Chamberlain Hrdlicka Grows Revenue by 13 Percent

Houston-based tax-boutique-turned-general-practice-firm Chamberlain Hrdlicka grew its gross revenue by nearly 13 percent in 2012 and is now focusing on expanding the capabilities of its Philadelphia-area office beyond just tax law.

Stevens & Lee Grows Revenue 1.3 Percent, PPP 1 Percent

Small increases in gross revenue and profits per equity partner (PPP) brought Stevens & Lee to all-time highs in those categories for 2012. The Reading, Pa.-based firm grew its gross revenue 1.3 percent from $113 million in 2011 to $114.5 million in 2012.

Jones Group to Cut 8 Percent of Staff and Close 170 Stores

Shares of the company rose 2.7 percent to $13.97 on the New York Stock Exchange after it announced the cuts, which it said would cost it about $40 million to $60 million over the next 15 months.

Jones' U.S. stores have struggled in the face of aggressive competition. Sales during the all-important holiday season fell about 7 percent.

Earlier this year, activist hedge fund firm Barington Capital Group, run by James Mitarotonda, met with Jones Group management and suggested the company cut expenses and focus on its most successful brands, while possibly selling other brands.

In the past, Barington has invested in several retailers, including Dillard's Inc and Warnaco, and pushed for operational and strategic changes. PVH Corp acquired Warnaco in February.

"Barington has been pushing for an in-depth review of the Jones brands and even a culling of some brands," said Damien Park, managing partner at Hedge Fund Solutions, a research and consulting firm focused on shareholder activism. "That was missing in today's announcement."

Barington typically seeks a seat on the boards of many companies in which it invests, Park added.

"Given their past record, it's highly likely they won't rest until they get board representation," he said.

A representative at Barington declined to comment. A Jones Group spokeswoman confirmed that the company met with Barington but declined to comment further.

Jones Group shares are up 23 percent so far this year.

The company estimated first-quarter adjusted earnings of about 15 cents per share, shy of Wall Street expectations for a profit of 25 cents a share. It estimated first-quarter revenue at about $1 billion.

First-quarter gross margins are estimated to fall 90 basis points below the company's own forecasts as a highly promotional environment and an unusually cold weather hurt sales.

Jones said it will cut U.S. retail staff by about 18 percent and corporate, support and supply chain staff by about 2 percent.

The company said upon completion of the restructuring plan, it expects outlet stores comprising a significantly higher percentage of its overall retail locations.

The company is now betting on its wholesale division, where sales to chains like Macy's Inc and Nordstrom Inc contribute about half its revenue.

Jones said it will streamline the wholesale business to focus more on sportswear and also consolidate some distribution and supply chain facilities.

The restructuring is already underway and includes 50 store closures announced in the fourth quarter of 2012, Jones said.

Jones had a total of 594 domestic retail stores at the end of 2012, which include 409 outlet stores. The company had about 6,250 full-time employees and about 5,540 part-time employees as of December 31, according to a regulatory filing.

(Reporting by Siddharth Cavale in Bangalore; Editing by Rodney Joyce, Supriya Kurane and David Gregorio)

Some Savers in Cyprus May Lose 60 Percent

The more sizable haircut, coming soon after the imposition of tough capital controls, is the latest and perhaps most profound reminder of the financial punishment being visited upon this small island economy as it struggles to comply with the conditions that Europe is demanding of it before it gets a desperately needed 10 billion euro loan.

Europe has demanded that large depositors in the country’s two largest banks — Bank of Cyprus and Laiki Bank — accept across-the-board losses in order to pay for the 17 billion bailout.

Over the past week, government officials have been saying that depositor losses would not exceed 40 percent — even though bankers and lawyers involved in the negotiations have been warning for some time that the final figure would need to be higher if the bank was to re emerge as a viable entity.

Under the terms of the transaction, large depositors would have 77.5 percent of their savings turned into different forms of equity. 37.5 percent would be direct equity, in the bank with the rest coming in the form of securities that may convert into shares at a certain period. The remaining 22.5 percent would be a frozen, non-interest-bearing deposit that they would be able to access in the future.

As a result of this arrangement, the bank’s largest depositors will initially become its major shareholders.

If the bank does well, depositors would be able to sell their stock. But even in the best case, in which the bank thrives on the back of a quickly recovering economy — a long shot most economists believe — the loss is likely to exceed 60 percent and could well be much more than that.

Lawyers and bankers who have analyzed the transaction believe the ultimate loss to the depositor could be anywhere between 60 and 77.5 percent.

There has been no official announcement of the deal and, given the political sensitivities involved, there could be further changes in the coming days. But news of the terms is already rocketing through Cyprus.

How much of a loss uninsured depositors with accounts of more than 100,000 euros at the bank would have to bear has become a hotly disputed topic in the past two weeks, pitting Cyprus’s creditors — the European Commission, the European Central Bank and in particular the International Monetary Fund, known widely as the troika — against the Cyprus government.

In the past week, as it has become evident that the country’s 18-billion-euro economy was going to enter a tailspin after the controversial move to impose capital controls and freeze bank deposits equal to one half the size of the country’s economic output, it has become increasingly clear that the bank would need a much larger capital cushion if it is to survive the next year.

Projections of an economic slump of 3 percent that were once seen as a worst case now seem wildly optimistic, with most economists expecting the economy to plunge between 5 and 10 percent this year.

While many of the Bank of Cyprus’ largest depositors are wealthy Russians, numerous Cypriot businesses and wealthy individuals also had significant amounts of capital in the bank. Economists believe that wiping out such a large amount of savings will be devastating — not just on the economy but on Cyprus’s future as a center for financial services.

European New-Car Sales Down 10.2 Percent in February

MILAN — Europe’s new car market shrank a further 10.2 percent in February, according to figures from the Association of European Car Manufacturers on Tuesday, the lowest since its records began in 1990.

Ford, General Motors and Fiat were the worst performers, as European car registrations fell to 829,359 vehicles after hitting a 17-year low in January.

Car makers in Europe are still reeling from a terrible 2012, when annual car sales volumes in the 27-nation European Union fell 8.2 percent to 12.05 million vehicles. In the 17-nation euro zone, sales dropped 11.3 percent to just under 9 million, according to Reuters calculations.

This year is shaping up to be another tough slog for mass-market car makers, as consumers in recessionary European economies postpone new car purchases.

For 2013, the market forecaster LMC Automotive recently estimated a 3.1 percent drop in West European sales, to 11.4 million vehicles, compared with levels of around 12.8 million in 2011 and 13 million in 2010.

At the European market leader Volkswagen, sales of the core VW brand fell nearly 10 percent, and sales of its luxury brand, Audi, fell 3.8 percent.

The South Korean brands Hyundai and Kia, usually a bright spot, gained 1.4 percent and dropped 1.1 percent, respectively. The duo have made a name for themselves with attractively designed, affordable cars that enjoy long warranties.

Another bright spot was Britain, where sales rose 7.9 percent.

Cozen O'Connor Grows Revenue 5.6 Percent, PPP 8.4 Percent

Cozen O'Connor saw increases in its key financial metrics in 2012 thanks to strength in nearly all of its core practice areas, the firm said.

Duane Morris Sees Revenue Grow 1.2 Percent, PPP 1.7 Percent

Philadelphia-based Duane Morris saw modest increases in its revenue and profits per equity partner (PPP) in 2012, a fiscal year that Chairman John J. Soroko characterized as "almost an instant replay" of the prior fiscal year in terms of financial growth.

Stocks Shed More Than 1 Percent

Stocks declined more than 1 percent on Wall Street late on Monday on fears that a divided parliament in Italy would get in the way of the country’s reforms and hamper the euro zone’s stability.

The Standard & Poor’s 500-stock index went from a morning gain to a 1.8 percent loss by the end of trading. The Dow Jones industrial average lost 1.6 percent, or more than 216 points, and the Nasdaq composite index was down 1.4 percent.

Conflicting forecasts of the outcome of Italy’s election raised the possibility of deadlock in parliament, which could in turn paralyze a new government and reignite the euro zone crisis.

In trading on Wall Street, Barnes & Noble stock jumped 12.6 percent after its chairman, Leonard Riggio, said he was considering a bid for the company’s bookstore business.

Stocks have been strong performers so far this year, with the S.&P. 500 up 6.2 percent to around its highest levels since 2007. That has prompted many to predict a pullback, but so far declines have been neutralized as investors use any dip as a buying opportunity. While the S.&P. fell last week, the decline was a slight 0.3 percent and was the first weekly drop after a seven-week string of gains.

“People are cautious about investing near five-year highs, especially given the pace at which we got here, but there’s still room to grow and any pullback should be shallow,” said Robert Pavlik, chief market strategist at Banyan Partners in New York.

The gains have come on strong corporate earnings. With 83 percent of the S.&P. 500 companies having reported results, 69 percent beat profit expectations, compared with a 62 percent average since 1994 and 65 percent over the last four quarters, according to Thomson Reuters data.

Another test for equities will come with the looming debate over big United States budget cuts that will take effect on Friday if lawmakers fail to reach an agreement over spending and taxes. The White House issued warnings about the harm the cuts are likely to inflict on the economy if enacted.

More government-related uncertainty came from Italy, where a close election left questions about how the country would handle its three-year debt crisis. Still, European shares were higher on Monday, rising about 0.5 percent.

Lowe’s Companies reported earnings that beat expectations, helped by rebuilding efforts after Hurricane Sandy in the United States. Shares were off 2.3 percent.

Dynavax Technologies shares plunged 35 percent after the Food and Drug Administration denied approval for the company’s adult hepatitis B vaccine and sought additional data to evaluate its safety.

Chrysler Profit Rises 80 Percent

DETROIT — Chrysler, the third-largest Detroit automaker, said on Monday that its third-quarter profit rose 80 percent on the strength of new models, less debt and steadily growing sales in both American and international markets.

The company said it earned $381 million in net income, up from $212 million in the same period a year ago. Revenue for the quarter was $15.5 billion, an 18 percent increase from $13.1 billion in the same period last year.

The results could be seen as the latest evidence that Chrysler’s improbable comeback from its government bailout and bankruptcy was not only sustainable, but accelerating.

“We’ve changed the conversation at Chrysler Group,” said Sergio Marchionne, the chief executive of both Chrysler and its Italian parent, Fiat. “We continue to work feverishly and are pleased to see that our all-consuming aspiration for excellence is translating into results.”

Chrysler’s solid results are propping up the faltering European operations of Fiat, which was scheduled to release its third-quarter earnings on Tuesday.

Mr. Marchionne may announce new moves to cut losses at Fiat, which is struggling to cope with the steepest decline in sales in Europe in nearly 20 years.

But there’s no need anymore to fix Chrysler, which has repaid its debt to the American taxpayers and totally revamped its product lineup since emerging from bankruptcy in 2009.

The company said its worldwide sales increased 12 percent in the third quarter to 556,000 vehicles. For the first nine months of the year, it sold 1.7 million vehicles, up from 1.4 million in the same period in 2011.

Before its financial collapse, Chrysler relied mostly on its pickups, S.U.V.’s and minivans to contribute the bulk of its profit. The company was particularly vulnerable to swings in gas prices, which drove consumers to buy smaller, more fuel-efficient passenger cars from other manufacturers.

With the assistance of Fiat technology and parts, Chrysler has broadened its lineup to include a compact car, the Dodge Dart, which gets 40 miles per gallon of gas. The company is also putting more efficient engines into its bread-and-butter models like the Jeep Grand Cherokee and Chrysler 300.

Mr. Marchionne on Monday reaffirmed Chrysler’s full-year targets of $1.5 billion in net income and global shipments of 2.3 million vehicles.

Chrysler’s balance sheet also continues to improve as its business grows. The company said it had $11.9 billion in cash at the end of the third quarter, compared with $9.5 billion in the same period a year ago.

The company’s net industrial debt was $693 million at the end of the quarter, considerably lower than the $2.86 billion in debt on its books a year ago.

Chrysler’s two American rivals, General Motors and Ford, are expected to report lower earnings for the third quarter than a year ago, primarily because of growing losses in the troubled European car market. Ford was scheduled to report on Tuesday and G.M. on Wednesday.

Connecticut's Chief Justice Calls for 11 Percent Pay Hike for Judges

As a newly created committee begins meeting to discuss judicial salaries in Connecticut, the state judicial branch has offered up a detailed proposal that would boost annual pay for most judges by about $45,000 or more over the next four years.

In a 20-page report, Chief Justice Chase T. Rogers calls for the state's judges and judicial magistrates to receive a pay increase of about 11.3 percent next year and 5.5 percent for each of the three following years. That would boost salaries for the state's 162 Superior Court judges, for example, from $146,780 now to $163,416 next year and $191,890 by fiscal year 2017.

In calling for the increases, Rogers notes that state judges haven't had a pay increase in five years, that judicial salaries have risen less than 1.65 percent annually in the past decade and that Connecticut now ranks 45th overall in judicial pay, when the state's cost of living is factored in.

The initial 11.3 percent increase, Rogers stated in the report to the 12-member Connecticut Commission on Judicial Compensation, would bring salaries to where they would have been if judges had received cost-of-living increases, linked to inflation, over the past decade. The first year of raises would cost the state an estimated $3.8 million.

"As public officials, judges do not expect to become wealthy," Rogers wrote. "But fairness and the need to retain highly qualified jurists require that judicial salaries maintain their value. Protecting the compensation of Connecticut's public officials against inflation is essential to prevent genuine hardship over time, hardship that increasingly discourages recruitment and retention of talented individuals."

Rogers' proposal will no doubt launch a spirited debate. In recent months, some members of the legal profession have worried that below-market salaries had caused many experienced judges to step down and go into private practice. "I would guess (and this is just a guess) that more judges have left the bench in the last five years or so, than the number who left in the preceding 10 to 15 years," Superior Court Judge Barry Stevens wrote in a letter to Connecticut Law Tribune columnist Dan Krisch, who has written about the "trickling exodus" of judges.

Others have said that, given the still-struggling economy and the state's budget woes, this is an inopportune time for judges to request a large pay increase. They note that, even with the static pay in recent years, the state has no shortage of lawyers who want to be judges.

Representative Arthur O'Neill, R-Southbury, noted the outrage that erupted earlier this month when it was revealed that the state Department of Higher Education had awarded raises of up to $48,000 to 21 staff members. "This is the wrong time to be asking for substantial increases in compensation," said O'Neill, a member of the Legislature's Judiciary Committee. "Any increase is going to be difficult to sell, given the fact that we have an ongoing budget deficit [and] enormous debt from unfunded liabilities."

PRIVATE SECTOR RELUCTANCE

The judicial branch report, bolstered with graphs and narrative arguments, compares judges' salary increases with employees in other branches of government and with unionized employees.

Clifford Chance Accounts Reveal Management Team Pay Hike of 10 Percent

Clifford Chance's management committee received total remuneration of £19 million for the 2011-12 financial year, a 10 percent increase from the previous year's figure.

The figure is contained within the firm's latest limited liability partnership accounts, which show the 16-member board received a total of £17.3 million in 2010-11.

The report also reveals that the average partner headcount at the firm increased 3 percent to 568 in 2011-12, while the number of associates rose 5 percent to 2,325. Total staff costs increased by 5 percent from £537.3 million to £565.7 million.

Profit available for profit share among members rose to £382.5 million in 2011-12, up almost 13 percent from £339.5 million in 2010-11.

Audited revenue for 2011-12 rose 7 percent to £1.303 billion from £1.219 billion in the previous year, the same figure as reported by the firm earlier this year.

Geographically, the Asia-Pacific region saw the most significant growth, with a 28 percent increase on the previous financial year to account for 14 percent of global revenue. The firm's performance in the region was bolstered by its tie-ups with Australian boutiques Chang Pistilli & Simmons and Cochrane Lishman Carson Luscombe during 2011, as well as solid returns from its bases in China, Hong Kong and Singapore.

Capital net contributions made by partnership members also increased significantly over the year, up from £1.9 million in 2010-11 to £8.1 million in 2011-12. The firm attributed this in part to a larger number of partners promoted into the equity over the year as well as a substantial number of senior lateral hires made during the period.

The report also showed that the firm repaid a £2.2 million bank overdraft during the year, with cash at the bank and in hand now standing at £120 million, up from the 2010-11 figure of £66.8 million.

Separately, the accounts note that the closure of its defined benefit pension scheme came into effect from the end of the 2010-11 financial year, stating: "The scheme was closed to future accrual with effect from 30 April 2011, having been closed to members since 2005."

Compensation for Chief Legal Officers at Large Texas Companies Up 11 Percent

General counsel who are among the highest-paid executives at large Texas companies earned more on average in 2011 than in 2010, according to Texas Lawyer's annual Corporate Roster, which reports on GC compensation.

Compensation for chief legal officers at 51 large Texas companies averaged $2,198,109 in 2011, up 11.8 percent compared to an average of $1,966,590 at 48 large Texas companies in 2010.

It's the second year in a row that average total compensation for the GCs improved on a year-to-year basis, following two years of declines, and the highest average since 2007, when compensation averaged $1,991,410 for 51 general counsel at 51 Texas companies.

GC pay packages continue to exceed the average profits per partner at large Texas firms. In 2011, partners in the 25 highest-grossing firms in Texas made $924,280 on average, which is less than half of the $2,198,109 average compensation for the GCs at large Texas companies in 2011.

Wayne Watts, senior executive vice president and general counsel at AT&T Inc. in Dallas, heads the list of Texas' highest-paid GCs, with compensation totaling $8,505,373 in 2011, including equity valued at $3,407,689.

In an emailed statement, AT&T writes that it "remains committed to paying for performance, and Mr. Watts' compensation reflects this: in 2011, more than 85 percent of his target compensation was tied to performance.

"Mr. Watts' compensation also reflects his responsibilities as general counsel of one of the world's largest telecom companies and the 12th largest corporation in the United States. During 2011 he effectively guided the company's regulatory filings and compliance matters in addition to providing support for day-to-day operations and M&A activity -- and successfully managed litigation matters, including 158 appeals to various Federal and State Courts of Appeal and 10 to the United States Supreme Court."

Right behind Watts on the best-paid list are Robert Reeves of Anadarko Petroleum Corp.; Larry Hutchison of Torchmark Corp.; and John Wombwell of Plains Exploration and Production Co.

All but six of the 51 general counsel on the best-paid list racked up at least $1 million in compensation in 2011, including the value of their equity compensation. That's more than in 2010, when 40 of the 48 general counsel on the best-paid list earned more than $1 million in compensation.

Texas Lawyer has reported on general counsel compensation in the annual Corporate Roster for the past 20 years.

Economic View: For the Wealthy, a 28 Percent Tax Solution

In a nutshell, the fewer deductions and other “tax expenditures” we have, the lower the rates can be. That part is simple.

The problem is that cutting rates is more popular than closing loopholes, especially those like the mortgage-interest deduction that are used by millions of taxpayers. But there is a possible solution.

I call it the modified Reagan 28 plan, or just the “28 plan” for short. It is a simple framework for thinking about tax policy. Though I’ve named it in honor of Ronald Reagan, it is similar in many ways to the ideas proposed by the Bowles-Simpson commission, which is a good starting point for any serious discussion of tax reform.

My first premise is that we should devise tax policy from the top down. As everyone now knows, nearly half of American households do not pay any income tax, though they do pay Social Security taxes, sales taxes and so forth. And many households that earn enough to start paying some income tax are essentially on a flat-tax system, because few itemize their deductions. That means they mostly just pay a percentage of their income above the threshold where taxes kick in. So let’s think about how to tax the rich, then work our way down the income ladder.

For this discussion, let’s define a household as rich if its income exceeds $1 million a year. In fact, my plan applies only to the income such households earn above that threshold. And I can state my idea in just one sentence: All income above $1 million a year for a household will be taxed at 28 percent. There are no deductions, and all income, including capital gains and dividends, is included. President Reagan favored something like this approach. His 1986 tax plan also taxed dividends and capital gains at the same 28 percent rate, as would the Bowles-Simpson proposal.

While we’re at it, let’s make the corporate tax rate 28 percent, too, because our current rate is high by international standards. Oh, and the estate tax exemption? On amounts above $3.5 million for individuals, the rate would be, of course, 28 percent.

What would this plan accomplish? First, by establishing the same marginal rate on all income sources, the incentives disappear for shifting from one source of income to another. Although there is much discussion about how taxes affect people’s willingness  to work, most people don’t have much flexibility about how many hours they’re employed. For the rich, however, it can be relatively easy to switch income from a highly taxed category to one that is taxed at a lower rate. One reason that Mitt Romney’s taxes have been so low — he paid an effective federal income tax rate of only 14 percent in the two years for which he has disclosed his returns — is that venture capitalists have figured out a legal way for the incentive fees they receive to be treated as capital gains income, currently taxed at a rate of only 15 percent. If we tax all income at the same rate, these games will end.

But what about the argument that taxing capital gains and dividends at the same rate as ordinary income will discourage investment? I don’t find this claim convincing. People are willing to buy bonds issued by corporations even though the interest is taxed as ordinary income, and I don’t see why investors need a special tax break to induce them to put money in the stock market, which has historically paid high returns. One bonus from adopting this plan would be a short-term windfall to the Treasury from investors realizing their capital gains now, in order to pay the current, lower rate. (Also, I do think that capital gains taxes should be adjusted for inflation.)

Wouldn’t nonprofit organizations suffer if we eliminated the charitable deduction for the wealthy? There might be some effect, but notice that by reducing the marginal rate to 28 percent, the tax incentive to donate would already be quite a bit lower than at current rates of 35 percent or more. And if this political season has taught us anything, it’s that rich people don’t need a tax deduction to contribute to causes they believe in. (Political contributions are not deductible.)

We could pay for the reduction in the corporation income tax by broadening that base as well. There are many special deals — like subsidies to oil companies — that could be eliminated.

OF course, I haven’t said what would happen to the households in the middle, or what the taxes would be on the first $1 million for the rich, but the Bowles-Simpson commission offers a comprehensive plan that is in the spirit of my suggestion. One possibility is to scale back deductions smoothly, starting at household incomes above $250,000, and completely eliminate them for incomes above $1 million. That would leave the popular deductions fully in place for those earning less than $250,000. A more radical plan, curtailing deductions for this large group, is probably politically infeasible, at least for now.

And what if the resulting revenue falls a bit short of what we need to start trimming the deficit? I suggest that we get our gasoline tax more in line with those of the rest of the world. Gradually raising it to something like $1 a gallon would both bring in revenue and help reduce emissions. In the long term, we could set the rate as a percentage of the price at the pump. Maybe 28 percent?

Richard H. Thaler is a professor of economics and behavioral science at the Booth School of Business at the University of Chicago.