Biglaw, Rankings

The 2016 Am Law 200: Revenue Swirling Down The Drain

While some firms came out on top, others were merely surviving. How did the Am Law 200 stack up?

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handful of moneyToday, the American Lawyer released its Am Law 200 law firm rankings — a closely watched list of the law firms that are well-known in legal circles, but not quite rich and prestigious enough to become members of the elite and influential Am Law 100.

When the Am Law 100 rankings came out in late April, the key takeaway was that while there was growth across the board, it was weaker than it had been in years past, and there may be trouble ahead. The latest Am Law 200 rankings tell a different tale, with flat performance in metrics like average revenue per lawyer and average profits per partner being celebrated in the face of declining revenues. The deeper one dives into the Second Hundred, the more pronounced the dips in revenue become.

While some firms came out on top, others were merely surviving. How did the Am Law 200 stack up?

Before we plunge into PPP, here’s an overview of how the “Second Hundred” firms (#101-#200) as a whole performed in 2015:

  • Gross revenue: $18.7 billion, down by 3.2 percent
  • Average revenue per lawyer: $649,023, up by 0.3 percent
  • Average profits per equity partner: $737,470, up by 0.1 percent

Focusing on the key metrics of RPL and PPP — which struggled to move in 2015 — this is an incredibly lackluster performance. Am Law has more information on the decrease in gross revenue on average across the Second Hundred:

Divided into quartiles based on gross revenue performance in 2015, firms in the Second Hundred’s top two quartiles performed better than the bottom two quartiles. Gross revenue declined 1.39 percent at firms 101-125, 1.49 percent at firms 126-150, 6.34 percent at firms 151-175 and 6.50 percent at firms 176-200.

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Some firms did so poorly that they fell out of the Am Law 200 entirely, such as Kenyon & Kenyon and Stevens & Lee, firms that were both victims of en masse equity partner departures. Other firms that exited the Second Hundred either fell apart (Dickstein Shapiro) or were gobbled up in gigantic mergers (Edwards Wildman combined with Locke Lord, while McKenna Long & Aldridge was swallowed whole by Dentons).

On the bright side, there were standout performances posted in 2015 by the Am Law 200’s all-star firms. Which ones had monumental performances?

Los Angeles’ Irell & Manella and Washington, D.C.’s BuckleySandler—both of which have fewer than 150 total lawyers and 40 equity partners—had the highest profits per partner among Second Hundred firms: $3,205,000 and $2,615,000, respectively. Both firms’ PPP also ranked in the top 20 of all Am Law 200 firms, a list dominated by The Am Law 100’s Wachtell, Lipton, Rosen & Katz; Quinn Emanuel Urquhart & Sullivan; and Paul, Weiss, Rifkind, Wharton & Garrison. Choate Hall & Stewart; Munger Tolles & Olson; Kasowitz, Benson, Torres & Friedman; Jeffer Mangels Butler & Mitchell; Patterson Belknap Webb & Tyler; and Lowenstein Sandler were the Second Hundred’s next highest performers, all with PPP greater than $1.5 million.

It’s also worth mentioning that three Second Hundred firms ranked among the top 20 of all Am Law 200 firms in revenue per lawyer, a metric that’s generally relied upon to evaluate the overall measure of a law firm’s health: Irell ($1.59 million), Munger Tolles ($1.29 million), and Choate Hall ($1.265 million).

Now for the part you’ve been waiting for: gross revenue, revenue per lawyer, and profits per partner. Flip to the next page to see how the Second Hundred made out.

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