Biglaw, Money

The Global 100: Fractured Futures At The Richest Law Firms In The World (2017)

Uncertain times may be ahead of us given their financial performance.

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The American Lawyer just released its latest edition of the Global 100, a ranking of the world’s 100 largest law firms by total revenue. How did these firms do in the year that was? As we learned from the most recent Am Law 100 rankings, revenue per lawyer flatlined, and that statistic was rather telling; in fact, it was one that could “mark the beginning of the end” for this period of post-recession recovery. On a global scale, things were rough in 2016.

Here is some analysis from the American Lawyer:

[T]his year’s Global 100 survey suggests that conditions for the world’s largest law firms are getting even more challenging. Total Global 100 revenue rose just 2.8 percent in 2016, to $99.3 billion—the lowest annual gain since the recession and the second consecutive year of slowing growth. (Group revenue is still likely to pass $100 billion next year for the first time ever, however, requiring an increase of just 0.7 percent to hit that milestone.)

Having fallen by 2.1 percent in 2015, the group’s average revenue per lawyer (RPL)—a key measure of law firm health and efficiency—remained essentially flat last year, at $813,000. Global 100 RPL has increased by just 5.7 percent over the six years since the end of the recession—far below the rate of inflation.

An even more alarming picture is emerging at the bottom line, with total net income growth plummeting from 8.6 percent in 2015 to just 2.7 percent last year.

This resulted in the first decrease in average Global 100 profit per equity partner (PPP) in seven years, with that metric dropping half a percent, to $1.59 million.

This is worrisome. From the sounds of it, the future for Biglaw firms across the globe will be challenging and uncertain. As Chris Johnson of the American Lawyer wondered, is this as good as it gets for global law firms? We will continue to watch these trends over the course of this year.

Here are the top 10 firms of the 2017 Global 100 (i.e., the top 10 firms ranked by 2016 revenue). This is the second time in history that the top 5 firms are U.S.-based:

  1. Latham & Watkins: $2,823,000,000
  2. Baker McKenzie: $2,670,000,000
  3. Kirkland & Ellis: $2,651,000,000
  4. Skadden Arps: $2,495,000,000
  5. DLA Piper: $2,470,000,000
  6. Dentons: $2,205,000,000
  7. Clifford Chance: $2,087,500,000
  8. Allen & Overy: $2,059,500,000
  9. Jones Day $1,977,000,000
  10. Linklaters: $1,950,000,000

There was a bit of disruption in this year’s rankings, thanks to Kirkland’s meteoric rise. Not only did the firm’s gross revenue jump by 15 percent, but its profits per partner surpassed $4 million for the first time ever. DLA Piper, on the other hand, dropped two places this year, and it’s the first time the firm has placed outside of the top three since 2011 (when Am Law first began treating DLA’s American and global arms as a single firm). Jones Day made its way back into the top 10, and Freshfields was forced out entirely (in fact, the firm is now in 14th place, its lowest ever position since Am Law started this ranking almost two decades ago).

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What about the closely watched profits per partner rankings? Flip to the next page to see which firms produce the world’s richest partners, plus the firms with the most lawyers.

Staci ZaretskyStaci Zaretsky has been an editor at Above the Law since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, or comments. You can follow her on Twitter or connect with her on LinkedIn.

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