Expansion pays off for K&L Gates, Reed Smith

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Pittsburgh's two biggest law firms said their aggressive expansion strategies in the U.S. and international markets paid off in 2013 as both generated record-high revenues.

K&L Gates said 2013 revenues jumped by 9 percent to $1.2 billion, from $1.1 billion in 2012, while Reed Smith's revenues rose by 6 percent to $1.08 billion, from $1.01 billion the prior year. Both are based Downtown.

K&L Gates said its growth resulted mainly from its January 2013 merger with Middletons, an Australian law firm that added 300 lawyers and four offices to the K&L brand. The firm also picked up significant business from office openings in Houston, Texas; Wilmington, Del.; and Seoul, South Korea.

K&L now has 2,000-plus lawyers in 48 offices worldwide.

Gains from the new locations helped offset declines elsewhere, K&L said. Overall, the firm's performance "continued to reflect a challenged legal marketplace," it said, as both revenues per lawyer and profits per partner slipped. Revenue per lawyer was $586.8 million, down from $616.5 million in 2012. Net income per partner for all equity partners was $594 million, down from $636.9 million in 2012.

While its energy, litigation and real estate practices had a strong year, demand was soft for corporate legal work, K&L said.

Reed Smith, the second-largest firm based here, credited its growth last year primarily to business from new offices in Singapore and Houston. Reed Smith now has 25 offices worldwide plus a global customer center in Pittsburgh.

It added nearly 100 lawyers last year for a total attorney head count of about 1,800 in the U.S., Europe and Asia. Among the new attorneys were 41 associates. In Houston, where Reed Smith had long wanted to launch a presence to tap the booming Texas energy markets, the office has already grown to 40 lawyers from 17 when it opened early in 2013. The Singapore office, opened in 2012, has about 10 attorneys.

The firm said profits per partner grew by 5.5 percent, to $1.14 million, up from $1.08 million the prior year. Revenue-per-lawyer was flat at $690,000, Reed Smith said.

"Our geographic reach is highly attractive to clients," Alexander "Sandy" Thomas, global managing partner, said in a statement on the 2013 results.

While it continues to evaluate new global locations, Reed Smith may also try to replicate the customer center located on Stanwix Street that handles back office tasks and provides technical support to all Reed Smith offices on a 24/7 basis. A similar facility could be opened outside the U.S., Mr. Thomas said.

Last year, Reed Smith was 19th largest on American Lawyer magazine’s annual ranking of the top 100 law firms in the U.S. while K&L was a notch higher at 18th.

Joyce Gannon: jgannon@post-gazette.com or 412-263-1580.


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