The American Lawyer on Thursday released its annual report on the top 100 law firms, ranked by gross revenue.
It’s a lot to digest, so we’ve singled out five data points, below, that caught our attention:
One: Both Headcount and Revenue Grew
The number of lawyers in the AmLaw 100 rose 2.7 percent, and the overall revenue for these firms rose 4.3 percent.
That’s good news for an industry that often hears about headwinds. For instance, earlier this month, a report on a sample of 155 law firm by Citi Private Bank’s Law Firm Group found that in the second half of 2016 demand, defined as the total number of billable hours a firm logged, declined by 0.3 percent.
Analysts often note that not all law firms are faring well — some are improving their financial performance and others are falling behind. But on the other hand growth is growth.
“You could speak about isolated practice areas that are doing better than others,” said Jeffrey Liebster, a partner at the legal placement firm, Major, Lindsey & Africa, “but in general it indicates the industry is healthy notwithstanding the significant changes to the way clients and their lawyers are doing business.”
The total gross revenue posted by the AmLaw 100 hit $86.7 billion with net income of $34.51 billion.
Two: Not all Firms Have Grown Together
The gap between the top 50 firms and the bottom 50 firms is real.
Gina Passarella, executive editor of The American Lawyer, pointed at the Revenue Per Lawyer data in an interview with Big Law Business when asked for her main takeaways from this year’s data.
It’s true that gross revenue is up, Passarella said, but the differences between elite firms and less elite firms become clear when you look at revenue per lawyer.
Law firms in the top half of the AmLaw 100 experienced a 3.6 percent increase in revenue per lawyer, but the bottom half lost ground, and revenue per lawyer actually declined by 1.3 percent.
Overall, revenue per lawyer grew by 1.5 percent. But looking at law firms’ performance as a group masks the fact that some firms are gaining ground while others are losing ground, hence Passarella said the theme of the report is ‘Choppy Seas,’ a metaphor for what’s happening in the legal market.
“The reason we went with ‘Choppy Seas,’ is it’s really a mixed result,” she said.
Three: Firms With Top Revenue and Profits Per Equity Partner.
The abbreviated rankings by gross revenue:
- Latham & Watkins, with 2,280 lawyers, held the number one spot with $2.823 billion in gross revenue.
- 3. This year, for the first time, the 1,759-lawyer Kirkland & Ellis moved into the number two position with $2.651 billion — a 15 percent increase from its 2015 performance.
- 5. The much larger 4,607-lawyer Baker McKenzie, which had a good year growing revenue by 7.8 percent, nonetheless held steady in the third spot, with $2.62 billion in gross revenue.
The profits per partner rankings remained unchanged from last year:
- Wachtell Lipton posted a $5.8 million profits per partner. Despite that, it was an off year — overall revenue declined 8 percent to $765 million and PPEP had been $6.6 million.
- 3. Quinn Emanuel broke the $5 million mark at $5.015 million.
- 5. Paul Weiss posted $4.38 million.
Four: Three New Faces This Year.
There were three newcomers to the AmLaw 100: Nelson Mullins Riley & Scarborough, which jumped to number 88 on 18 percent growth to $380 million in revenue; Husch Blackwell posted the largest year-over-year increase in gross revenue, at 23.2 percent, arrived at 96th with $350 million in revenue; and Shook, Hardy & Bacon found the last spot with $334 million on 3.6 percent growth.
Five: Equity Partnership More Valuable
Making partner is increasingly rare — that’s not your imagination playing tricks on you! As Chris Johnson reported , parenthetically, in an article on the “super rich,” the name for that segment of law firms with very high profits per lawyer, there are fewer equity partners on a relative basis these days:
When The American Lawyer published its first Am Law 50 survey in 1985, 36 percent of all lawyers at those firms were equity partners. In this year’s Am Law 100, less than 22 percent of all lawyers are equity partners.
Passarella told me that the report was a joint effort between the newsroom and the research analysts at ALM Intelligence, with work starting back in January and involved no less than 30 people.
UPDATED: An earlier version of this story incorrectly listed the net income of the AmLaw 100 as $34.51 million. It has been corrected to reflect that it is $34.51 billion.