The 2017 Am Law 200: Keep Calm And Carry On

Reports of Biglaw's death are greatly exaggerated.

Keep-calm-and-carry-on USEI’m usually a pretty positive person — see, e.g., my recent shiny happy profile of David Boies — but with your indulgence, I’m going to intrude on Mark Herrmann’s turf and be a bit of a curmudgeon (affiliate link to Mark’s book, which I highly recommend).

Earlier this week, the American Lawyer released its Am Law 200 rankings. As you may recall, the eagerly anticipated 2017 Am Law 100 rankings came out last month, so the latest rankings feature the so-called “Second Hundred,” those firms ranked from #101 to #200 in terms of gross revenue.

Now, I enjoy law firm rankings as much as — indeed, probably more than — the next guy or gal. But I do question the significance of the Second Hundred as a classification. There’s a certain arbitrary quality to a firm’s total revenue, which is the product of revenue per lawyer (“RPL”) multiplied by the total number of lawyers. Some firms wind up in the Second Hundred rather than the Am Law 100 because they have lower RPL, but other firms wind up there because they’re just smaller in size. As a result of this arbitrariness, there are firms in the Second Hundred that really have more in common with Am Law 100 firms than with their peers in the Am Law 200.

Take, for example, a firm like Munger Tolles, in the Second Hundred at #127. In many ways — in terms of clients, cases, recruiting, and financial metrics — Munger is much more similar to Wachtell Lipton or Williams & Connolly, both Am Law 100 firms, than it is to McCarter & English, ranked #126, or Chadbourne & Parke, ranked #128 (and in the Am Law 200 for the last time, because of its acquisition by Norton Rose Fulbright).

This takes me to my next curmudgeonly point. The Am Law analysis of the Second Hundred focuses on the plight of firms in the “hollow middle,” but “Second Hundred” and “hollow middle” are not the same thing.

The “hollow middle” is a term coined by law firm consultant Bruce MacEwen of Adam Smith, Esq., one of the most astute observers of the legal industry out there. As MacEwen explained in our pages back in 2013, in his law firm taxonomy, “hollow middle” firms are “one-size-fits-all, not a special destination, generic law firms,” and as such, they are “endangered; at risk of marginalization, irrelevance.”

I agree with MacEwen that firms in the “hollow middle” don’t have promising long-term futures — they will lose high-end work to the Cravaths and Wachtells of the world, and they will lose low-end work to automation, other technological advances, and outsourcing — but “hollow middle” isn’t synonymous with “Second Hundred.” There are firms in the Second Hundred that are going to be fine (like Munger, I’d submit, despite its 10 percent drop in revenue last year). And there are firms in the Am Law 100 — I won’t name names — that do commodity work, just at such high volume that they are huge in terms of revenue.

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And here’s my final quibble, which is actually happy news. Everyone loves predictions of doom, but many “hollow middle” firms will be able to keep on chugging for a long, long time — quite possibly into the retirements of many people reading this post — before they run into problems.

Even though both lawyers and cab drivers bill for their time, the practice of law is very different from driving a taxi. Biglaw cannot be disrupted as easily as the taxi and limousine industry got disrupted by Uber, Lyft, and other ride-sharing companies. We lawyers are very clever. We have come up with all sorts of rules and regulations, many of them supposedly grounded in legal ethics, that protect our profession from disruption. Think about the rules against unauthorized practice of law, non-lawyer ownership of law firms, and fee splitting with non-lawyers. These rules, and others, make it more difficult for some clever innovator with a cool technology to put everyone in Biglaw out of a job.

Will some technologies put some lawyers in the unemployment line? Sure; it’s already been happening. In eDiscovery, for example, technologies like predictive coding have reduced the number of Biglaw associates (and also contract attorneys) who are needed for document review and production. But it will be a long time before technology can do all the work that Am Law 200 law firms handle (even if parts of that work might get automated, so some firms might shrink — and some firms already have shrunk).

But predictions like “in 10 years, the Am Law 200 will be gone, except for 25 mega-firms” are ridiculous. I’m saying this on the record in 2017; check back with me in 2027, and I’ll tell you, “I told you so.” We will still have an Am Law 200 in 2027, and while some firms will be gone, and others will be smaller in terms of headcount, the fundamental Biglaw business model will not be that different. There will still be at least 200 major law firms, and each of those firms will have hundreds of lawyers and tens of millions in revenue. (This year’s #200 firm, Archer & Greiner, has 178 lawyers and $91 million in revenue.)

Please don’t get me wrong; I’m not saying that firms should be complacent, ignore technology, or otherwise fail to innovate, thinking that they’re safe no matter what. I’m all in favor of firms evolving with the times (and so is Above the Law; look at our robust coverage of legal technology). But I just don’t think there’s any major cause for alarm. Some individual firms will shrink or even die — boy, Dewey know about that — but Biglaw as a whole isn’t folding anytime soon.

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Okay, I’m stepping off my soapbox. Flip to the next page for some analysis and tables from this year’s Am Law 200….


DBL square headshotDavid Lat is the founder and managing editor of Above the Law and the author of Supreme Ambitions: A Novel. He previously worked as a federal prosecutor in Newark, New Jersey; a litigation associate at Wachtell, Lipton, Rosen & Katz; and a law clerk to Judge Diarmuid F. O’Scannlain of the U.S. Court of Appeals for the Ninth Circuit. You can connect with David on Twitter (@DavidLat), LinkedIn, and Facebook, and you can reach him by email at dlat@abovethelaw.com.