TAMPA - Profits per partner surged 22.5 percent last year at Holland & Knight, thanks to tough cost-cutting measures and the law firm's largest-ever layoff.
But Holland, which started in the bay area, has miles to go before catching its peers.
A survey by American Lawyer ranked it 93rd among the country's 100 largest law firms in profits per partner in 2002, just four notches above its 2001 rank.
Holland's profits per partner rose to $435,000 last year. By comparison, Greenberg Traurig of Miami saw its average rise 13 percent to $780,000, while Foley & Lardner, a Milwaukee firm with a substantial Tampa presence, increased its per-partner profits by 24.8 percent to $630,000. The average increase among the top 100 firms was 6.9 percent.
Profits per partner - a firm's total profits divided by the number of so-called equity partners - is not simply a benchmark. At law firms, it is a crucial recruiting and retention tool. The higher the figure, the more tempting the job offer for many candidates.
Managing partner Howell Melton Jr. declined an interview request Friday afternoon, citing prior commitments. But statistics and earlier conversations with Holland executives suggest several reasons for the firm's relatively low profits per partner.
One is its market positioning. For years, Holland has positioned itself as a mid price law firm willing to provide virtually any kind of legal service from its vast array of offices worldwide. After his election in March, Melton said Holland would seek to focus on higher-margin legal specialties in the future.
Holland's history of rapid growth by acquisition - a trademark of former managing partner and gubernatorial candidate Bill McBride, who resigned in 2001 - has further hamstrung the firm. Unlike internal growth driven by freshly-minted law school graduates, acquisition-based expansions require the hiring of seasoned partners.
As a result, Holland's leverage ratio - associates vs. partners - is one of the industry's highest. In 2002, 37 percent of Holland's lawyers were equity partners, 13th highest among the top 100 firms. And 57 percent of its lawyers were either equity or nonequity partners, ranking it second in that category.
Some of Holland's standby arguments - that its lawyers are located in cities with lower costs of living, or that they devote an unusually high proportion of their time to pro bono, or volunteer, legal services - are decreasingly valid.
Holland's pro bono ranking fell 10 places in 2002 to 42nd, due to a reduction in donated hours per lawyer. And law firm acquisitions in high-cost markets such as Chicago, Boston and New York continue to refine Holland's middle-market profile.
Its Boston office, for example, is the city's second largest among nonlocal law firms, with 122 lawyers.
Holland undertook a number of cost-cutting measures last year, including replacing a patchwork of local vendor contracts with national ones, canceling its annual all-lawyers meeting, and letting go 60 lawyers and 170 support staff.
