In the second year of the pandemic, Greenberg Traurig rode the market’s insatiable appetite for deals to record revenue and elevated profits without significantly increasing its attorney ranks.
Revenue per lawyer tells the story: Last year, Greenberg Traurig added fewer than 40 full-time equivalent lawyers but grew its revenue by $270 million for an RPL increase of nearly 14%. The firm also exceeded $2 billion in revenue for the first time.
By contrast, in 2020, Greenberg added about 100 full-time equivalent attorneys and grew revenue by roughly $90 million for an RPL increase of 0.5%.
“It was a very busy year across the firm,” CEO Brian Duffy said in an interview. “Real estate, corporate, private equity, and capital markets on the corporate side were major drivers from a practice area standpoint.”
The firm billed 7.5% more hours in 2021 while total head count increased by just 1.8% to 2,209 full-time equivalent lawyers. Greenberg also raised rates 5.5% over the course of the year, exceeding its 4.6% rate increase of 2020. Duffy declined to share the firm’s realization rate but said it had improved over 2020.
Net income and profits per equity partner climbed by 19.8% and 19%, respectively, despite rising expenses from the return to the office, the resumption of in-person business development and travel, a 14% increase in nonequity compensation, and rising compensation expenses for staff members.
Duffy said the firm also moved information technology expenses that had been slated for 2022 up to 2021, including expenses for cybersecurity software, talent and training.
“We’re upgrading constantly,” Duffy said. “We talk a lot about associate demand, but IT professionals who are experts in data privacy and data security—especially as we’ve gone more remote—are only more important.”
On a net basis, Greenberg’s equity tier continued to grow at a glacial pace as the firm added two full-time equivalent equity partners in 2021. In the past eight years, the equity tier has grown by 16 full-time equivalent partners, whereas the nonequity tier has expanded by 187. The firm added fewer nonequity partners this year—12—compared with a net increase of 48 in 2020.
Total head count tells another story. Despite a net increase of 14 full-time equivalent partners in 2021, the firm actually gained 66 partners in total: Greenberg hired 84 lateral partners and promoted 28 attorneys to partner over the course of the year, while 46 partners left in lateral moves.
Asked how adding 66 total partners worked out to a net increase of 14 full-time equivalent partners, Duffy not only acknowledged a trend toward retirement, but also said some partners had decided to work half the time.
“We had more people go to a reduced workload, not necessarily being full time, which could make a difference on full-time equivalent versus the gross number of partners,” Duffy said. In conversations with the partners, Duffy said that some decided they liked working from home and felt they were in a financial position to not work full time anymore.
“We saw in our own organization an increase in retirement,” Duffy continued, “but what was more unique was people saying I want to cut back, I want to work less. For us, it was something we observed at a level we’d not seen before.”
For associates, Duffy said the salary hikes and bonuses Greenberg paid to keep up with the market were offset by productivity. The firm is paying market rate in New York—$215,000 for first-years—and it adjusts compensation by market. Greenberg’s associate ranks grew by 20 lawyers to 841 associates in 2021.
Globally, Greenberg Traurig’s London office didn’t close its fiscal year until March 2021, but Duffy said nearly all of the firm’s international offices did well with the exception of Mexico City, which saw ”business challenges” in 2021 as political uncertainty slowed mergers and acquisitions activity.
While the firm didn’t open any new offices in 2021, it has already added offices in Portland, Oregon, and two Long Island locations in 2022. The geographic expansion to the Pacific Northwest is part of the firm’s goal to become the nation’s preeminent national platform, Duffy said. The firm currently maintains 32 U.S. offices, five in Europe, three in Asia, and offices in Mexico City and Tel Aviv.
Barring runaway inflation and commensurate, dramatic interest rate increases, Duffy said he expects more of the same in 2022. While rising interest rates may depress deal flow somewhat, Duffy said he believes the amount of dry powder in the market will keep demand for real estate and private equity transactions high throughout the year.