With 2012 revenue that was at its lowest level in six years, the Minneapolis law firm of Dorsey & Whitney is banking on 2013 to be a turnaround year.
A new management team is in place, the client list is expanding, new attorneys are filling some of the vacant downtown office space and ongoing projects such as legal work on the new Vikings stadium promises to produce a steady revenue stream for several years to come.
Still, Dorsey feels like a firm in transition. Gone is the managing partner of the last six years, Marianne Short, who surprised many in the firm late last year when she left Dorsey to become chief legal counsel for longtime Dorsey client UnitedHealth Group Inc.
Dorsey no longer is the largest Minneapolis-based law firm in Minnesota. Thanks to a blockbuster merger last year, that distinction goes to Faegre Baker Daniels.
And Dorsey, which has national and international offices, now ranks No. 3 in terms of lawyers working out of its Minneapolis office, behind FaegreBD (as the firm markets itself) and Fredrikson & Byron.
“2012 was a disappointing year,” said Ken Cutler, Dorsey’s managing partner of two months. “But the last six years are the best six we’ve ever had.”
Figures compiled by the trade publication American Lawyer show Dorsey’s revenue declining from a high of $367 million in 2008 to $313.5 million in 2012. Profits per partner dropped from $670,000 in 2008 to $515,000 last year.
At FaegreBD with 740 attorneys, revenue last year was $443 million, up 3 percent from 2011. Profits per partner were $700,000, also an increase from pre-merger levels.
But Cutler is unfazed. He disputes the validity of American Lawyer’s profits-per-partner metric because of an imprecise definition of partner. Cutler would rather measure the firm’s success by the amount of revenue generated per attorney, which for Dorsey was down less than 1 percent in 2012 after increasing by 11 percent the year before.
“I think Dorsey’s numbers are still respectful,” said legal consultant Roy S. Ginsburg. “$515,000 is still a lot of money.”
Finances aside, though, Cutler said he senses an air of optimism and enthusiasm at the firm.
“We’re expanding marketing, we have more focused practice groups. We even have a partner looking for lateral hires [from other firms],” Cutler, 65, said in an interview from Dorsey’s downtown Minneapolis headquarters. “We think this will bear fruit in 2013 and even more so in 2014.”
Cutler is a 39-year veteran of Dorsey, the only law firm in which he has worked. He’s a corporate attorney by specialty and his practice has focused on emerging growth companies, mergers and acquisitions and corporate finance.
Cutler is known for his collegial and collaborative style. He’s also a huge hockey fan and booster of the Minnesota Wild.
Cutler’s first order of business as managing partner has been to visit Dorsey’s 19 foreign and domestic offices. This week he’s in London. Later this month he’ll be in Anchorage, Alaska.
Dorsey recently added medical device giant Medtronic Inc. to its client roster and hired a corporate attorney who has worked with the Fridley-based company. The firm also hired an attorney versed in employee/employer benefits issues and a medical device/intellectual property specialist for its Palo Alto office in California’s Silicon Valley.
“My clients do not wait for business to come in the door. Neither can we,” Cutler said.
Much of the decline in legal work, across all firms, can be attributed to the Great Recession and the slow recovery both in the United States and abroad over the last five years.
Business transactions, a Dorsey staple, slowed considerably during the downturn. Even trial work was down.
“Dorsey is not in the forefront these days,” said Jodi Standke, head of the law firm consultancy Talon Performance Group. “They’re just keeping up. At Dorsey, they have to ask ‘What are we? Who are we? Do we need all of those offices?’ ”
FaegreBD attributed its performance last year to concentration on four major industries — energy and clean technology, financial services, food and agriculture and life sciences.
“We’ve … been able to take on additional work — in terms of both scale and complexity — due to our expanded depth and breadth of resources and capabilities,” managing partner Andrew Humphrey said in a statement to the Star Tribune.
Notable deals for FaegreBD included Hormel’s acquisition of Skippy peanut butter and favorable court decisions for aircraft manufacturer Cirrus Design and legal publisher Thomson Reuters.
Dorsey, meanwhile, represented Park Nicollet Health Services in its merger with HealthPartners and handled multiple transactions for longtime clients UnitedHealth and U.S. Bank.
Cutler, while acknowledging that Dorsey’s European business is off, said its legal work in China is strong.
Asked about morale at the firm, Cutler said, “It’s pretty good. Anytime there’s change, there’s a bit of an upbeat. Marianne did a fabulous job. But anytime you do something fresh, there’s excitement. We’ll see how long the bloom lasts.”