Dechert followed a lackluster 2020 with a stellar financial performance in 2021 that saw the company increase revenue by 25% and take an even bigger step in earnings per partner.
According to Dechert CEO Henry Nassau, all of Dechert’s capital-facing teams – real estate securitization, private equity and fund formation, among others – have had extraordinary years, both because of the quality of their lawyers and the amount of capital floating around the world. And while the firm’s litigants did not match the volume generated by its negotiators, they were busier than in 2020, as the practice of product liability had its best year ever.
Dechert’s revenue topped $1.3 billion for the first time, while earnings per partner jumped around 50% to $4.2 million, a figure that would have ranked the firm 15th. of last year’s Am Law 100.
“2021 was one of the history books,” Nassau said in an interview. “We are incredibly proud of the firm, our partners and associates and the rest of our business community. It has been an extraordinary year with extraordinary demand in the context of another difficult year of COVID. Everyone has provided our clients with innovative, insightful and excellent service, while finding time to transition from pro bono projects to diversity initiatives.
Nassau attributed the outsized role in Dechert’s strong 2021 results to several issues. The company assisted T. Rowe Price in its $4.2 billion acquisition of alternative credit manager Oak Hill Advisors. He advised investment firm Certares on SPAC’s $5.3 billion deal that merged Apollo Strategic Growth Capital with American Express Global Business Travel. The company is also representing 3M in a massive product liability battle over allegedly defective earplugs. And he advised Citi as a mortgage lender in its $6 billion financing of Blackstone’s acquisition of QTS Realty Trust.
Nassau also touted expanding relationships with top private equity names like Cerberus and KKR, attributing this to both securing more partners in front of those clients and a steady convergence of private equity businesses. investment, securitization and funds.
“I wish it was faster. The global financial crisis slowed that down, but it’s now been 10 years behind us and you really see them coming together,” Nassau said.
Dechert’s net income grew at a pace that outpaced his impressive revenue gains, climbing 37% to more than $597 million. Nassau noted that while spending increased somewhat from 2020, when it plunged into the legal sector, it still did not match revenue growth. He also cited an accelerated collection schedule and improved realization rate for revenue growth, adding that early payment of expenses in recent years has helped.
Dechert also closed several offices, eliminating locations in Princeton, New Jersey and Irvine, Calif., which were adjacent to larger offices, as well as exiting Hartford, Connecticut and Almaty, Kazakhstan.
The company also saw its equity partnership shrink by 8% to 141 partners, a decrease that helps explain the near doubling of earnings per equity partner. Nassau attributed the drop to a combination of retirements and careful pruning of the partnership.
“We have a culture of stewardship in which everyone who is here is expected to be high-performing partners. We’ve definitely had conversations with people at the end of their careers who aren’t part of that culture anymore, and I don’t think there’s been any hard feelings,” he said. “If you want to be here, you have to love your job and be willing to work hard.”
Reviewing Dechert’s performance around the world, Nassau noted that the company was strongest in the United States, adding that all of its offices had some degree of growth. He said his biggest challenges were in offices in Beijing, Hong Kong and Moscow, due to macroeconomic and political trends. Meanwhile, the firm’s offices in Dublin and Luxembourg, key centers for the practice of private fund formation, were bright spots. Overall, the fund formation practice increased its revenue by 25% over the previous year, which also boosted work in London.
In the United States, the firm continued to grow its ranks in San Francisco and Los Angeles, bringing in former federal prosecutor Hartley West, corporate governance litigator Rick Horvath and fund-training lawyer Sonia Gioseffi as partners, while relocating several other existing partners.
“We’ve always wanted to expand on the West Coast,” Nassau said. “We added a new litigation team in San Francisco, and then two of our very good young East Coast partners moved there to help grow the practices. When you can get someone good moving and keep doing the work they were doing on the East Coast and help build the practice, the stars align and good things happen.
San Francisco and Los Angeles, along with New York, Philadelphia, Boston and Washington, DC, remain organic growth targets in the US, as do London, Munich and Paris overseas.
And Nassau said the firm has been fortunate to see a number of former attorneys return as partners, with two more about to be announced and several more in the pipeline.
“People like to work with other people who are very committed to hard work and really good at what they do,” he explained. “We have this culture where if someone asks you for help, you’re going to drop whatever you’re doing and go help them, on the phone.”