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Book of lists: Look who’s taking a leading role in New York’s legal industry

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In just three years, Kirkland & Ellis has grown massively. The company, ranked 12th on the 2015 Crain’s list of New York’s largest law firms, has increased its local lawyer count by 61% to climb into the No. 4 spot. Much of that growth has come in its corporate and securities practice, where Kirkland’s attorney count has nearly doubled in three years. The 110-year-old firm’s expansion in this area is by design, said Peter Zeughauser, who chairs the Zeughauser Group legal consultancy.

“There aren’t many firms like Kirkland that are so focused on strategy,” Zeughauser said. “Their strategy is three-pronged: private equity, complex litigation and restructuring. New York is the heart of these industries, and Kirkland has built a lot of momentum by having everyone row in the same direction. They’ve been able to substantially outperform the market in terms of revenue and profit.”

Kirkland’s revenue grew by 19.4% in 2017, according to The American Lawyer, a particularly remarkable increase, given that it was previously $2.7 billion. Zeughauser has heard that a revenue growth rate exceeding 25% is in the cards for 2018. The firm declined to comment on whether that prediction will hold, but any further expansion beyond the $3 billion threshold will put Kirkland’s performance beyond the reach of most 
competitors.

“There are very large firms pulling in $800 million to $1 billion in revenue, and it’ll be almost impossible for them to catch Kirkland,” Zeughauser said. “Is that going to cause firms to consider merging to be competitive? The answer is yes. Firms are realizing that the bell is tolling.”

Also stoking speculation of potential mergers is Kirkland’s record of hiring top private-equity partners away from its rivals. In the wake of such departures, firms have needed to make their own hires and pay big sums to try to match previous productivity. With new partners earning seven figures, there’s a danger of stoking resentment from those making one-thirtieth of that.

“It creates two different kinds of partners,” Zeughauser added. “You don’t have a culture of all partners thinking they’re equals who can perform at the same level.”

SOURCE: Section Page News – Crain’s New York Business – Read entire story here.