Morgan Lewis Chair Jami McKeon on the law firm's record year and legal industry's salary wars - Philadelphia Business Journal - Philadelphia Business Journal
Morgan Lewis & Bockius had a strong fiscal year “against all odds” with the pandemic, Chairwoman Jami McKeon told the Philadelphia Business Journal in a recent interview.
“We had a record year across the board — revenue, profits, number of matters…. You name it,” McKeon said.
Morgan Lewis does not provide specific financial data to the media, even for the annual AmLaw 100 ranking of the highest grossing law firms put together by the American Lawyer magazine. AmLaw, however, reported Morgan Lewis was the 7th highest grossing U.S. law firm in 2020 with $2.45 billion in revenue and $1.2 million in revenue per lawyer. The Philadelphia-based firm has more than 2,000 lawyers spread across 30 offices in the U.S., Europe, Asia and the Middle East.
In 2021, McKeon said litigation continued both via in person and remote proceedings. Work included Covid-19-related matters with key clients such as Johnson & Johnson on its vaccine partnership with Merck. At the height of the pandemic, as Hewlett Packard rallied the industry to use 3D printing to bridge health care supply chain gaps, Morgan Lewis advised the company on development and supply of Covid-19-related devices, including face masks, face shields, and other personal protective equipment; swabs for collecting samples for Covid testing; and medical device components. McKeon said Morgan Lewis helped HP navigate the fast-evolving FDA policies and guidance for these types of products.
The firm also represented Takeda in three major licensing agreements across multiple practices and offices to distribute vaccines in Japan.
McKeon said nearly all of the firm's top 25 clients by revenue in fiscal 2021 are serviced by at least half of its 15 practice groups, and almost half of its 31 offices. Eight out of the top 10 clients have been in the top 10 for the last three years, which McKeon said reflects the consistency of its client base.
Here is more from the Business Journal's wide-ranging discussion with McKeon, who also said the firm has achieved full vaccination for its U.S. employees, save for those who have religious or medical exemptions.
PwC going remote
PricewaterhouseCoopers recently said it will implement remote-only working arrangements for most of its employees. Some believe that PwC's size and stature could force its professional services company peers to play follow the leader.
McKeon, though, said there is a major distinction between accounting and law firms that makes it less likely that companies like Morgan Lewis will institute full remote working.
While younger CPAs receive training by being embedded with partners and managers on site with clients, McKeon said young lawyers tend to be assigned to various teams and need to spend some time in the office where they can collaborate and receive training
“I think it’s rare that many CPAs are in the office more than once a week, so it’s not as big of a change for them as it might seem like on the surface,” McKeon said. “So I don’t think you can analogize with law firms. For us, going full remote is not conducive to camaraderie, culture, collaboration and training. I know a lot of our people can’t wait to get back to the office and see their friends and co-workers.”
Update on its new Philadelphia headquarters
Morgan Lewis signed a 20-year lease in January 2020 to relocate to a new tower at 2222 Market St. from its current headquarters at 1701 Market St. it will be the sole tenant and take up 305,000 square feet, but McKeon said the pandemic has changed the calculus somewhat. Morgan Lewis is still committed to 305,000 square feet at 2222 Market.
It currently occupies 289,432 square feet at 1701 Market with all of its 300 Philadelphia lawyers and a total of 940 employees situated there. The firm also has 100,000 square feet of space at 1801 Market St., mainly used for back office operations and the firm’s eData team. The lease at 1801 Market expires a year after the one at 1701 Market. When it signed the lease at 2222 Market, the idea was that it would largely be for the lawyers and staff at 1701 Market.
McKeon now believes that it can fit its more than 1,000 total employees at 2222 Market if it so chooses.
“We have the opportunity to be more flexible while also preserving our culture,” McKeon said.
Salary Wars
In June, New York-based Milbank announced it was raising it starting associate salary to $205,000 from $190,000. This set a new industry high-water mark for associate salaries that roughly 100 U.S. law firms matched. Morgan Lewis jumped on board a week later, confirming that effective July 1, starting salaries rose to $205,000 for its current first-year associates. To avoid salary compression for more senior associates, Morgan Lewis issued commensurate raises for those who graduated law school between 2013 and 2019. While the full pay scale was not revealed, the firm confirmed that those in the class of 2013 will be paid $365,000.
That is a significant cost added to the balance sheet of Morgan Lewis and other firms. Corporate clients have become much more skeptical about paying billable rates of young associates who are still being trained and deemed less efficient at handling their matters. But with the new cost added, some firms might feel they have no recourse but to pass on the cost to clients by raising billable rates. McKeon said Morgan Lewis will not be one of them.
“We will not be passing along that cost to clients,” said McKeon, adding that close to $1 billion of the firm’s revenue last year came from arrangements that are not pure hourly rate arrangements. She said that reflects the strength of the firm’s partnerships with clients with the focus being to offer them predictability, flexibility and collaboration.
“You’ve got to be pretty good at this if you’re willing to put $1 billion of your revenue into these kinds of arrangements, and we have a fantastic business operations team that supports us and our clients in coming up with alternatives to the traditional billable hour that are a win win for both parties,” McKeon said.
The reason Morgan Lewis and so many other firms matched the new associate wage scale set by Millbank was largely competitive. A firm would be at a disadvantage if it paid $15,000 less than its competitors to secure the best law graduates and to recruit and retain lateral associates.
“The competition for talent is real,” McKeon said. “Everyone needs talent. I think we do well with recruiting and retention but it is highly competitive. And we see that now with our clients.”
Law firms in Philadelphia Metro Area
Ranked by Local attorneys
| Rank | Name | Local attorneys |
|---|---|---|
| 1 | Morgan, Lewis & Bockius LLP | 300 |
| 2 | Cozen O'Connor | 298 |
| 3 | Fox Rothschild LLP | 259 |
| View This List | ||
source: https://www.bizjournals.com/philadelphia/news/2021/10/17/jami-mckeon-on-morgan-lewis-new-hq.html
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