Washington-based Steptoe & Johnson saw declines in both revenue and profits in 2009. But firm Chairman Roger Warin said he thought it was a "pretty good year." Last year "was all about simply trying to make it through the rapids," he said.
Steptoe's gross revenue dropped 5%, from $356.4 million to $338.6 million. Revenue per lawyer slid 4.47%, to $807,897. Net profits dropped 4.9%, to $130.17 million. And profits per equity partner decreased 3%, from $904,407 to $877,177.
Warin said Steptoe’s transactional practices were hit hardest by the recession and were much of the reason for lower revenue and profits. “But we actually exceeded our budget for a down year,” he said.
Steptoe’s litigation practices, which make up 56% of the firm’s business, did fairly well last year, Warin said, although intellectual property litigation in particular was down. Steptoe saw an uptick in Foreign Corrupt Practices Act cases, and its white-collar defense practice had its best performance in years, he said.
Steptoe’s regulatory practices, which make up 35% of its business, also stayed busy, Warin said.
The firm represented Seagate Technology and Mitsubishi before the International Trade Commission last year. It also took the lead in getting indictments thrown out against Blackwater security guards charged in the shooting deaths of 17 Iraqi civilians in September 2007.
Stephen Fennell, who chairs the litigation practices, said the firm expected an increase in lender liability litigation after the economy hit the skids. But that work didn’t materialize in 2009. Now “we’re starting to see an increase in that work,” Fennell said.
Steptoe’s headcount dipped slightly, from about 421 to about 419. Likewise, the equity partner ranks dropped 1.96%, from about 151 to about 148. (The firm does not have nonequity partners.) Four new partners brought books of business that added about $15 million to the firm’s revenues, Warin said.
Steptoe also saw a number of departures. Warin put those down, in part, to the “natural attrition in our associate ranks.” Referring to lawyers at all levels, he said, “We saw 2009 as a return to a more healthy level of attrition after 2008, where few people wanted to make a move.”
Steptoe trimmed $11.1 million from its expense budget through several cost-cutting measures, including renegotiating lease agreements for its Phoenix and New York offices and freezing associate salaries. Also, several members of the administrative staff retired. The firm did not lay off any lawyers or staff members, Warin said.
Because the firm’s workload remained down through the first three quarters of 2009, Warin said, the firm deferred the incoming class of associates until 2010. But it began calling some associates into work in the fourth quarter. “The fourth quarter was good for us, and we saw that January 2010 was equally robust,” he said.
The firm posted a 5% increase to its pro bono hours, which Warin attributed to lawyers having more free time.