Law firm's trims pay off
Revenue per lawyer soars after Holland & Knight cut its equity partners by 40 percent.
By Scott Barancik
Published May 1, 2007
Holland & Knight, a 1,018-lawyer giant founded in the Tampa Bay area, distinguished itself from its peers in more ways than one last year.
No other major firm in the country cut as many equity partners. On the flip side: Holland's revenue per lawyer rose 21 percent, third-fastest among the country's 100 highest-grossing firms. Its profits per equity partner leapt 14.8 percent to $700, 000; the median increase was 10 percent, according to an American Lawyer survey.
The financial gains came in part because the firm had fewer attorneys doing more work.
The country's 14th-largest firm by lawyer head count closed or consolidated nine U.S. offices last year, including one in St. Petersburg. It trimmed expenses and support staff. It also ushered in structural and performance-based changes that are making it harder for young staff lawyers to become equity partners - and tougher for equity partners to stay that way.
By year-end, in fact, Holland had reduced its pool of equity partners a stunning 40 percent, from 332 to 198.
Painful? Yes, managing partner Howell Melton Jr. said Monday. But necessary if Holland is to effectively compete.
Before the changes, some equity partners at Holland were coasting, Melton said, leaving the burden on more aggressive colleagues. Meanwhile, associate lawyers were routinely being promoted to partner status with little attention to performance. That had to stop, said Melton, who is in the final year of a five-year term. "The reality is, to be an equity partner requires a greater time commitment, " he added. The era of tenured lawyers is over.
American Lawyer editor-in-chief Aric Press agreed. "They (Holland) may be an extreme example, but it's going on at a lot of (major) law firms, " he said. Big earners don't want to share the fruits of their hard work with partners who aren't working as hard or as successfully. And they wield power; if things don't change in their favor, other law firms will be willing to pay handsomely to bring them in.
For Melton, the new financial data were vindication. "We have focused now for the last 2 1/2 years on improving our revenues per lawyer, " Melton said.