By aggressively cutting costs,
The Am Law 100 eked out a small
increase in profits. But the tough
choices are just beginning.
LESSONS OF THE
By Aric Press and Greg Mulligan
AM LAW 100
IT COULD HAVE BEEN WORSE. THAT’S the best that can be said
for the performance last year of The Am Law 100, the top-grossing law firms in the nation. Three of the four key categories we’ve
measured for 25 years—gross revenue, head count, and revenue per
lawyer—fell, while profits per equity partner (PPP) barely increased
by 0.3 percent, or $3,463, to $1.26 million.
But on average, even the bad results weren’t nearly as dire as
many firms had feared just a year ago. Overall, gross revenue was
off by 3. 4 percent, and head count dropped by about 1 percent. The
firms earned a total of $64.8 billion, down roughly $2.3 billion. And,
in the first year-over-year reduction in head count since 1993, they
cut their lawyer labor force by 1,219, to 80,772. For all the heated
attention to layoffs, about half the firms actually increased their size
last year. RPL, which we regard as the most telling economic indicator, was down $15,697, to $802,381, a 2 percent fall. This was the
second consecutive year in which RPL fell, another sign of the toll
of the weak economy.
There were at least two reasons why the average partner profts
eked out a small gain. Firms aggressively reduced expenses in 2009. And, the number of equity partners
in The Am Law 100 dropped. There were 139 fewer
of them, down 0.73 percent, to a total of 18,808. By TURN THE PAGE for the debut of our Periodic Table of The Am Law 100.
contrast, the number of nonequity partners increased by 640; col-
lectively they now constitute a record 37. 9 percent of all Am Law
100 partners.
The averages mask two important developments:
O THE SEGMENTATION OF THE AM LAW 100 CONTINUES. The
23 firms headquartered in New York, on average, outperformed the
rest of the pack. And, of that group, the 13 firms with PPP of $2
million or more did better still, with a 3 percent gain in per-partner
profits. In this group, there wasn’t any growth in equity partners.
The other ten New York firms showed 1 percent gains in profits,
spurred by a 4 percent drop in equity partners, mainly at White
& Case and Dewey & LeBoeuf. The remaining 77 firms dropped
about 0.8 percent in PPP. This was a sharp contrast to 2008, when
the New York firms underperformed the rest of The Am Law 100.
Putting geography aside, the top quintile of firms in PPP was the
only segment of the market to show modest increases in both profits
and RPL. This group includes New York’s 13-firm moneyed elite,
plus such giants as Latham & Watkins, Kirkland & Ellis, and Gibson, Dunn & Crutcher, as well as smaller, pure litigation plays like
Quinn Emanuel Urquhart & Sullivan and Boies, Schiller & Flexner.
After the Wall Street implosion, some competitors had predicted
that the era of the “bulge bracket” firms was continued on page 172
AVERAGE GROSS REVENUE
The 3. 4 percent drop was
smaller than many had feared.
PROFITS PER PARTNER
Firms as a whole posted only a
tiny increase from 2008.
REVENUE PER LAWYER
With the boom years excluded,
firms are up from 2006 levels.
$700,000,000
O
O
O
8
$1,350,000
O
8
O
$800,000 8
$600,000,000
8
O
8
$500,000,000
$600,000
2006
2007
2008
2009
$1,200,000
2006
8
2007
2008
2009
2006
2007
2008
