K&L calls for post-Dewey transparency with comprehensive financial report

K&L Gates has become one of the first major US law firms to publish comprehensive financial figures for its global operations, in a move billed by chairman Peter Kalis as a challenge to the legacy cast by the collapse of Dewey & LeBoeuf.

The results, which were drafted to Securities and Exchange Commission standards, show a more comprehensive balance sheet for the Pittsburgh-headquartered firm than is typically issued by US practices.

Kalis (pictured) said the financial mismanagement of Dewey had “tarnished” the reputation of the legal industry, and in revealing comprehensive figures, K&L Gates wanted to show a public and internal transparency that had been lacking at Dewey in the run up to its demise.

Among the data is a “compensation compression ratio” metric, which shows that the highest paid equity partner earned 7.9 times more than the average of first year equity partners’ compensation. K&L Gates declined to reveal the figures, though the 2012 top earner is likely to have earned far more than 2011′s highest salaried partner, when the ratio was 5.8:1.

Lawyer numbers at year end decreased 8.5%, from 1,910 to 1,748, which the firm put down to “attrition”, despite the firm opening offices in Milan and Seoul in 2012. Headcount and financials for the firm’s tie-up with Middletons are not included, as the deal went live on 1 January this year.

As previously reported by Legal Week, the figures show overall revenues were flat for the year at $1.06bn (£695m). London turnover increased by 8% in 2012 after a busy year for the US firm, up to £35.6m from 2011′s total of £33m, despite a slight fall in partner headcount to 60.

Broken down by region, the Europe and Middle East saw revenues rise 17% to $93.9m (£61.5m), up from $80.1m (£52.5m) the previous year. The firm also saw strong growth in the Asia-Pacific region, with turnover rising 25% to $41.5m (£27.2m) from $33.3m (£21.8m).

The firm’s intellectual property practice was singled out for a productivity increase of almost 10%.

Remuneration breakdown shows 30.2% of revenue was available for all equity partners, while revenue per lawyer stood at $616,486 (£404,000), and net income per equity partner was $636,920 (£417,000). Net income for “fully participating” equity partners stood at $899,960 (£590,000).

Cash and cash equivalents were down in 2012 at $220.7m (£144.7m) from $260.8m (£171m) the previous year, while the firm boasts a debt-free balance sheet.

Other interesting details in the firm’s statement include an increase in inter-office work. Some 467 of the firm’s 500 largest clients used lawyers from two or more of K&L Gates’ offices, while 15 of the firm’s 20 largest clients used lawyers in 10 or more its offices.