Howrey banks on investment
31 March 2008
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One firm that missed out on a spot in last week’s The Lawyer US Top 50 was Howrey.
Office openings signal drive to keep panel places
One firm that missed out on a spot in last week’s The Lawyer US Top 50 was Howrey. The firm, which in the past decade has almost transformed itself into a litigation boutique (90 per cent of its fee income is derived from disputes of various kinds), posted a revenue of $475.2m (£237.58m) and an average profit per equity partner of $1m (£499,957).
The firm’s CEO Bob Ruyak says 2007 was particularly strong for Howrey, and in terms of fee income 2008 already looks like being a belter, with the firm 15 per cent up on this time last year.
But when you are talking to Ruyak, you quickly realise that financial results are not his key measure of success. Although not among the largest firms in the US, Howrey is working hard to distinguish itself in other, more creative ways than sheer bulk. And for Ruyak, it is the significant investment the firm made during 2007 that is a more reliable indicator of its success.
“As a litigation firm Howrey has to replace much of its business each year,” says Ruyak. “To ensure we keep doing that we’ve taken the decision to make some significant investments.”
Crucially, Howrey is looking at making the kinds of investments that will help ensure it retains its place on various (and usually shrinking) law firm panels. Last year the firm added offices in New York, Munich and Madrid.
“They’re small offices, but contributing,” says Ruyak. “We’re now in every country we think is critical, so there are no more offices planned for this year. But we’re already handling cases in 21 different countries.”
And while new offices may be off the agenda, Howrey’s international expansion will still continue this year. As www.thelawyer.com reported (12 February), later this summer the firm plans to launch an outpost in Pune, India. That move is part of a wholesale transformation at Howrey that has seen it not only invest significant sums in overseas offices, but embark on the wholesale hiring of non-legal support staff.
The non-legal arm, Howrey Global Services, includes ranks of accountants, financial advisers and engineers, totalling some 200 non-lawyers that clients and Howrey’s own lawyers can access. The firm already has a major facility in Virginia and the Indian launch is aimed at taking these non-legal services (which include trademark portfolio management, document management and e-discovery) to a new level.
“This isn’t outsourcing,” says Ruyak. “We take Indian graduates for six months after they graduate in the US, bring them into Howrey and train them. Then they’ll go back to India to our new facility in Pune and become very productive members of our team. Clients love it. They are 100 per cent behind it. Most of them have these facilities themselves.”
If Abbey business consultant Sophie Parkinson is typical, then Ruyak is not wrong. Parkinson confirms that the prevailing trend among major clients is to reduce the size of their legal panels and to look for added value from the reduced numbers of suppliers.
“The trend isn’t so much about reduction for reduction’s sake,” she says. “For us it’s about making sure we have the right suppliers doing the right kind of work. Along with technical expertise, we look for added value services such as secondees, data rooms and training - either low cost or no cost. The more work we give to fewer firms, the more we get from them in return. And then we can offer more business.”
This attitude is meat and drink to Howrey. As Ruyak says, the trend for reduced panels is not going to reverse.
“Clients should use fewer firms as they can get better leverage,” argues Ruyak. “It saves them money because they don’t have to educate new lawyers or firms on how they like to work, for example. Also, if you give us $20m more business, I can give you better rates because it’s cheaper for us. This is the truth.”
It is a persuasive argument.
An O’Melveny team that had been advising collapsed subprime mortgage company New Century Financial has just been slammed over its conduct by the bankruptcy court examiner Michael Missal of K&L Gates.
Word is the judge, Kevin Carey, was less than delighted with the delays to the investigation, apparently caused largely by O’Melveny’s decision to be, as Missal put it, not entirely “forthright”. The firm could be hit with the one sanction that really stings - a significant reduction in its final fee.
O’Melveny’s fee in this case is estimated at around $25m (£12.42m). How much of that it actually gets is now in the hands of Judge Carey.
What has been New York’s reaction to the record financial results revealed exclusively by The Lawyer last Tuesday (25 March)?
Don’t expect the The Lawyer US Top 50 to look the same next year. But there are signs that the litigators, cavalry-style, will come to the rescue. Indeed, as Alisa Levin of recruitment consultancy Greene-Levin-Snyder puts it: “The litigators are salivating.”
Firms that can tick not only the litigation box, but also bankruptcy (we’re thinking the likes of Paul Weiss, Weil and Sullivan), will be okay. For others, it’s going to be a long, tough year.
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