You can access the various charts via this portal page. Aric Press and Greg Mulligan summarize the results:
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?
It’s one of the few things still shrouded in secrecy at most firms: which partners have equity in the firm and which don’t. Actual partners, of course, get a share in the firm’s profits, and are part of the PPP calculations reported by Am Law. Non-equity partners get the partner honorific, but in actuality they’re often just glorified senior associates, at least when it comes to matters like salary and major firm decisions. (Of course, this varies from firm to firm.)
Being a non-equity partner can be nice. You generally don’t have to toil on management committees or get caught up in partnership politics, and you may be less personally exposed to financial fallout should the firm’s fortunes sour (assuming the equity partners made personal guarantees on loans). But being a non-equity partner is also like being a stepparent that the children don’t respect. You don’t have any real power and don’t get to reap the full rewards from your investment and care.
Women and minority groups have tried to put pressure on firms to reveal partners’ equity or non-equity status when it comes to diversity reporting. But firms have resisted, saying that they don’t want to stigmatize non-equity partners. Angela Onwuachi-Willig sums it up on Concurring Opinions:
Over the past two years, the National Association for Law Placement (NALP) has tried to obtain information regarding the breakdown of equity and non-equity partners by gender and race at law firms. The majority of NALP’s law firm members refused to hand over the information, and NALP eventually gave in on February 12.
The Executive Director of NALP, [James] Leipold, indicated that most firms cited privacy concerns for not divulging the details of their equity and non-equity partnership breakdowns. According to Leipold, small firms especially worried that providing such information would allow non-equity partners to be easily identified and stigmatized.
Well, Delaware firm Young Conaway Stargatt & Taylor has revealed who its non-equity partners are, though it did so by accident. The firm’s controller needs a little lesson on the use of “bcc”…
It’s a been a beautiful week in New York City. The sun is shining and Biglaw partners are making it rain. Am Law Daily reports some great news from Cravath:
Cravath, Swaine & Moore joins the exclusive ranks of New York firms that achieved a significant jump in both revenue and profits per equity partner (PPP) last year. The firm’s revenue rose 7 percent to $569 million; PPP increased 8 percent to $2.7 million, according to our reporting.
This is wonderful news compared to what was coming out of Cravath last year:
Cravath’s 2009 results are an optimistic change from a disappointing 2008 when reveue fell 13 percent and PPP plunged 24 percent, as we reported last year. Despite this rebound, the firm’s numbers remain below the high water mark of 2007, when revenue reached $610.5 million and PPP soared to $3.3 million.
But Cravath isn’t the only New York titan that received good news this week …
It’s been almost a year since a Biglaw firm dissolved, so don’t expect any more lights to be turned off because of the recession. But an article in Legal Week announces that Howrey is facing some difficult times:
Howrey is set to cut up to 10% of its partnership over the coming months in the wake of a 35% drop in profits per equity partner (PEP) during 2009.
Between 25 and 30 partners are expected to leave Howrey over the next few months as part of the restructuring, with the majority of the cuts set to fall in the US. Up to three partners are expected to leave across the firm’s European offices.
That’s a huge number. How do you say “trail of tears” in partner-speak? We’ve seen lots of firms lay off 10% of their associates, but we haven’t seen this kind of forced partner exodus.
How times have changed. It wasn’t all that long ago that Howrey was acquiring partners in bunches from other failed law firms.
Now the firm appears to be struggling. Am Daily suggests that these lateral hires are part of the reason for Howrey’s current troubles:
Ironically, the acquisition of high-profile laterals–including a construction group from the now-defunct Thelen and Gary Bendinger, whose lucrative client list includes KPMG and other auditors–created internal client conflicts that hurt some partners, according to two sources familiar with the matter. In an interview Thursday, [managing partner Robert Ruyak] acknowledged as much, but said that firms routinely make such trade-offs in planning for the future.
This morning, we wrote about the partners at DLA Piper sharing in the pain of 2009. The trend at many firms reporting 2009 numbers has been the revenue line heading south while the profits-per-partner line heads north. At DLA, however, revenue and PPP were down at the firm, so Elie gave them a shout-out for not cutting deeply enough.
But perhaps more striking is Covington & Burling: Last year’s revenue was actually up at the D.C.-based firm — but PPP was down.
Covington is über white-shoe, but this seems oh-so-radical-populist. What happened?
We have thoroughly examined DLA Piper’s new associate compensation system. While the firm has argued that its move to merit-based compensation is something more than a paycut, many associates disagree.
But unlike some firms that have seemingly used pay cuts and associate layoffs as a way to protect partner profits, it appears that DLA partners shared the pain felt by their employees. Or at least the firm didn’t cut deep enough to generate an increase in PPP despite declining revenue. Am Law Daily reports:
DLA Piper U.S.* reports that gross revenue declined nearly 14 percent in 2009, to just over a billion dollars. Revenue per lawyer (RPL) and profits per equity partner (PPP) fell only about 5 percent, due to cuts in the firm’s lawyer ranks.
*DLA Piper is structured as a set of alliances. These results reflect only the U.S. operation.
While the numbers add more circumstantial evidence that DLA’s compensation structure represents an attempt to cut expenses, at least the firm isn’t crowing about record profits while their employees suffer.
Don’t get me wrong, the firm is still happy with itself given a difficult 2009. Statements of success after the jump.
About a week ago, K&L Gates’s Peter Kalis called for the abolition of NALP. Kalis was focused on NALP’s well-documented problems trying to guide the recruitment of fresh talent to Biglaw. Kalis isn’t alone in thinking that NALP does an ineffective job setting out legal recruitment guidelines.
But if the organization can’t even be trusted to accurately report statistics, then maybe we really do need to examine what value NALP is adding to the process. There has been a movement, led by various groups of women lawyers, to get NALP to acknowledge the difference between equity partner and non-equity partner when reporting diversity stats. The distinction is important for women and minority groups trying to asses whether or not firms are doing a good job at promoting women and minorities to partner. You know, actual partners — not the non-equity “partners” who don’t get a share in the firm’s profits (and thus don’t affect profit per partner numbers as reported to Am Law).
The importance of becoming an actual partner as opposed to a non-equity employee should be obvious, but I’ll let Ms. J.D. explain:
Thanks in part to the efforts of groups like NAWJ, NAWL and MCCA, surveying and ranking organizations like Vault and AmLaw have learned to distinguish between equity and non-equity partners when collecting data from firms on stats like profits-per-partner and diversity. As you can imagine firms have an incentive to decrease the number of people they describe as partners when reporting profit-per-partner numbers and increase it to include more women or racial minorities when reporting diversity numbers. Firms care about the resulting rankings. We need to keep these firms honest to leverage the rankings as an additional force for increased diversity in firms.
It seems like the organization charged with collecting partnership data from law firms should be most sensitive to this distinction. But apparently NALP has decided that it will continue to ignore the distinction between equity and non-equity partners.
What’s the rationale for NALP’s position?
Although our colleague Elie Mystal is on vacation this week, he took some time today to sit down with Fox Business News, where he discussed how some large law firms enjoyed record profits in 2009 — thanks, in part, to record layoffs.
An added bonus: he offered weight loss advice! No donuts involved.
The profit gods did not smile upon Morgan Lewis & Bockius in 2009. Not on the partnership, not on the associates. We’ve already reported on MLB’s various attempts to change its associate pay scale. But making employee costs “merit-based” wasn’t enough to keep Morgan Lewis profits growing. Am Law Daily reports:
Morgan, Lewis & Bockius saw declines in revenue and profits in 2009 as a general economic slowdown and a hiring spree impacted the firm’s bottom line.
As of September 30, the end of Morgan Lewis’s fiscal year, 2009 revenue declined by nearly 5 percent to $1.07 billion from $1.12 billion in 2008. Profits per equity partner (PPP) dropped 15 percent to 2006 levels. The firm’s 2009 financials contrast sharply from 2008–that year, Morgan Lewis saw an 8 percent boost in PPP.
“We knew we dodged the bullet [in 2008], but we knew the hit was coming later,” says managing partner Thomas Sharbaugh.
The firm’s cost cutting measures were more than counterbalanced by significant new investments in lateral hires, says Sharbaugh. Morgan Lewis hired 55 new lawyers in the last fiscal year, nearly double the number of lateral hires made in 2008.
Oh, I see. Morgan Lewis is using laterals to replace people that they’ve laid off or deferred. Well, that’s a plan, I guess.
But for that plan to work, laterals have to want to come to the firm. Usually attracting laterals involves paying them competitively. Is MLB doing that?
More 2009 profit numbers are in, this time for law firms based in Boston. And, as we’ve seen elsewhere, partners in Boston are enjoying record-breaking profits. The Boston Globe reports:
Senior lawyers at three of Boston’s biggest law firms had their most profitable year ever in 2009, despite widespread job losses in the city’s legal industry.
Bingham McCutchen, Fish & Richardson, and WilmerHale all said they recorded the highest average profits per partner ever in 2009. Meanwhile, some other firms reported better-than-expected financial results.
For the associates laid off by Bingham, the associates laid off by Fish, and for the staff laid off by WilmerHale, I don’t know what to tell you. Biglaw partners in Boston didn’t just find a way to make money during the recession, they were able to make more money than ever before.
I guess all of the laid off associates and staff can feel good about helping them rake in the dough?
All the gory details after the jump.
The holiday season is upon us, and yet again, you have no idea what to get for the fickle lawyer in your life. We’re here to help. Even if your bonus check hasn’t arrived yet, any one of the gifts we’ve highlighted here could be a worthy substitute until your employer decides to make it rain.
We’ve got an eclectic selection for you to choose from, so settle in by that stack of documents yet to be reviewed and dig in…
Ed. note: The Asia Chronicles column is authored by Kinney Recruiting. Kinney has made more placements of U.S. associates, counsels and partners in Asia than any other recruiting firm in each of the past six years. You can reach them by email: email@example.com.
We currently have a very exciting and rare type of in-house opening in China at one of the world’s leading internet and social media companies. Our client is looking for an IP Transactional / TMT / Licensing attorney with 2 to 6 years experience. The new hire will be based in Shenzhen or Shanghai. Mandarin is not required (deal documentation will be in English) but is preferred. A solid reason to be in China and a commitment to that market is required of course. This new hire will likely be US qualified (but could also be qualified in UK or other jurisdictions) and with experience and training at a top law firm’s IP transactional / TMT practice and could be currently at a law firm or in-house. Qualified candidates currently Asia based, Europe based or US based will be considered. The new hire’s supervisors in this technology transactions in-house team are very well regarded US trained IP transactional lawyers, with substantial experience at Silicon Valley firms. The culture and atmosphere in this in-house group and the company in general is entrepreneurial, team oriented, and the work is cutting edge, even for a cutting edge industry. The upside of being in an important strategic in-house position in this fast growing and world leading internet company is of the “sky is the limit” variety. Its a very exciting place to be in China for a rising IP transactional lawyer in our opinion, for many reasons beyond the basic info we can share here in this ad / post. This is a special A+ opportunity.
If your firm is in ‘go’ mode when it comes to recruiting lateral partners with loyal clients, then take this quiz to see how well you measure up. Keep track of your ‘yes’ and ‘no’ responses.
1. Does your firm have a clearly defined strategy of practice groups that are priorities of growth for your office? Nothing gets done by random chance, but with a clear vision for the future. Identify the top practice areas for which you wish to add lateral partners. Seek input from practice group leaders and get specifics on needs, outcomes, and ideal target profiles.
2. In addition to clarifying your firm’s growth strategy, are you still open to the hire of a partner outside of your plan? I’ve made several placements that fit this category. The partner’s practice was not within the strategic growth plan of my client, but once the two parties started talking with each other, we all saw how it could indeed be a seamless fit. Be open to “Opportunistic Hires.” You never know where your next producing partner might come from, so you have to be open to it. I will be the first to admit that there is a quirky element of randomness in recruiting.
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