[ News Article ]
Duane Morris Revenue and PPP Up Sharply in 2005
By Gina Passarella
March 2, 2006
The Legal Intelligencer
Duane Morris reported a 9.8 percent increase in revenue for 2005, up from $264 million to $290 million, and an increase in its profits per equity partner by more than 18 percent, according to financial data provided to The Legal Intelligencer.
Firm Chairman Sheldon Bonovitz said the number of attorneys will also increase through a merger within the next few years, echoing comments he made last fall.
Bonovitz said he wants to see the 600-attorney firm hit the 1,000-lawyer mark, and has plans on doing that within two to four years. He said it would most likely happen closer to the two-year range.
The firm has no plans of accomplishing that task strictly through lateral hires, which have played a significant role in the firm's growth over the past few years.
"We expense on average, I think, about $7.5 million a year in lateral recruiting," Bonovitz said. "We're really investing in the firm as we're building it."
Building the firm through a merger would most likely happen in Duane Morris' New York, Chicago or Washington, D.C., markets, Bonovitz said.
The firm is not looking to enter new markets, but rather fill out its existing offices, he said.
Michael Coleman of Coleman Legal Search said the firm is following its strategic plan and will most likely follow through with those goals.
"Duane Morris has developed some significant credibility in the marketplace," he said. "They have over the years announced what their goals are and have adopted a game plan to reach those goals."
The firm's profits per equity partner rose 18.4 percent from $570,000 in 2004 to $675,000 in 2005. The firm increased the PPP while adding to its total number of equity partners by 6 percent, moving from 125 in 2004 to 133 in 2005.
Revenue per lawyer went up 8 percent from $550,000 in 2004 to $595,000 in 2005.
Bonovitz said he looks to both the profits per equity partner and RPL as indicators of the firm's strength. He said the PPP "shows the return to the owners of the business" while the RPL shows the productivity of the firm's lawyers as well as an indication of the quality of the client base.
While growth in gross revenue is important, Bonovitz said it doesn't show much if the other numbers are going in the wrong direction.
"I've always said there's no prize for size," he said.
Bonovitz said the firm would have had even stronger financials had it not invested the $7.5 million in lateral hires in 2005.
The firm leader said he puts a lot of stock in a number not often discussed in rankings: inter-office revenue, i.e., new revenue generated from existing clients.
Duane Morris tracks the origination of business and follows the work generated from that business through other offices.
According to Bonovitz, the inter-office revenue exceeded 22 percent of the gross revenue in 2005, or $63.8 million.
He said it shows the effectiveness of the firm's ability to cross-market its practice areas.
One example of a practice area that did well, in part to cross-marketing of offices, was the firm's real estate group, he said.
"It's almost counterintuitive to think that real estate is something that you can leverage nationally," Bonovitz said because of the regional focus of most real estate deals.
The local Preferred Real Estate Investments was a client that ended up producing major deals in Chicago, Atlanta and Boston, according to Bonovitz. He said the firm's national platform was a big part of getting that work.
The national platform also allowed the firm's litigation group to have a strong year, along with the corporate and finance and intellectual property groups, he said.
Intellectual property was the fastest-growing group for the firm. It now has 63 attorneys, with 40 of them being patent lawyers, Bonovitz said.
Coleman said the financial numbers are impressive, given this is the second year in a row that the profits per equity partner have increased by at least $100,000. The PPP in 2003 was $470,000 and the firm had 145 equity partners.
He said he views these improved financials as phase two of the firm's overall plan. Phase one was moving from a regional firm to a national firm through a "flurry" of office openings, Coleman said, adding that the firm has remained true to its promise to hold off on more offices and instead strengthen its existing footholds.
He said phase three would be achieving the 1,000-lawyer mark.
"This is an aspiration or future goal that has credibility because the firm has a track record," Coleman said.
None of the numbers provided to The Legal Intelligencer include changes from Duane Morris' merger with 75-attorney firm Hancock Rothert & Bunshoft. Of the firm's 75 attorneys, 60 made the move to Duane Morris. That merger became effective on Jan. 1.
Bonovitz also gave credit to the firm's large marketing and business development team.
"Our increase in revenue is also, in part, attributed to our marketing and business development personnel," he said.
Marketing the Law Firm magazine ranked Duane Morris' marketing department second out of 50 for its leadership in the field, use of technology and the business development of its affiliate businesses.
Coleman said the firm has worked hard to bring in executive talent to carry out its business functions.
This article originally appeared in The Legal Intelligencer and is republished here with permission from law.com.