Reflecting an increase in the use of alternative fee arrangements, Crowell & Moring’s profits per partner decreased 6.1% from 2010 to 2011, falling to $845,000, according to our reporting.
Net income also dropped for the D.C.-based firm during that time frame by 12.1% to $80 million. However, gross revenue slightly increased, by 0.6%, to $329.5 million.
Crowell chairman Kent Gardiner said that the year’s numbers reflected the firm’s commitment to its clients through the use of alternative fee arrangements.
“That is the confluence of a firm that is very busy but has made the decision to go with their clients all-in on alternative fee arrangements,” Gardiner said. “The clients like that because we have skin in the game.”
The lower net income and profits per partner figures stemmed in part from the use of various fee arrangements, firm lawyers say. Some contracts are handled on a "success fee" basis, where if the firm achieves a goal, it is rewarded based on the result. Other times, the firm isn’t paid a part of its fee until the resolution of the matter. And some cases are handled purely on a contingency basis. Partners said they see the long-term strategy as an opportunity to build lasting relationships with clients.
“Your calling card is your willingness to be flexible on fees and the timeliness of the return,” Gardiner said. “It has us looking at growth and profitability on a multiyear basis.”
But despite some of the lower numbers, the firm has had its successes. In September, Crowell won a $919.9 million award for DuPont in a trade secrets case against Kolon Industries. The dispute revolved around Kevlar, a DuPont product most notably used in body armor. A former DuPont employee stole information about Kevlar and took it to Kolon. He later pleaded guilty to theft of trade secrets.
“It was something quite prominent and a hard-fought battle,” Gardiner said. “It was a signature case for us, done on a very substantial success fee basis.”
Crowell also had a Foreign Corrupt Practices Act conviction vacated for its client in December. This was the first trial against a corporate defendant charged under FCPA. And, the firm served as antitrust counsel alongside Arnold & Porter in the proposed AT&T/T-Mobile USA merger.
“I think this was the busiest year in the firm’s history,” Gardiner said.
Gardiner also pointed to several high-profile laterals, including former Wyoming Gov. Dave Freudenthal and the addition of four intellectual property litigators. Gardiner said that it’s part of the firm's effort to expand its healthcare, generic pharmaceutical, government contracts, and antitrust practices.
During the last year, the firm added five additional attorneys, but lost six equity partners. Overall, partner headcount dropped by one attorney. Gardiner said that retirements and partners going from equity to non-equity status also contributed.
This report is part of The National Law Journal's ongoing web coverage of 2011 financial results of Am Law 200 firms in the Washington area. Full survey results will be published in The American Lawyer's May and June issues.