Daily Report Dozen
April 2007
AS THE OLD saying goes, you have to spend money to make money, and McKenna Long & Aldridge proved that adage true in 2006.
The firm invested in three new offices—two acquired during its merger with the firm where former New York Gov. George E. Pataki once practiced—and a bevy of name-brand, politically connected partners and lobbyists.
The payoff: revenue that rose 17 percent to $228.25 million, and partner pay increases of more than 20 percent. Equity partners’ pay rose $157,694 to $808,244, on average; average nonequity compensation climbed almost $60,000 to $300,862.
“I don’t know if you ever get to have a ‘10’ year, but I think it was an ‘8’ or ‘9’ for us,” said Jeffrey K. Haidet, the firm’s managing partner. He said the 2002 merger that created McKenna has settled in, and that plus last year’s healthy economy bolstered the bottom line.
Though Haidet said he can’t point to one practice group that led the revenue-generating charge, he said both the intellectual property and government affairs practices posted revenue growth in excess of 70 percent.
For the government affairs group, said practice leader Eric Tanenblatt, that meant lobbying revenue of $17.8 million in 2006, up from $10.3 million a year prior.
In the last two years, the practice group has doubled to about 40 lawyers and nonlawyer professionals, thanks in part to McKenna’s May 2006 acquisition of Pataki’s old firm, Plunkett & Jaffe, a six-lawyer government affairs shop with offices in Albany, N.Y., and Manhattan. Lobbyist Amy Solomon, who was assistant director of the intergovernmental relations bureau for former New York Attorney General Eliot Spitzer—now the state’s governor—is the Albany office’s managing director.
Haidet said the firm recently helped Plunkett & Jaffe client Silverstein Properties, a real estate developer, negotiate with various government entities about building Freedom Tower on the old World Trade Center site.
McKenna also opened a lobbying office in Sacramento, Calif., in November that made—and quickly lost—a prominent political hire. Richard Costigan III, the former legislative secretary to California Gov. Arnold Schwarzenegger, stayed for less than a month before boomeranging back to his old firm, Manatt, Phelps & Phillips.
“To say we weren’t disappointed with that would be ridiculous. Of course we were disappointed,” Haidet said, adding that McKenna plans to grow its California lobbying presence but that he doesn’t know yet whether the growth will be in Sacramento—where the firm now has just two lobbyists—or in other cities.
In all, Haidet said, the firm added 67 lawyers last year; headcount was 381 as of August 31 and it was 388 by year’s end. The firm also pushed equity partners’ profit up without dramatically slashing their ranks. There were 88 equity partners in 2006, compared to 91 a year prior. Leverage has been inching up, however: In 2004, it was 3.5; in 2005 it was 4.0; last year it hit 4.3.
When it comes to work, Haidet said the intellectual property litigation group had a “significant” year, which included two separate wins of about $50 million each on behalf of client LG.Philips LCD in patent infringement suits against Tatung Co., ViewSonic and other defendants.
In other litigation matters, Atlanta partner David L. Balser said his team won either injunctive or monetary relief for Cingular Wireless in 10 separate actions involving suits against data brokers, spammers and others seeking confidential information about or improperly communicating with Cingular customers.
The most significant case of the bunch, Balser said, involved the firm getting the first contested temporary restraining order in the country against Data Find Solutions—plus a $1.14 million judgment.
On the corporate side, Haidet said the firm focused on private equity work, with an emphasis on funds that invest in distressed businesses. McKenna lawyers also helped AGL Capital Corp., a subsidiary of AGL Resources, close on a $1 billion credit facility.
All that and more pushed the firm’s revenue per lawyer up to $66,321, the third-highest dollar increase in the Dozen, to almost $600,000.
Looking ahead in 2007, Haidet predicted growth in transactional work, which includes corporate and real estate finance, private equity and corporate compliance and investigations; and the government affairs and contracts practices.
“It’s an expanding portion of the economy,” he said.
Janet Conley is associate editor at the Daily Report.