer.com. The Am Law Second Hundred will be published in the June issue.