When I became Managing Partner at Lowenstein Sandler in February 2008, the world stood on the precipice of a financial crisis that would send the global economy into a deep recession. Facing the most severe economic downturn of any of our lifetimes, we charted a new strategic direction for the firm that focused on our strongest practices and clients.
Over the next 12 years, that strategy paved the way for a historic growth streak. Between the end of the previous cycle, in 2008, and 2020, we nearly doubled the firm’s revenue–without a significant merger or acquisition. We did it with a methodical focus on our core work in technology, life sciences, and investment funds–and, indeed, the portion of firm revenue from those sectors grew from around 50 percent in 2009 to nearly 80 percent today. Notably, we achieved this revenue increase against the backdrop of an economic cycle in which the U.S. economy never achieved a 3 percent growth rate; in three years of that cycle, GDP actually declined.
Fueled by recruitment of some of the best practitioners in our core sectors and a disciplined focus on internal talent development, we increased our headcount by 30 percent over that time. Yet our revenue per lawyer increased by over 50 percent, and our profits per equity partner (as measured by The American Lawyer) grew 165 percent, pushing us into the top 40 of U.S. firms by that measure.
In time, commitment to our strategy helped us evolve into a firm that consistently provides higher-value services to the most sophisticated consumers of legal counsel.
A New Era Ahead
Today, the world once again stands on a precipice. This time, we face something that will likely be far more profound: a post-pandemic recovery, fueled by long-awaited technological and scientific advances, that many believe will unleash economic growth unlike anything most of us have ever experienced.
I believe our firm is poised to thrive through the tectonic shifts ahead by counseling precisely those businesses that will advance technological and scientific discovery. By facilitating the ingenuity and investment that fuel those efforts, Lowenstein Sandler will play its part in producing a safer, healthier, and more equitable world. In fact, that work began last year, when we had the privilege of working with a number of clients that were actively developing therapies to help those afflicted with the Covid-19 virus.
My belief is grounded largely in the powerful foundation we’ve built in the technology, life sciences, and investment fund industries. And it’s informed by the lessons we learned in 2020.
Results We Can Be Proud Of
You don’t need me to recap the harrowing events we all lived through last year. But as I consider the future of our firm, our profession, and our society, I think back to the time following Thursday, March 12–the last day we, and many thousands of other businesses, went to work together in our offices. In those frightening early weeks of the pandemic, when COVID-19 restrictions essentially brought the world economy to a halt, nobody, including us, knew how or if their business would survive.
I remember leadership-team conversations where we wondered aloud whether any business owner or leader, faced with vanishing sales and focused on the health of their workforce, would keep paying their legal bills. It was no hypothetical: in March and April of last year, we took steps to prepare for the worst.
The worst never came for us as it did for some other businesses. We were extremely fortunate that most of our work held steady. The sectors of the economy in which many of our clients operate came roaring back in the summer and fall.
Today, I’m immensely proud to look back on the way we managed through the most difficult year any of us has ever experienced. Most of all, I’m proud of our people’s teamwork and resilience and of the fact that we remained committed to our people by avoiding the types of compensation and headcount cuts that so many others were forced to implement.
It also turned out that our clients kept returning to us for counsel on the complex, high-value transactions and matters they trust us to guide them through. The result may not seem spectacular: our gross revenue grew modestly last year, by 2 percent.
Look closer, however, and you’ll see that our core revenue–generated by our strategic practices in guiding investment funds as well as growth companies in the technology and life sciences sectors–grew by 8 percent. Even in the most challenging year of our careers, our strategic commitment proved its value.
At the Center
In an article published in the first week of January, McKinsey & Co. declared 2021 “the year of transition,” predicting that, just as we divide the 20th century into pre-war and post-war periods, future generations will think in terms of the pre-COVID and post-COVID eras.
The article then describes the trends and forces that will shape the new, post-COVID normal. Among them: a wave of innovation and entrepreneurship, a technological revolution in manufacturing, and “a massive acceleration in the pace of medical innovation, with biology meeting technology.” Each of those, it goes without saying, will require tremendous amounts of capital.
There is evidence this transformation has already begun. Last year, startups raised $150 billion in venture funding–a 13 percent increase over 2019. The development of COVID-19 vaccines has demonstrated that the life sciences sector can produce health miracles few would have believed possible a year ago. Private equity firms alone are sitting on over $1.5 trillion in capital, much of which will be directed at funding health and technology innovation.
On January 28, General Motors announced it would produce only zero-emission vehicles by 2035–a stunning bet on technology and scientific advancement. And a clear sign that a new era is about to begin.
Back in 2009, we made the decision to focus much of Lowenstein’s business around three strategic industry groups. We spent the last decade assembling the very best teams practicing in those sectors. Now, those sectors are poised to help lead a transformation that could rival the Industrial Revolution.
We stand ready to help them do it.