March 6, 2012 7:00 PM
Early Numbers: At Husch Blackwell, Revenue and Profits Drop
Posted by Brian Baxter
Missouri-based Husch Blackwell has demoted 25 partners from equity status on the heels of a year that saw the firm’s gross revenue and profits per partner drop.
Husch Blackwell’s gross revenue dropped 4.7 percent to $266 million and its profits per partner slipped 7.1 percent to $525,000 in 2011, according to The American Lawyer‘s reporting. Last year’s sluggish financial performance follows a 3.5 percent decline in gross revenue in 2010.
Husch Blackwell saw its head count fall from 551 lawyers in 2010 to 520 lawyers last year. The firm also lost 30 lawyers in 2010, according to data compiled by sibling publication The National Law Journal. The Am Law Daily reported in late 2010 that Husch Blackwell had let go of at least 20 underperforming associates and non-equity partners.
In 2011, Husch Blackwell also reduced the size of its equity partnership by more than 4 percent to 158 and cut the number of non-equity partners by almost 7 percent to 169. Missouri Lawyers Media broke the news of the firm’s partner de-equitizations Monday.
“A year ago, our firm determined that we needed to reexamine the criteria for equity partner, something that had not been evaluated since our firms merged four years ago,” incoming Husch Blackwell chairman Maurice Watson said in a statement provided to The Am Law Daily. “Following an industry analysis, we determined that our criteria were lower than peer firms. As a result, 25 equity partners have been reclassified as fixed income.”
On April 1, Watson, a litigation partner in Kansas City and onetime senior aide to former U.S. Senator John Danforth, will become the firm’s sole chairman of Husch Blackwell after being elected to the post last fall. Real estate partner Gregory Smith will become CEO and managing partner, according to the firm.
Watson noted in his statement that amid the demotions, several Husch Blackwell fixed income partners had been promoted to equity status. A firm spokeswoman told The Am Law Daily in a a follow-up e-mail that three fixed income partners had received such promotions. The firm traded a lockstep compensation structure for a competency-based system several years ago.
“We continue to be focused on the long-term growth of Husch Blackwell, which includes ensuring that our compensation plan is competitive relative to other firms our size,” Watson said in his statement.
Husch Blackwell was formed out of a late-2007 merger between St. Louisâ€“based Husch Eppenberger and Kansas City, Missouriâ€“based Blackwell Sanders. The combined firm expanded again in 2008, picking up Chicago IP boutique Welsh Katz in a merger that made it a nearly 700-lawyer shop. The firm adopted its current name, Husch Blackwell, in August 2010, the same year it first broke into the Am Law 100.
Husch Blackwell did make some important moves in 2011. The firm absorbed 24 lawyersâ€”including prominent sports attorney Paul Jacobsâ€”from Denver firm Jacobs Chase in July. Husch Blackwell also forged a referral agreement with Scottish firm McGrigors, which agreed earlier this year to merge with London-based Pinsent Masons.
Husch Blackwell also kept busy last year advising Kansas Cityâ€“based client HR Block on its proposed $288 million acquisition of 2SS Holdings, maker of the TaxAct software. Corporate partner James Ash served as interim general counsel for HR Block before the company hired Tom Gerke to fill the position full-time earlier this year.
In November, a federal judge blocked HR Block’s proposed acquisition of 2SS on antitrust grounds. HR Block, which chose not to appeal the injunction barring the merger, had turned to Hogan Lovells for antitrust counsel on the matter.
This report is part of The Am Law Daily’s early coverage of 2011 financial results of The Am Law 100/200. Final rankings and full results for The Am Law 100 will be published in The American Lawyer’s May 2012 issue and on AmericanLawyer.com. The Am Law Second Hundred will be published in the June issue. An interactive chart of the financial results reported so far is available here. The chart will be updated as additional data is reported.
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