Covington & Burling had a strong 2009 by all accounts. Gross revenue jumped 9.79%, from $531 million to $583 million. Net compensation climbed 6.16%, to $250 million. The firm made a number of big lateral hires. And it had no reported layoffs of lawyers or staff and no deferrals of associate start dates.
But the firm also increased overall headcount by 16.34% (to 652.68 lawyers) and equity partner headcount by 15.3% (to 208.56). That explains, in part, why revenue per lawyer slid 5.29%, from $945,000 to $895,000. PPP fell by 7.69%, from $1.3 million to $1.2 million. The firm does not have nonequity partners.
Managing partner Tim Hester has declined to comment on the numbers.
Covington had a good year in its litigation, antitrust, and white-collar defense practices, three partners said. Stephen Anthony, who serves as vice-chair of the firm’s litigation practice, said litigation remained a “very strong, very robust” practice at the firm in 2009. “Clients continued to look to us as big case architects,” Anthony said.
Bruce Baird, who chairs the firm’s white collar defense and investigations practice group, said the firm has emphasized its white collar practice in recent years and sees it as an important source of future revenue. “That practice has grown exponentially over the past 10 years. We see that as an important part of our litigation group as a whole,” Baird said.
Covington’s white collar workload was strong last year, Baird said, but the firm did not see the uptick in securities enforcement work that some other firms have reported.
“For us, securities enforcement work was steady,” Baird said. “But we expect that it will be going up, both the number of investigations we see and in advising on regulatory issues.” Baird pointed the additions of Haywood Gilliam Jr. in San Francisco and David Kornblau in New York as examples of the firm’s emphasis on the practice area. The firm added more than 35 new clients in the securities enforcement practice last year, Baird said.
Covington also made several other big plays in the lateral market in 2009. Fourteen partner additions came when it landed a 50-lawyer IP group from the collapsing Heller Ehrman in October 2008. The firm opened offices in Silicon Valley and San Diego to accommodate the Heller group.
The firm also aggressively pursued former Bush administration lawyers. Covington brought back former DOJ antitrust chief Thomas Barnett, who returned to the firm in January 2009. In March, his replacement as acting antitrust chief, Deborah Garza, signed on to the firm. (Barnett and Garza now co-chair the firm’s antitrust practice.) And in September, another top Antitrust Division official, James O’Connell, signed.
Barnett said that antitrust work “was on an upward trend in 2009,” and that he expects that to continue into 2010. “We had a number of high-profile, large matters as well as smaller matters keeping us busy last year,” he said.
Garza and O'Connell from the antitrust practice advised Exxon Mobil on the company’s $31 billion acquisition of the Texas-based natural gas company XTO Energy. Merck & Co. retained Barnett and Garza in its $41.1 billion merger with Schering-Plough.
Other notable hires include former Homeland Security Secretary Michael Chertoff, who joined the white-collar defense practice; and Gerald Masoudi, now co-chair of the food and drug practice group and former chief counsel of the Food and Drug Administration.
The firm also lost a couple of high-profile partners to the Obama administration. Eric Holder Jr. left to become the attorney general, and Lanny Breuer left to lead DOJ’s Criminal Division.
Big corporate matters in 2009 included advising Procter & Gamble on the $3.1 billion sale of its prescription drug business and representing Medarex during its $2.4 billion acquisition by Bristol-Myers Squibb
The firm, which has traditionally had strong pro bono efforts, increased its pro bono hours by 30.9%.