Deal-making had a record year last year, in terms of the value and volume of mergers and acquisitions. So it should be no surprise that the people who put together those deals had a huge year as well.
Revenue at law firms across the country soared by 14 percent in 2021, according to a recent survey by banking giant Wells Fargo & Co. That easily eclipsed the 3 percent growth seen in 2020, the first year of the COVID-19 pandemic. Big firms — the top 50 based on size — did even better, with revenue up 16 percent on average.
And many firms in Boston enjoyed robust business, buoyed by the city’s concentration of venture capital and private equity firms, as well as its fast-growing fields of life sciences, clean energy, and tech.
“We’re very much focused on the new economy industries, and I think so are a lot of firms in the Boston area,” said Ken Leonetti, co-managing partner at Foley Hoag. “Those industries were very much the drivers of economic growth in both New England and in the country as a whole over the last 18 months.”
More precise data will become available next month, when The American Lawyer magazine reports its annual law firm rankings. But in its survey, Wells Fargo found it was a good year for the legal sector nationwide. Owen Burman, segment manager for Wells Fargo’s legal specialty group, said the industry has not seen such a strong surge in at least a decade.
“This cycle surprised everyone,” Burman said. “Demand was off the charts last year.”
A global record for M&A volume, with deals ranging from small mom-and-pops to the biggest public companies, played a key role; every side in any merger needs lawyers. Venture capital funding also shattered records in 2021, and every one of those investment deals needs a law firm to represent the company and at least one for the investors. Even the SPAC craze, which reached new heights in 2021 before starting to taper off, kept lawyers busy. Many of these deals were driven by low interest rates and high stock prices, making financing easier to obtain.
The pandemic played a role, if indirectly. For example, Burman said, the mass shift to remote work prompted employers to upgrade their tech platforms, which then prompted a flurry of capital spending and investment in the tech firms that enable remote work, such as cloud computing and cybersecurity providers.
Foley Hoag expects to report next month that revenue grew by about 25 percent from 2020 levels. The Boston-based firm also grew its roster of attorneys by about 15 percent last year, to 325. Just two years ago, as businesses shuttered when COVID-19 arrived here, partners worried that the pandemic would cause a significant slowdown at the firm, Leonetti said. Things did slow early on, when the legal world was largely put on hold. But by later in the summer of 2020, revenue picked up again, he said.
At Mintz, where roughly half of the 1,200 lawyers work in Boston, the partners are expecting another record year as well. Managing partner Bob Bodian declined to give precise figures for 2021, saying the fiscal year doesn’t end for his firm until March 31. But he did say he expects a double-digit increase — that is, more than 10 percent — from 2020. Bodian said the majority of his firm’s revenue comes from three distinct kinds of business: transactions, intellectual property (patents and the like), and litigation. And all three were busy last year, he said.
Nixon Peabody also saw increases across its various business lines — from M&A to real estate to white-collar defense — and is adding lawyers to keep up with demand. Revenue grew from 2020 by about 8 percent, chief executive Stephen Zubiago said. This year started off strong as well, but Zubiago said it’s hard to know if the anticipated rise in interest rates and the ongoing conflict with Russia might slow down the US economy, and thus curb growth of law firms like his. For now, Zubiago expects to add about 40 lawyers to the team this year, roughly doubling the growth that the Boston-based firm experienced last year.
“We’re very proud of the fact we’ve been able to grow our headcount,” Zubiago said. “We believe we need to add to our depth and breadth to grow our business and service our clients. [But] like a lot of people, I’m concerned about interest rates and what’s going on internationally.”