Does Size Matter? Dissecting The New Am Law 100

What insights can be learned from the latest Am Law 100 rankings?

Ed. note: This is the latest installment in a series of posts Lateral Link’s team of expert contributors. Michael Allen is Managing Principal at Lateral Link, focusing exclusively on partner placements with Am Law 200 clients and placements for in-house attorneys.

The results for the savviest Biglaw accountant Am Law 100 survey are finally in and Biglaw enthusiasts are already dissecting them left, right, and center. The biggest news perhaps is that Latham — a top five mainstay — is a first time champion. Latham’s growth comes not only from acquiring large groups (such as O’Melveny’s entertainment group in Century City earlier this year), but also from increased profitability from several large windfall cases.

Most Am Law rankings remained stable within the top 100 firms. Few firms gained or dropped more than a few places in the rankings. The biggest drop was Alston & Bird (dropping from 44th to 54th). The two largest firm leapfrogs were Jenner & Block (a firm that jumped 13 slots from 87th to 74th, in part because of Tony Valukas’s powerhouse of a practice) and Wachtell (a firm that gained 10 spots in the rankings after leaping from 54th to 44th).  Twenty-four firms boasted the exact same rank as the year before and 23 moved just one spot (click to enlarge image).

Though law firm sizes have been increasingly growing, most of the Am Law 100 firms gain or lose 20 net attorneys a year, which is often negligible compared to the size of the firm. One might expect that the largest firms are the ones gaining or losing the most attorneys. This hypothesis is actually not accurate; the largest firms by headcount were by far the most stable in terms of net growth. The most unstable were the smaller firms.

PPP was also a decent indicator of net gains or losses. Generally, the higher the PPP, the fewer lateral losses or gains the firm realized. This observation is no coincidence, for the most part, the higher PPP firms are desirable and a lateral defection can be more quickly replaced by another stellar attorney. These firms also have less incentive to indiscriminately grow as they have already reached their status in the PPP rankings (as well as profit margins for many of them).

Unsurprisingly, the change in revenue from 2013-2014 correlated well with the amount of attorney losses or gains a firm realized. A few of the firms with the largest losses from 2013 to 2014 were Norton Rose, O’Melveny & Myers, and Alston & Bird. The firms with the most gains were, Latham, Sidley Austin, Kirkland & Ellis, Quinn Emanuel, and Cooley. Recruiters follow trends as opposed to working against them, so we expect to see more of the same from these firms in 2015.

Few firms had a bad all-around year in 2014. While most were strong in a majority of categories, very few were weak in all, except for Norton Rose and O’Melveny & Myers. This graph measures the percent change from 2013 to 2014 in several key areas.

The highest gross gains percentage increase by any firm was made by Cooley, whose gross revenue increased by 19%. Close behind was Wachtell, who boasted 17% gains over the previous year. The next four highest, hovering around 14%, were Willkie, Latham, Jenner & Block (as an aside, one of my favorites in the bunch), and Fragomen.

The greatest overall gains belong to Latham who obliterated expectations by maintaining their profit margins while greatly increasing their gross revenue at the same time. Latham grew $327,000,000 since the last Am Law report came out. Not so close behind were Sidley, Kirkland, Quinn Emanuel, and Cooley, with under half of what Latham gained.

The greatest percentage loss belongs to O’Melveny, whose gross revenue was 9% lower than the previous year. However, the firm with the highest gross revenue loss was Norton Rose. Kilpatrick performed well overall, however they lost 28% of their equity partners from the previous year. This greatly increased their leverage, however, if there isn’t enough work to go around, a round of layoffs could be in the near future for Kilpatrick associates.

Dentons by far claimed the greatest gain in equity partners, which is no surprise given their aggressive and well thought out expansion strategy. Compared to the last report, Dentons has 25% more equity partners, many brought in through mergers, lateral acquisitions, and promotions. Orrick took second place with a healthy 20% gain in equity partners over the previous year.

In terms of total net equity partner laterals, Norton Rose and Kilpatrick claim the bottom two spots with 53 and 45 losses respectively. The next closest firm was Nixon Peabody with 17 losses.

Dentons claims both spots in terms of net total and net percentage of change with 97 equity partners being brought on, four times as many as the next firm. Orrick and Baker Hostetler round out the top three with 24 and 20 net gains, respectively (click to enlarge images).


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