Paul Hastings Outpaces Competitors Despite Economic Challenges

Despite the economic slowdown and cost-cutting measures by major law firms, Paul Hastings saw an increase in profits last year. Chairman Frank Lopez, who took over in October, stated that the firm is poised to surpass its record-breaking 2021 financial results. Paul Hastings experienced a surge in demand for legal services in 2021, resulting in $1.57 billion in gross revenue and $4.7 million in profits per equity partner. However, other major firms are projected to report decreased profits for 2022 as corporate transactions return to pre-pandemic levels. According to a Wells Fargo report, profits per equity partner at large law firms dropped by almost 4% in total last year. Lopez declined to give specific numbers for 2022 but stated that the firm gained market share through lateral hires across various practices, such as restructuring and infrastructure. Thanks to its diverse portfolio of practices, Paul Hastings was able to maintain demand levels comparable to 2021 despite economic challenges. Other firms have also managed to overcome the difficulties.
 
Vinson & Elkins' leaders, Keith Fullenweider and Jim Fox, stated in November that the firm's financial outlook was positive for the year. Meanwhile, Baker Botts reported that it exceeded its 2021 gross revenue figures by 4%, according to the American Lawyer. Since Frank Lopez took over as leader of Paul Hastings, replacing Seth Zachary, the firm has been on a hiring spree, bringing on over 30 new partners across its California, London, New York, and Washington offices. Lopez officially assumed his leadership role in October, alongside managing partner Sherrese Smith, both of whom have an entrepreneurial spirit and a vision for continuing to build the firm. Lopez joined Paul Hastings in 2019 and has seen the securities and capital markets group's revenue increase by 85% in the last three years. Smith joined the firm in 2013 and is credited with maintaining the firm's relationship with Live Nation. Paul Hastings also made a significant addition last year, acquiring a 43-lawyer restructuring team from Stroock & Stroock & Lavan. The firm has also hired partners from rival firms such as Kirkland & Ellis, Latham & Watkins, and Weil, Gotshal & Manges. According to law firm management consultant Kent Zimmermann, hiring strong teams from firms with uncertain futures is a successful strategy that many firms follow.
 
Paul Hastings' hiring approach is diverse and not focused on just one area, says Lopez. The firm made lateral hires in 12 of its 20 practice groups last year, he stated. According to Lopez, the firm has "very specific strategies in every practice area," and will be "opportunistic" if profiles that fit those strategies arise. One notable hire was Eduardo Gallardo, the former global co-chair of Gibson, Dunn & Crutcher's mergers and acquisitions group, who now co-chairs Paul Hastings' M&A group. Gallardo said the firm is aiming to become a leading firm in the lucrative M&A market. While Paul Hastings has advised on $23.7 billion in deals in 2022, this is a small fraction compared to Wall Street's Simpson Thacher & Bartlett, who handled $424 billion and topped the Bloomberg league tables.