The New AmLaw 100 List Is Available
I listened to the AmLaw 100 webinar this morning offered by American Lawyer in connection with release of their new report. My notes appear below. The webinar is available here to listen to until July (free reg req’d). The details of the report appear here.
Gross revenues for the top 100 firms were down 3.4%, lawyer headcount was down 1% and Revenue Per Lawyer (“RPL”) was down 2%. This RPL figure follows a 1% drop the year before.
Profits Per Partner (“PPP”) were up slightly (.03%) to $1.26M. This slight uptick is the result of two factors: (1) expense reduction; and (2) a .73% decline in the number of equity partners. That’s 139 fewer equity partners in the top 100 firms.
Non-equity partners, on the other hand, are up a record 37.9% (that’s 640 income partners). Legal industry consultants caution against growth in this category of headcount for three reasons: (1) these lawyers have no business; (2) income partners are less productive than associates; and (3) these lawyers cost more than associates. On the other hand, commentators recognize that promoting associates to income partner is a way to reward and retain talent.
After Wall Street imploded, many thought that the era of the “bulge bracket” firms was over. This is that group of law firms that cater to the most elite investment banks. The new report demonstrates that this is not the case, althought these firms might be getting by with the restructuring, bankruptcy and securities defense work related to the meltdown — work that isn’t sustainable over the long term.
Firms on the AmLaw 100 grew steadily throughout the decade until 2007 & 2008, when growth turned into “irrational exuberance” with huge leaps in revenues, profits and hiring. Take those two years out of the trendline, and 2009 continues the steady growth rate in 2006.
The following firms are off the new AmLaw 100 list:
- Stroock (after 25 years of being on the list)
- Ballard Spahr
- Kilpatrick Stockton
- Sutherland Asbill
- Womble Carlyle
These firms are new to the list:
Baker & McKenzie edged out Skadden for the first time since 1994 in gross revenues to gain the top spot on the list. Baker’s revenues actually dropped, but Skadden’s dropped more. Skadden remains twice as profitable, however.
Fifty-four firms on the list reduced headcount in 2009. On the other hand, that means 46 held steady or increased. This is compared to 22 firms reducing headcount in 2008, and 8 in 2007.
AmLaw reports were first launched 25 years ago with the AmLaw 50. Of the original 50, this is who’s left:
- 35 firms remain in the top 50
- 8 have dropped to 50-100
- 3 have dropped to 100-200
- 4 have merged
- 2 are gone (Finley Cumble and Mudge Rose) (anybody else old enough to remember these firms?)
Headcount in the top 50 firms has quadrupled in the last 25 years and RPL has grown from $265K to $843K. PPP is 5x greater, growing from $309K to $1.5M. Even if you adjust the $309K number to today’s dollars (to $623K), this still represents a 2.5x increase. Numbers like this certainly won’t deter people from going to law school. =)
Firms did not raise their rates in 2009, prompting much commentary on whether the traditional law firm model is dead. The traditional model (several attorneys per equity partner) appears to be alive and kicking, according to the new report. The current leverage ratio is 3.29 attorneys per equity partner, a ration that the AmLaw called “lucrative” on the webinar. This ratio is 2x the leverage employed 25 years ago for the top 50 firms.
There you have it! The report on the second 100 firms is due out next month.