Crediting growth across its “power alley” practices in 2021, McDermott Will & Emery crossed the $3 million barrier in profits per equity partner and saw its revenue jump over the $1.5 billion mark for the first time.
The firm’s gross revenue grew 20.5% to $1.67 billion, up from $1.38 billion in 2020 and 42% higher than the $1.17 billion the firm brought in just two years ago.
Profits per equity partner were in line with the revenue growth, with the firm showing a 21% gain in 2021 to hit $3.05 million. Just two fiscal years ago, the firm’s PEP was $1.88 million.
Despite growing overall head count by 5.2% to 1,177 total attorneys, the firm’s revenue per lawyer was up 14.6% to $1.42 million.
McDermott achieved growth in profits per equity partner despite having a larger equity tier by 5%, reaching a total of 216 equity partners. Net income was up 27%, to $660 million.
The nonequity partner tier was also 5.1% larger, with 390 partners. The firm has 607 partners in all.
Asked about the financial results, chair Ira Coleman said he was more impressed with how that growth was achieved.
“Our disruption and dispersion in the market is what most interests me,” Coleman said. “We were able to garner market share in important, high-growth areas and do things that are more aligned with successful companies outside of the legal community. Our partnership has allowed us to pivot into these areas, and that is what great leadership does.”
Coleman suggested that the firm’s recent run of success is the product of a deliberate plan and quality “ingredients.”
“When you are cooking a great recipe, it still takes an hour or so to see how the dish is going to come out,” he said. “We want to use the freshest ingredients and have the best chefs. And we are confident that when we pull it out of the oven we will see fruit for our labor. We are running a farm-to-table spot.”
Coleman highlighted deal work in the health care, IP and energy spaces as drivers of profit growth.
The firm served as regulatory counsel to digital health company Babylon Health in its $4.2 billion SPAC merger with Alkuri, served as health care counsel to PE firm Harvest Partners on its $2.7 billion acquisition of Affordable Care and represented Meta in patent counsel work focused on data-driven patent strategy and actions meant to increase inventor diversity.
In the energy sector, the firm worked with Clean Path New York LLC (CPNY), an infrastructure project focused on aiding New York City climate goals, on a joint venture between several entities, focused on the delivery of renewable energy to New York City.
On the pro bono front, the firm touted its “McDermott Rise” program, which provides free legal services to Black and minority business owners and entrepreneurs. Coleman said the first year of the program saw 20 businesses get that assistance and over 100 applied. Last year they had 250 applications.
Coleman also highlighted the firm’s addition of quality “chefs” through its lateral strategy. The firm picked up 54 partner laterals in 2021. It also had 48 associates in its 2021 class. Many of those, Coleman said, were likely not people that would have considered McDermott as a home a few years ago.
“The trajectory is what we are all about,” Coleman said. “We are having discussions with and bringing on laterals that we weren’t able to before. You can’t just sell the future. People want to get a taste of what is actually happening. And we have a proven track record now.”
And, he contends, McDermott’s approach to management through pandemic has helped the firm make its case to lateral candidates.
“We stepped down on the pedal on recruiting during COVID,” Coleman said. “We got some of our best laterals ever. The pandemic acted as sort of an accelerant for those that didn’t like the messaging of their firm.”
Part of that growth was in the firm’s newest office in Singapore.
While many firms have gone to Hong Kong or Beijing in order to get a foothold in Asia, McDermott’s leaders felt that Singapore was the right move.
“Some might ask why open an office literally around the world during the pandemic,” Coleman said. “It’s the same reason we get into any area: We see opportunity and growth potential.”
The office currently has four partners and eight attorneys overall, although Coleman hinted that this number could increase relatively soon.
Elsewhere on the globe, the firm’s London office had a strong year, according to Coleman, though he would not disclose specifics of its finances.
“I’m so proud of that office,” he said. “They recruited well, their revenue and profits were up and we brought on some great people to build for the future.”
The firm is building a new office in London, and moved out of its old offices in anticipation of that change. He said the cost savings from not having a brick-and-mortar London office temporarily during the pandemic was helpful for firm finances.
While the latest financial results are good news, looking ahead, Coleman said, the firm is playing more of a “long game” when it comes to strategy.
“We want our people learning and becoming experts in areas that clients value,” he said. “If you look 30 years ago, practicing law was very different than it is now. Thinking about crypto, the metaverse and other amazing things that are going on, we want our people asking how that affects their area of law.”
