Reed Smith revenue up 3.7 percent

February 27, 2012 12:01 am

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Downtown-based Reed Smith saw its second consecutive year of revenue growth in 2011.

Profits per equity partner, however, dipped nearly 3 percent in a year that saw profit margins squeezed as expenses increased.

The law firm's gross revenue grew 3.7 percent from $958 million in 2010 to $993 million in 2011. Reed Smith saw an increase in demand in 2011, growing revenue and revenue per lawyer through a larger jump in billable hours than it saw in attorney headcount.

Revenue per lawyer grew 1.1 percent year over year, inching up from $661,000 in 2010 to $668,000 in 2011. The firm's billable hours increased about 4 percent to around 2.57 million hours, while headcount grew by 2.6 percent to 1,486 lawyers worldwide.

The equity partner tier dropped by three lawyers to 313 partners and the nonequity tier grew 4.8 percent to 392 lawyers.

Reed Smith global managing partner Gregory B. Jordan described 2011 as "a solid year in a tough environment."

He said demand is still sluggish and there is a lot of price pressure and competition. Even still, Reed Smith looked to continue investing in growth, which he said resulted in profits dipping. The firm brought on 33 lateral partners, a term used to describe lawyers recruited from other firms, across the equity and nonequity tiers in 2011, causing profits per equity partner to slip, he said.

Mr. Jordan said there was nothing in particular on the expense side that caused profits to slip, though part of the firm's expense increase can be explained through pay increases for nonequity partners. While the nonequity tier grew 4.8 percent, the pay to that group increased 7.4 percent to a total of $145 million in 2011.

Reed Smith also increased its first-year associate salary last year, but those associates were deferred until January 2012.

In 2010, Reed Smith paid Pittsburgh-based first-year associates $110,000 and Philadelphia-based first-years $117,500. When the firm's 25 first-year associates started in January, they were set to earn $125,000 in Pittsburgh and $130,000 in Philadelphia.

First Published 2012-02-26 23:20:54

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