Latham’s Voge takes long view as financials plateau at $2.6bn

Latham & Watkins has posted a 1.5 per cent rise in global revenue from $2.61bn to $2.65bn for the 2015 financial year, a sharp contrast to the firm’s double digit increase in revenue last year when revenue rocketed by 14.3 per cent from $2.28bn to $2.61bn.

The firm’s average profit per equity partner (PEP) effectively stayed flat at $2.9m while average revenue per lawyer (RPL) fell by 2.2 per cent from $1.24m to $1.22m.

Latham firm-wide chair Bill Voge, who described last year’s near $40m rise as “not pocket change”, said he felt “pretty good” about the results.

“We had such a tremendous increase in 2013 and, frankly, in my first year as chairman I was just hopeful we could at least maintain revenues,” said Voge. “Also, while we do focus on annual revenue growth it’s important to look at the four or five-year picture.”

The longer term view confirms Latham’s significant growth in recent years, with the firm having added $500m to the top line over four years and $350m since 2013.

Similarly Latham’s PEP two years ago stood at $2.5m and $2.3m in 2011.

“This shows that as our revenues have increased we’ve also had a meaningful increase in PEP,” said Voge. “This year we’ll keep pushing forward on many strategic initiatives for the long term, not necessarily just on year-on-year results. Our long-term results show a direct correlation to what we were doing five years ago and underline that as a firm we’re committed to a long-term strategy.”

In terms of practice areas Voge confirmed that there had been a slow down in capital markets-related work during the second half of the year which had had a negative impact on revenues but that this had been off set by “robust increases” in other areas.

“All of our litigation practice areas including IP, antitrust and white collar were up as was M&A activity,” said Voge. “We also saw a big boost in our new practice area of entertainment, sports and media.”

In November last year Latham opened an office in Century City, the business epicentre of Los Angeles’ entertainment industry, bringing in six partners from O’Melveny & Myers.

Firmwide highlight matters during the year include representing the London Metal Exchange before the Court of Appeal in the first judicial review of a recognised investment exchange’s consultation process; acting for Carlyle Group in its $8bn purchase of Veritas; and for the issuer on the $6bn National Commercial Bank IPO.

Voge said the decrease in RPL was partly the result of Latham having added 77 lawyers on an FTE basis during 2015 while foreign exchange fluctuations also had an impact.

Voge said Latham’s London office “continues to be one of our crown jewels”. Last year Latham was the largest overseas-headquartered firm in the UK, with its London office revenue rising by 27 per cent, from $210.6m to $267m.

Voge said some areas of Latham’s City practice including high yield and leveraged bank work had slowed down but he remained “bullish” on the firm’s presence in the UK.

Voge would not be drawn on which areas of Latham’s international network had performed best but said no part of the platform went down rather than up.

“Clients love the fact that we have global teams,” added Voge. “I’d say that’s the primary reason we’ve had such strong revenue growth over the past five years, the global platform. Our clients like what we’ve built.”

Earlier this week The Lawyer reported that Latham had added seven partners to its Hong Kong office through lateral hires, internal transfers and promotions, in a push to build up its private equity and leveraged finance practices.

The new hires include Clifford Chance’s Carlyle Asia relationship partner Simon Cooke, the sixth partner Latham has taken from Clifford Chance’s private equity group globally, following David Walker, Tom Evans and Kem Ihenacho in London and Oliver Felsenstein and Burc Hesse in Germany.

This week The Lawyer also reported that Latham is set to become the latest international firm to enter into South Korea, having submitted an application for a foreign legal consultant office.

Meanwhile Davis Polk & Wardwell saw flat revenue growth in 2015, with total fee income effectively the same as 2014 at $1.07bn.

Average profit per equity partner stood at $3.3m, up slightly on the previous year, while its total lawyer numbers rose more significantly by 7.5 per cent to 895.

The growth in headcount and the flat turnover means Davis Polk’s average revenue per lawyer fell by nearly 3 per cent from $1.23m to $1.19m.

Recent deals for Davis Polk include HNA Group’s $6bn (£4.17bn) purchase of Ingram Micro, the latest in a series of takeovers by Chinese companies, on which the US firm represented the target; Deutsche Bank’s sale of its stake in Chinese lender Hua Xia Bank to Chinese insurance group and Davis Polk client PICC for up to RMB25.7bn (£2.7bn); and the initial public offering of Dutch bank ABN AMRO.

Davis Polk did not comment on its financial results.