Number crunching: Quinn Emanuel
18 February 2013 | By Lucy Burton
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If anyone is looking for evidence that litigation is recession-proof, check out the stats for US litigation powerhouse Quinn Emanuel Urquhart & Sullivan.
Turnover at the US giant’s London outpost has ballooned annually since its City arrival in 2008 - up by 45.9 per cent (£8.5m to £12.4m) in 2010, 75 per cent (£12.8m to £21.8m) in 2011 and, most recently, 35.3 per cent (£21.8m to £27.5m) in 2012.
The challenge now is to continue this growth as the office celebrates its fifth birthday. Will it prove true that what goes up must, eventually, come down?
Maybe a little, as London co-managing partner Richard East does admit that 2012 will be a particularly hard act to follow. This, he says, was down to his firm winning key roles on a handful of major cases - one being the £1bn court battle between Rusal chief executive Oleg Deripaska and businessman Michael Cherney, another being the dispute over the Barclay brothers’ acquisition of the Maybourne Hotel Group.
But for now, lets talk money. As one of the most profitable firms in the US Quinn’s profit margin in the UK remained among the highest in the market at 68 per cent (£18.7m) in 2012, a figure that has barely budged since the firm started recording its results in 2009, when profit was £5.5m.
In 2012 this profit was spread across 10 partners (all equity) - an increase of three on the previous year after one lawyer was made up internally and two Allen & Overy partners, global international arbitration head Anthony Sinclair and arbitration partner Stephen Jagusch, joined the firm.
Despite this nudge in headcount the office still boasts an average profit per equity partner of £2.6m. Not bad, but the profit is shared among a small pool. Including partners, the firm has just 25 permanent lawyers. Revenue per lawyer currently stands at £1.36m. The partners include one female partner, Sue Prevezer QC, who co-manages the office in the East.
Although total headcount is still low, this marks an increase from 15 permanent lawyers in 2011. The firm instead relies on paralegals and contract lawyers for help during big cases (see box), a model that has helped to keep costs down. That said, the office is clearly looking to expand its number of permanent lawyers - East has already said via Twitter that the firm is looking for two or three new associates (of 3-5 years’ ) - with either arbitration or commercial litigation experience, or a combination of the two.
With expansion on the agenda then, it seems that if Quinn’s London office does come down it is unlikely to have a great fall.
In 2012 The Lawyer reported that firms are expected to increase the number of paralegals they employ by 18 per cent in the next five years. It’s a concept litigation machine Quinn Emanuel has tried and tested, and you could hardly say unsuccessfully. The firm is open about its widespread use of paralegals and contract lawyers, a model that has helped keep costs low.
In 2012, for example, the firm brought in 46 paralegals just to work on the Deripaska case - more than twice the number of permanent staff in the office.
Are rivals watching? Last year Skills for Justice research showed the number of people taking on paralegal functions will rise from an average of 42 per firm to 49 by 2017.
Notable recent London battles
Re Sigma Finance Corporation v In Re The Insolvency Act 1986 (2009). Co-managing partner Sue Prevezer QC argued and won one of the first judgments of the UK Supreme Court. “This case showed off our attribute of fighting on despite initial losses,” says East.
The European Directories restructuring (2010). East, along with of counsel Lucy Pert, acted for the junior creditors. “We won at first instance, which shocked the restructuring world,” says East. The decision was later overturned on appeal.
Quinlan v McKillen (2012)Partner Matthew Bunting and East saw off allegations of dishonesty against client, Irish property tycoon Derek Quinlan, in connection with a shareholders’ dispute regarding the ownership and control of hotel owner Coroin Ltd.
Top three cases since opening in London