Legal Law

Biglaw Agency desperately hopes they will reverse their downward spiral

Biglaw law firm Hughes Hubbard & Reed has been on a "downward trend" for the past five years, according to a report by Christine Simmons of, and the numbers back it up. During that period, gross revenue fell 27 percent (from $ 394 million in 2014 to $ 288.1 million in 2019), the number of attorneys by more than 80 attorneys, and the profit per equity partner to 1 , $ 41 million in 2019 (from a high (watermark of $ 2.145 million in 2014), and the company's profit margin is now ~ 18 percent, down from a high of 42 percent. As a result, the Am Law 200 ranking dropped from 72 to 116.

And that was all before the COVID-19 hit.

With the added trouble caused by the pandemic, the company dealt with more bad news. Hughes Hubbard took out a multi-million dollar loan for the paycheck protection program and laid off more than 30 people in July (insiders say they are "blind" to the cuts). Later that month, eleven international trade attorneys left the firm and took away a reported book of more than $ 12 million.

The law firm's corporate advisor, Kent Zimmermann, told

"But when a company's headcount, turnover and profitability drop sharply, especially if all of this happens in a good economy," said Zimmermann, "it could lead to people wondering what would happen in an uncertain economy. "

It was about the industry in general, not Hughes Hubbard's specifics, but concerns remain.

So, what's up? Simmons reports that Hughes Hubbard long survived in both large and really large cases:

More than a decade ago, Hughes Hubbard was embroiled in a variety of product liability disputes defending drug giant Merck over its controversial pain reliever, Vioxx, before Merck agreed to pay $ 4.85 billion for a settlement in 2007.

Hughes Hubbard also watched liability for tobacco-related products decline after former customer Lorillard was acquired by Reynolds American in 2014. Reynolds moved much of the Lorillard litigation to Reynolds' regular tobacco advisor on Jones Day, The American Lawyer reported in 2015, and Hughes Hubbard cut off some of his Kansas City staff as a result.

In recent years, Senior Counsel James Giddens has ceased to act as trustee overseeing the liquidation of the broker-dealer unit of Lehman Brothers Holdings. That ended a decade-long odyssey that generated more than $ 400 million for the company. During the heyday of the fall, some partners made millions of dollars a year. Giddens was also a trustee in the liquidation of the securities broker-dealer MF Global.

More recently, Hughes Hubbard's work for Airbus has slowed significantly.

And, as one source puts it, "The problem comes when you don't get another big case. There are lots of mouths to feed."

The company's chairman is aware of the recent end of these big issues but remains optimistic about the company's results:

Chairman Ted Mayer admitted that some important matters had ended and said in an interview that the company had "gone through a reorganization" in which partners began to improve their own practices. Now the company is seeing success, he said, as the number of partners with at least $ 3 million is the highest the company has ever had.

Hughes Hubbard is seeing an upswing in international legal business and pointing to expansion beyond the firm's usual boundaries, according to executives.

"We feel very good about keeping our budget and ending the year strong," said Mayer.

Mayer expects revenues to remain unchanged in 2020, but the company continues to work on "big new litigation". He said the rebuilding process "takes time and we are seeing tremendous success".

The corporate culture and commitment to pro bono matters and diversity continue to make the company a robust company:

"While some of the metrics it has released don't seem as robust or positive as people would like them to be," said New York recruiter Alisa Levin, "the company still has a strong culture and many respected practices." Not everyone has to make $ 5 million a year, she added.

Hopefully Mayer's planned turnaround means that lawyers' dismissals will be a thing of the past.

Kathryn Rubino is Senior Editor at Above the Law and host of The Jabot podcast. AtL tipsters are the best so please connect with her. Feel free to email her tips, questions, or comments and follow her on Twitter (@ Kathryn1).

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