Sheppard Mullin Richter & Hampton. (Photo: Diego M. Radzinschi/ALM)

Sheppard, Mullin, Richter & Hampton saw profits per equity partner dip slightly last year, even as it has continued to grow in revenue and head count.

The firm saw gross revenue increase by 5.4 percent to $707.4 million. Revenue per lawyer, at $991,000, was relatively flat, increasing by 0.2 percent.

Net income jumped by 6.6 percent, from $221.5 million to $236.1 million. But PEP dropped by 1.2 percent to $1.69 million.

According to Sheppard Mullin, 2018 was its 28th straight year of revenue growth.

“Our sweet spot of growth is five to seven percent per year,” Sheppard Mullin Chairman Guy Halgren said. “This was a very strong year for us, very consistent with our historical performance.”

Still, it didn't match 2017, when the Los Angeles-based firm reported double-digit growth in both revenue and net income, which rose 10.5 percent and 19.1 percent, respectively.

“We came into January 2019 with very strong inventory, so, if we had collected some of that in December, it moves the needle considerably,” Halgren said. "That's why we never look at any one-year isolation, we look at overall performance historically."

Halgren said the slowdown in the firm's financial performance was largely due to sizable lateral hire investments last year. He said Sheppard Mullin added 78 attorneys and 29 lateral partners in 2018. Throughout the year 15 partners left in the firm, including three who went in-house, 11 who joined other firms, and one who is now self-employed, the firm said.

Sheppard Mullin also launched a new office in Dallas and expanded its presence on the East Coast, including New York and Washington, D.C., Halgren noted.

“And, we did all of that while maintaining a zero debt,” Halgren said.

The New York growth included a seven-lawyer group from Venable, which joined in October. The group was led by partner Peter Koffler, who chaired Venable’s New York real estate practice and was vice chair of the firm’s national real estate practice. Before they joined, Sheppard Mullin had just one real estate partner in Manhattan.

Overall, the Los Angeles-based firm saw a net increase of 10 equity partners and six nonequity partners in 2018. The partner tier grew by 5.3 percent, to 335. The firm’s total lawyer head count also grew by 5.3 percent last year, to 814.

Halgren said Sheppard Mullin has been focusing on growing its corporate practices in high demand areas, such as private equity, mergers and acquisitions and fund formation. “Our business strategy is what we call broad and depth strategy, to represent our clients in an array of areas where we can provide superior value,” he added.

Some of the notable deals the firm’s attorneys worked on last year included representing international talent agency ICM Partners in its acquisition of Just For Laughs comedy group; representing Dallas-based Banner Oak Capital Partners in forming two funds totaling $800 million; and advising biopharmaceutical company in its $26 million IPO.

“Corporate is now our largest practice group by a pretty good margin,” Halgren said. “And we have done that because, historically, the firm was underrepresented in corporate, and we want to balance out our portfolio.”

Sheppard Mullin has a total of 15 offices in the U.S., Europe and Asia. As of now, Halgren said, the firm has no plans to expand into other geographies.

“We are very pleased with our existing footprint,” he said.

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