As we mentioned last week, the American Lawyer recently released its highly influential, closely watched Am Law 100 law firm rankings. And despite all the doom and gloom permeating the legal profession, as well as the stagnant bonuses for associates lucky enough to make it into Biglaw, partners at large law firms are living just as large as ever.
In a way, the recovery in Biglaw is not unlike the recovery in America in general. If you were already well-off, you’re doing great now. It’s just not trickling down to anybody else. See, e.g., anemic spring bonuses.
Interestingly enough, the division of the world into “haves and have-nots” continues even into the world of major law firms. Partners at super-top-tier firms are putting even more distance between themselves and partners at less high-powered or less profitable firms.
Let’s look at the numbers, shall we?
Over at the portal page for all the rankings and related articles, Am Law offers this concise summary:
All the key financial metrics for The Am Law 100 rose by single digits last year: gross revenue, revenue per lawyer, and profits per partner. Eighty-three firms posted revenue gains — 25 more than in the previous year. And the terrifying days of mass layoffs seemed to be over: Firms reversed course and added to their head count. Even equity partners, who sometimes seem like an endangered species, grew their ranks on average after two years of flat or negative growth.
For the Am Law 100 as a whole, gross revenue grew by 5.3 percent, revenue per lawyer grew by 1.9 percent, and profits per partner grew by 3 percent.
But as a rule, income inequality continued to plague the rankings. Both The Am Law 50 and The Am Law 51–100 reported 6 percent increases in gross, to totals of $50.9 billion and $20.1 billion, respectively. But the Fabulous 50 kept more of that money for their partners. This group posted average profits per partner of $1.6 million last year — a 4.8 percent jump — versus The Am Law 51–100’s 1.4 percent PPP rise, to $1.1 million.
A million dollars in PPP is nothing to scoff at, of course. But it’s clear that the firms in the top half of the distribution are far more profitable than the firms in the bottom half. You can read more about that trend here.
Some quick highlights (from articles included in the issue):
1. There were four newcomers to the Am Law 100: Barnes & Thornburg, Lewis Brisbois Bisgaard & Smith, Kilpatrick Townsend & Stockton (a merger product), and Wilson Elser Moskowitz Edelman & Dicker. And four firms dropped off the list: Bracewell & Giuliani, Husch Blackwell, McKenna Long & Aldridge, and Mintz Levin.
2. Quinn Emanuel is thriving: “The firm’s revenue jumped 31 percent, to $723.5 million — the biggest percentage increase on our list — and profits per equity partner rose 15 percent, to $4.16 million. Only perennial chart-topper Wachtell, Lipton, Rosen & Katz can claim higher per-partner profits.”
Is it only a matter of time before QE tops WLRK in PPP? Perhaps in a slow year for M&A, like 2012 is shaping up to be thus far?
3. How’d Dewey do? The embattled law firm of Dewey & LeBoeuf, which saw its 2010 and 2011 financial results restated by Am Law (ouch), still made the Am Law 100: it came in at #28 on the gross revenue list, with total revenue of $782 million. For purposes of the Am Law 100, a snapshot taken prior to many of the defections, Dewey had 1,040 lawyers and 190 equity partners. D&L came in #63 in profits per partner, with $1,040,000 in PPP. (That’s per equity partner; Dewey has a significant number of non-equity partners.)
4. Special investigations paid off nicely for Baker & Hostetler, which is handling the Madoff mess, and Arnold & Porter. Both firms saw double-digit increases in gross revenue and profits per partner.
Speaking of gross revenue and profits per partner, let’s now take a quick look at those and other key metrics, including a review of the chart-topping firms….