Reed Smith global managing partner Alexander “Sandy” Thomas believes the level of talent at his 1,500-attorney firm has never been higher. Combine that with a year when client needs generated demand across the firm’s core practices, and the result was a 9.6% increase in revenue, with the top line hitting $1.43 billion.
Profitability gains were even more substantial, with net income increasing 12.1% to $475.7 million, and profits per equity partner up 13.4% to $1.74 million.
And revenue in Reed Smith’s London office, the firm’s largest, climbed to $243.2 million from $214.2 million, a 13.5% jump.
These gains came in a year when transactional work, both in traditional mergers and acquisitions and private equity deals, was particularly robust.
“Our clients that come to us for deal after deal after deal were very busy, and they engaged us in multiple deals at very high levels throughout the year,” Thomas said.
He noted that the firm had been successful in expanding the M&A practice both generally among existing clients and more specifically among clients in the firm’s five key industry sectors: financial services, life sciences and health, energy and natural resources, shipping and transportation, and media and entertainment.
One example of this came from the firm’s representation of Sony Music in its $430 million acquisition of music-recording business Kobalt Music Group.
Reed Smith’s finance practice also thrived in 2021. The firm guided Apollo Global Management in a $4 billion loan to SoftBank in a transaction handled primarily by the London team.
Thomas added that the firm’s insurance recovery group had an “incredible performance.” While some of this demand for recovery work was likely generated as a consequence of the COVID-19 pandemic, he said it was mostly attributable to the culmination of the group “playing at the highest levels for a long time.”
Reed Smith’s product liability and mass torts litigators were particularly busy in 2021, with a significant chunk of work coming from opioid-related litigation, representing generics distributor AmerisourceBergen in a number of matters of “all different shapes and sizes.” The firm also has significant teams serving Endo, Becton Dickinson and Bard in multidistrict litigation and other consolidated matters.
Litigators in London, meanwhile, tried multiple cases in the last year involving ship assets. A finance team advised Starz Real Estate on the first commercial real estate collateralized loan obligation in Europe, a £219 million GBP-equivalent dual currency transaction. Add this to the Apollo work, and the 310-lawyer London office’s activity collectively serves as a strong representation of the overall strategy of the firm.
Elsewhere in the world, Thomas said, Reed Smith strengthened its international arbitration capabilities in Singapore. In continental Europe, the finance practice in Germany offered integral assistance to some major nonperforming loan transactions, while lawyers in Germany and France, along with London, contributed significantly to U.S. data privacy and security work.
Head count across the firm was largely stable over the course of the year, with slight downticks in overall attorneys and both tiers of the partnership all falling within the expected variance of any given year, according to Thomas.
Compensation costs did increase for the firm’s associates, echoing an industrywide pattern, but Thomas said the firm had prepared for this likelihood.
“The really important point in all of this is to not lose sight of the fact that as compensation costs grow, the demand for high-quality associates is very high, not just internally in the firm, but from our clients,” he said.
The firm also advanced 31 associates and counsel to partner at the start of 2022, while promoting 35 associates to counsel. Thomas said these promotions, as well as the firm’s 2021 lateral hires, all carefully tracked the firm’s five-industry-focused strategy.
He highlighted a five-partner corporate team that joined from Baker Botts in Houston, a series of entertainment hires from Loeb & Loeb in Chicago, a pair of disputes attorneys focused on energy and natural resources in London and Dubai, and two former assistant U.S. attorneys in the Eastern District of New York who are part of a multiyear plan to grow the firm’s investigations practice.
And while Reed Smith hasn’t opened a new office since launching in Brussels early in 2020, Thomas said that there are geographies the firm is looking into, noting that he and his colleagues go through an active “footprint review” at the board level throughout the year.
Thomas also highlighted a record pro bono year for the firm, and he says that, for better or worse, this work isn’t slowing, as lawyers are responding to a global public health crisis, social upheaval, natural disasters, and now war.
“As proud as we are of a record pro bono year … we have to respond to what is unfortunately an increase in demand for pro bono hours,” he said.