Hogan Lovells Tops $3 Million in Partner Profits as Tier Shrinks

Hogan Lovells surpassed $3 million in profits per equity partner for the first time last year by shrinking the number of lawyers eligible for a share of proceeds.

The firm reduced the number of equity partners to 325 from 361, firm chief executive Miguel Zaldivar said in an interview. That enabled an average 12% gain in profit distributions for the firm’s equity tier. The number of non-equity partners ballooned to 487 from 418.

“We managed our two-tier structure by persuading talent who were not meeting performance standards or looking at succession to move into the non-equity partner tier,” Zaldivar said.

Hogan Lovells joins rivals such as DLA Piper and White & Case by surpassing the $3 million mark. The firm’s removal of equity status for retiring and under-performing partners is a common strategy for Big Law firms to boost profits and help recruit and retain talent.

Hogan Lovells last year increased revenue by nearly 9%, falling short of Zaldivar’s “magic number” goal of $3 billion by $35 million. While only a limited number of firms disclosed financial metrics for 2024, only seven of the 100 largest firms topped $3 billion in revenue in 2023, according to the American Lawyer.

Despite the firm’s revenue increase in 2024, its net income was roughly flat, dragged down by personnel costs that exceeded the growth rate of revenue, Zaldivar said.

“We were able to control the growth of expenses to not exceed revenue growth in all categories except for one: people,” Zaldivar said. “The driver of that spike in expenses was adjustment of compensation to cope with inflation to protect our associates across the firm and staff.”

The Magic Number

Zaldivar, who was unanimously re-elected as chief executive in September for a term that runs through 2028, set the $3 billion revenue target when he first took over the leadership role in 2020.

“In my mind, $3 billion was a magic number we needed to clear to attract and retain top talent and to deal with the IT investments,” Zaldivar said. “We are going to get there by 2026.”

Client demand in response to US trade conflicts will help the firm hit the revenue target, he said. Zaldivar said he is also going to impress upon timekeepers the need to collect on billable hours “in a more effective way” to boost the firm’s bottom line. “Last year we waited too long to collect,” he said.

The firm has been building out its New York presence, as it picked up a 70-lawyer team, including 28 partners, from now-defunct Stroock & Stroock & Lavan in 2023. Twenty-two of the former Stroock lawyers were in New York. The Americas accounted for approximately 49% of the firm’s global billings, outpacing every other legal market, including Europe, the Middle East and Africa at 46%, and Asia Pacific at 5%.

Client Relationships

The firm’s clients include the Republic of Ghana, whom it aided last year in the restructuring of Eurobond debt worth approximately $13 billion.

On the US front, the firm advised Walmart in the department store chain’s $2.3 billion acquisition of TV designer VIZIO.

As part of the firm’s pro bono work, Hogan Lovells is representing PFLAG, an LGBTQ+ advocacy organization, in a lawsuit against the Trump administration, challenging the president’s order to halt funding to institutions providing gender-affirming care.

Zaldivar said he’s not worried that the firm will incur Trump’s ire, even though Covington & Burling was targeted by the administration for representing Trump’s political enemy in former special counsel Jack Smith.

“I can assure the president and anyone in the administration that we are not here to fight them or stop them,” he said. “We are not acting in America with any political bias for or against the administration.”