2007: It Was A Very Good Year (For the Most Part)
We linked to it yesterday in passing, but thought we'd draw your attention to it in a dedicated post. Check out TheLawyer.com's report on the 2007 financial performance of the top 50 U.S. law firms (ranked by revenue):
The top 50 US firms last year generated a total of $46.8bn (£23.4bn) in revenue - an increase of more than 16 per cent on the 2006 total of $40.27bn (£20.14bn)....2007 was one of the strongest on record for the majority of US firms, despite the turbulence that rocked the market in the summer and which continues to do so. The average profit per equity partner (PEP) at the leading group of US firms showed smaller, although still significant, growth. In 2006 the average PEP among the top 50 US firms was $1.55m (£842,391). Last year that rose by 11 per cent to $1.72m (£860,000).
Here's the discussion of one of the most closely watched metrics, profits per partner:
Cadwalader Wickersham & Taft was second only to Akin Gump Strauss Hauer & Feld in terms of posting the biggest fall in PEP. The former was down by 6.2 per cent, although despite this drop it hung on to its place in the top five best performers on PEP overall, with $2.72m (£1.36m). Here, Wachtell Lipton Rosen & Katz remains out of reach of any other US firm with a PEP of $4.48m (£2.24m)
And what will this year look like? You already know the answer to that question:
Ward Bower of US legal market consultancy Altman Weil says the numbers confirm that 2007 was the best ever for top firms in terms of both productivity and profitability."Don't expect to see that in 2008," he added. "Some of those same firms are off 10 to 15 per cent on the revenue side for the first two months of this year."
For additional data, plus a table of the top 50 U.S. law firms and their 2007 financial results, see here.
US top 50's £46.8bn haul makes 2007 the best year ever [The Lawyer]
Magnificent '07: The Lawyer US Top 50 2007 [The Lawyer]
(24) Comments
Uh huh.
Is the PDF floating around of the US News Rankings legit?
Looks like Simpson, Debevoise, and Sullivan had big bumps in PPP.
9:08
Yes.
9:08--what PDF are you referring to and if it is for real send it to Lat so he can post it
So why is Akin not in the top 20 of Vault's rankings?
What I don't understand is why firms are in so much trouble now. If 2007 was such a great year for a number of them, why didn't they store up that cash to at least get them through 2008 without having to resort to layoffs/reduced hiring? Living large in 2007 and then killing the careers of so many associates in 2007 seems either dispicably greedy or requires unbelievably poor planning.
9:39,
because you're going to Akin (Dallas)
What I don't understand is why firms are in so much trouble now. If 2007 was such a great year for a number of them, why didn't they store up that cash to at least get them through 2008 without having to resort to layoffs/reduced hiring? Living large in 2007 and then killing the careers of so many associates in 2008 seems either dispicably greedy or requires unbelievably poor planning.
No firm that saw an INCREASE in profits last year should even contemplate layoffs. And when firms or industry experts talk about a DECREASE in profits this year, they are talking about a decrease relative to last year's record breaking, breathtaking revenue and profit numbers. This is why people on this blog denigrate CWT, etc. with such passion.
Firms that engage in layoffs shouldn't even be listed on Vault. The fact that such firms rank well on Lawyer.com, AmLaw or other measures of partner comp should be meaningless to law students and junior associates, whose chief concerns are (or at least should be) the prestige, comp, firm culture and exit options that their 3-5 years at a firm afford them.
There is a post about the U.S. News rankings at the top of the main page now.
09:46, I work at Akin (DC).
LAT: HOW ABOUT SOME COVERAGE OF COVINGTON'S BONUS MEMO (and the lack of bonii theirunder)?
LAT: HOW ABOUT SOME COVERAGE OF COVINGTON'S BONUS MEMO (and the lack of bonii thereunder)
9:48pm--because law firms are cash businesses at the end of the day. Partners make their income each year by stripping the profits left taking out all costs.
Akin's PEP drop was the result of a one-time plaintiff's lit windfall in 2006. That gave a huge bump for '06, but resulted in a hangover for '07.
9:57--Agree that for junior associates, prestige, comp, firm culture and exit options matter most. But RPL and PPP also matter, considering that for many such associates the exit option is going to a lower prestige firm and becoming partner there.
what does the *** mean? Does that mean those firms are cheaters??
NY to KEEP MY JOB!
frankly, I think RPL is the most important metric. Any firm can increase total revenues by expanding offices or practice areas. PPP can be manipulated through non-equity partnerships. RPL is a relatively "clean" number.
Also, RPL reflects the types of mandates that the firm is receiving from clients, which is probably a better indication of prestige than the marginally informed opinions of associates scattered across the country.
Baker Botts had the highest % increase in PEP. Go Texas.
According to the information provided, Jones Day is the only top 50 firm that did not grow in revenue last year. And its PPP were 49th out of 50. ABANDON SHIP!
Actually, there was one other firm besides JD that did not grow in revenue.
What does an increase in PPP mean for summer associates? Are we gonna get offers or what?
I HATE OCI. Please don't make me do it again.
STRESS STRESS STRESS