By Gina Passarella
Special to the Legal
After reports from The Legal and others about a midyear capital call at Greenberg Traurig, the firm has issued a statement reaffirming its financial strength over the past few years.
"We requested that our shareholders approve a capital call of between 1 and 5 percent of one year's total compensation, payable over two years. Our revenues have been stable through the four-plus years of economic downturn, and our first-half revenues for 2012 were ahead of the same period last year, allowing us to finish the first half with no outstanding debt and able to make our usual midyear distributions to our shareholders last month,” firm head Richard A. Rosenbaum said in the statement.
“We have very low to no debt most of each year, though we have significant credit availability, require modest capital compared to our peers and have not raised any capital from our shareholders in over 10 years,” Rosenbaum continued. “So while there was no current cash need, bank or other requirement giving rise to this decision, it was a prudent move to create a further equity cushion which is fully consistent with our conservative financial management approach and with what other well-managed businesses are doing given the uncertainties in today's global economic climate."
While not speaking specifically about Greenberg Traurig, legal analysts who spoke to The Legal said midyear capital calls are rare and often a sign a firm is in trouble. The overall takeaway from the analysts was that capital calls that deviate from a firm’s normal course of business, whatever that might be, raise red flags.
Greenberg Traurig maintained its 10th-place ranking on Legal affiliate The American Lawyer’s Am Law 100 for 2012. The firm grew its gross revenue between 2010 and 2011 by 0.6 percent to $1.24 billion. The firm’s revenue per lawyer (RPL) increased 1.4 percent to $730,000 and its profits per equity partner (PPP) jumped 7.2 percent to $1.4 million. Attorney headcount fell from 1,721 to 1,699 and the equity partner rank dipped from 317 to 312 equity partners.
Since the start of the economic downturn in 2008, Greenberg Traurig saw its gross revenue and RPL fall in 2009 and climb back up in 2010. The firm’s PPP remained flat between 2008 and 2009 and inched up in 2010.