It could have been worse. That’s the best that can be said for the performance last year of The Am Law 100, the top-grossing law firms in the nation. Three of the four key categories we’ve measured for 25 years — gross revenue, head count, and revenue per lawyer — fell, while profits per equity partner (PPP) barely increased by 0.3 percent, or $3,463, to $1.26 million.
So PPP was basically stable in 2009 — not a bad result given the continuing economic weakness last year. Perhaps law firm partners are better business managers than they get credit for?
Press and Mulligan continue:
[E]ven the bad results weren’t nearly as dire as many firms had feared just a year ago. Overall, gross revenue was off by 3.4 percent, and head count dropped by about 1 percent. The firms earned a total of $64.8 billion, down roughly $2.3 billion. And, in the first year-over-year reduction in head count since 1993, they cut their lawyer labor force by 1,219, to 80,772. For all the heated attention to layoffs, about half the firms actually increased their size last year.
RPL, which we regard as the most telling economic indicator, was down $15,697, to $802,381, a 2 percent fall. This was the second consecutive year in which RPL fell, another sign of the toll of the weak economy.
These results are a bit equivocal. On the one hand, as Press and Mulligan note, things could have been worse. On the other hand, the first year-over-year reduction in headcount in 17 years is notable. And that decrease in headcount is a net number — the number of laid-off lawyers was offset in part by the arrival of incoming classes. (As documented in these pages, some firms seemed to engage in “housecleaning” layoffs of current associates to make way for new ones.)
As for the number that everyone fixates on — profits per equity partner, aka PPP — it was PPPretty good. Profits went up last year. Press and Mulligan explain why:
There were at least two reasons why the average partner profts eked out a small gain. Firms aggressively reduced expenses in 2009. And, the number of equity partners in The Am Law 100 dropped. There were 139 fewer of them, down 0.73 percent, to a total of 18,808. By contrast, the number of nonequity partners increased by 640; collectively they now constitute a record 37.9 percent of all Am Law 100 partners.
If you’ve been getting the sense that making equity partner is increasingly difficult, these numbers confirm your perception.
Press and Mulligan note two other developments:
(1) the increasing segmentation of the Am Law 100, i.e., the top firms pulling further away from the pack (think of this as the rich getting richer); and
(2) the continued viability, at least for now, of the standard, leverage-based Biglaw business model (despite all the hand-wringing over the future).
Read their complete write-up over here.
Now let’s take a spin through some of the various metrics:
1. The Am Law 100 2010 — Gross Revenue
The top 10 firms in 2009 were also the top 10 firms in 2008, but there has been some switching of places within their ranks. Most notably, Baker & McKenzie ($2.112 billion) overtook Skadden ($2.1 billion) to become the top-grossing law firm in the world. A total of 13 firms had revenues over $1 billion.
Full chart here.
2. The Am Law 100 2010 — Revenue Per Lawyer (RPL)
As usual, Wachtell topped the RPL chart, with revenue per lawyer of $2.53 million. This blew away its nearest competitor, Sullivan & Cromwell ($1.42 million), by over $1 million.
Litigation powerhouse Boies Schiller and white-shoe hottie haven Davis Polk tied for third, with $1.235 million. They were followed closely by another top litigation shop — Williams & Connolly, aka America’s Safest Law Firm™ — with $1.215 million in RPL.
Full chart here.
3. The Am Law 100 2010 — Profits Per Partner (PPP)
Wachtell once again tops the list, with PPP for 2009 of $4.3 million — up 7.2 percent over 2008. Of the M&A work that was around last year, WLRK got a lot of it. So did Sullivan & Cromwell, which clocked in at #3, with $2.965 million in PPP.
Not surprisingly, litigation firms fared well last year. Quinn Emanuel was #2 behind Wachtell, with PPP of $3.13 million, and Boies Schiller was #4, with PPP of $2.88 million.
How did your firm fare in this year’s AmLaw 100 rankings? Feel free to discuss in the comments.