Biglaw, Partner Issues, Partner Profits

Stat Of The Week: Second-Tier Firms Strike Back

The Am Law 51-100 firms still have plenty of life left in them.

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For the past few years, the dominant trend in Biglaw has been dispersion, the leaders pulling away from the pack. Check out the 2015 and 2014 Am Law 100 rankings. They tell the story of super-big, super-profitable, super-global law firms, the Lathams and Skaddens of the world, putting more distance between themselves and their less successful rivals. Indeed, some observers have predicted that within a decade or so we’ll wind up with about 25 Biglaw behemoths, due to “creative destruction” of the remaining Am Law 200 or NLJ 350 firms.

So it was interesting — and surprising — to see this statistic in the new report from Citi Private Bank on Biglaw’s financial performance in the first quarter of 2015. We hereby declare it our “Stat of the Week”:

Looking at the results by revenue size, the Am Law 51-100 was the only segment in The Am Law 200 to see demand growth during the first quarter, up 1.2 percent.

And wait, there’s more:

[Am Law 51-100 firms] saw the highest proportion of firms (62 percent) reporting demand growth vs. other segments. Demand growth, together with the strongest rate increases, resulted in these firms seeing the biggest growth in revenue. This differs from the recent trend of Am Law 1-50 firms outperforming others, as the chief beneficiaries of the uptick in transactional work.

Will some firms fail to innovate and ultimately fall apart? Sure. But don’t underestimate the ability of Biglaw firms to adapt to changing times — or the difficulty of disrupting an industry as slow to change, based on precedent, and heavily regulated as law.

Citi Report: Law Firm Expenses Outpace Revenue in First Quarter [Am Law Daily via Morning Docket]

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Earlier: The 2015 Am Law 100: Revenues Rising, Profits Popping, And A New #1 Firm
The 2014 Am Law 100: ‘The Super Rich Get Richer’

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