Editor’s note: This is part of a series of articles detailing how law firms fared financially in 2021, leading up to the Am Law 100 report on April 26 and the Am Law 200 report on May 24. The full collection is available here.
Ropes & Gray posted double-digit increases in all key financial metrics in 2021, record results that chair Julie Jones said reflect the firm’s strategic industry focus on private equity, asset management, technology, and health care and life sciences.
“Those areas were all on fire,” Jones said.
Revenue at Ropes & Gray hit $2.67 billion in 2021, up 21.9% when compared with $2.19 million in 2020. Even after adding 75 lawyers to its overall head count, revenue per lawyer (RPL) was $1.95 million in 2021, a 15.4% improvement from $1.69 million the prior year.
Net income surged to $1.160 billion in 2021, a 29.9% increase when compared with $893.3 million in 2021. With 1.1% more equity partners, profits per equity partner (PEP) came in at $4.33 million in 2021, up 28.4% when compared with $3.37 million the year before.
Total lawyer head count on a full-time-equivalent basis was 1,372 in 2021, 5.7% more than 2020′s 1,297. The number of equity partners on an FTE basis was 268, up 1.1% when compared with 265 the prior year.
The firm’s results in 2021 follow results from 2020, another strong year despite the pandemic, when revenue improved by 15.2%, RPL by 10.7% and PEP by 19.8%.
Jones said 2021 was a “very strong year” for transactions across industries, as private equity buyers were active—the firm does work for nine of the 10 largest PE firms—along with deals in life sciences, technology and asset management, she said.
The improved revenue was fueled by gaining market share with the firm’s large clients, which is something the firm has been working on for a while, she said. The biggest part of that, she said, was growing relationships between the firm’s largest clients and new partners.
“You want to be a growth firm and that involves momentum as a partnership and that’s what I feel like what we’ve achieved as a firm. It’s not just about single-year results,” she said.
She expects the firm to continue to grow not only its lawyer head count, but its equity partnership.
“Philosophically, I believe that you need to grow your partnership in order to continue to deliver to your clients. That’s a really healthy thing, and we will continue to do that during the course of the year. I contrast that with some firms where you are trying to maintain your profits by culling your partnership,” she said.
Among transactions in 2021, the firm represented TPG Capital in its deal with AT&T that spun off DirecTV into a separate company in a deal valued at $16.25 billion; McAfee Corp. in the completion of its sale to a private equity investor group in a deal valued at more than $14 billion; and Blackstone in the $13 billion sale of Change Healthcare to UnitedHealth Group’s Optum.
The firm also represented Acceleron Pharma, a biotechnology company specializing in respiratory and blood disease treatments, in its $11.5 billion sale to Merck & Co, and Pfizer in its $6.7 billion acquisition of Arena Pharmaceuticals, a biotechnology company developing potential therapies for the treatment of several immuno-inflammatory diseases.
The firm has 11 offices globally, but in late December announced a new office planned in Los Angeles, which will open soon with seven partners who are mostly lateral hires. The firm has clients in the LA market, particularly in private equity, asset management and health care, including PIMCO, UCS, TPG Capital, but Jones said it’s also an “amazing market” for lawyer talent.
“We need to stay focused on moves like this, looking where there are markets and amazing talent, and industry focus,” she said.
The firm isn’t currently looking at launching another new office, but she said the firm is aware of some “interesting markets” that would fit the firm’s industry focus, such as Austin, Texas; West Palm Beach, Florida; and Salt Lake City, and also Colorado, because of the growth of the biotech industry there.
Jones, who moved into the chair role in January 2020, has managed through the pandemic. Expenses were up in 2021, compared with 2020, she said, largely due to increased associate compensation.
“Our team is working incredibly hard and with that came financial rewards. There are some people who wring their hands over that stuff. Not me. These are amazing lawyers,” she said.
As for the firm’s international offices, Jones said London was busy throughout 2021, due to many of the same demand trends as in the U.S.
“Our work tends to be highly integrated globally with the U.S. We grew our asset management practice there, PE was really busy, [and we] added life sciences [and] health care expertise in London,” she said.
The firm has four offices in Asia. Jones said the Tokyo PE practice was “going gangbusters,” and life sciences and pharmaceutical companies are keeping lawyers in Shanghai busy. PE was also busy in Seoul, South Korea, but Hong Kong was a “mixed story” in 2021, with successes but also challenges, because the city is facing geopolitical and macroeconomic challenges.
The firm is asking lawyers to come into the office three days a week, Jones said, but the firm will be nimble and react if there’s increased COVID spread from another variant. But, Jones said she’s enjoying being “back out there” and coming to the office and meeting with clients. She said clients are ready to do things in person.
While deal volume may have slowed in 2022 in some areas, such as SPACs, Jones said the transactional practice remains strong compared to any year but 2021.
“People are absolutely still undertaking very high-level transactions,” she said. “They are willing to put capital to work. It doesn’t have the frenzy of 2021, but I don’t feel any paralysis in the market.”
Work in the firm’s strategic industries remains strong in 2022, she said, adding that life sciences and real estate have stayed quite busy, along with the funds practice.
She said every elite firm capitalized on market opportunities in 2021, and she is proud of what Ropes & Gray’s partners accomplished by working extraordinarily long hours.
“It was a special year, and a hard year from a human perspective on our colleagues. I’m really grateful for our clients and super-proud of the Ropes & Gray family,” she said.