There was a lot of talk in the media in the past two years about how the financial credit crisis would substantially change the legal scene, especially at "BigLaw" law firms. That talk can now be put to rest for the time being. As Aric Press and Greg Mulligan write in Lessons of The Am Law 100 (see our comments further below) about the Am Law 100:
"[T]he 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.Some notable facts that we summarize from the Am Law 100:
The 23 firms headquartered in New York, on average, outperformed the rest of the pack.... This was a sharp contrast to 2008, when the New York firms underperformed the rest of The Am Law 100.
From 2001 on, The Am Law 100 grew steadily. In 2007 and 2008, that growth turned into irrational exuberance with big jumps in revenue and profits accompanied by a surge in hiring, just as the bottom fell out on the demand side. As a thought experiment, erase those two years from the charts and consider the growth of The Am Law 100. The average result: A steady upward progression from 2006 to 2009. On every measure, the firms advanced from where they were three years ago. They were 11 percent bigger, ahead 3 percent on RPL, and up 5 percent on PPP."
- Baker & McKenzie (3949 lawyers, 720 equity partners) replaced Skadden (1860 lawyers, 435 equity partners) in 2010 as the new #1 for gross revenues, although both remain the only two "big law" firms to gross over $2 billion in the past year.
- Gross revenue, however, is a function of the number of lawyers in a firm, which varies. One also has to take revenues per lawyer into account in looking at the stats.
For example, my old alma mater law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP ("Paul Weiss" in the trade) ranked 11th in RPL (Revenues per Lawyer) coming in at $1,020,000 as compared to $2,530,000 at top-ranked Wachtell. For this stat, it is advantageous if the ratio of equity partners to the number of lawyers in the firm is high since equity partners generally bill their time out at a higher rate than associates. Wachtell has 231 lawyers and 86 of these are equity partners (ca. 37%). Paul Weiss has 653 lawyers of which 116 are equity partners (ca. 18%). A ratio of around 20% (plus or minus 5%) seems to be the prevailing ratio at many "big law" law firms, so Wachtell is an exception in its high ratio of equity partners.
- A related statistic is PPP (Profits per Partner), where Wachtell also ranked 1st, and Paul Weiss, for example, ranked 6th. This statistic shows in some cases that bigger is not necessarily better for profits. Although Baker & McKenzie rose to the top in terms of gross revenues, their decline in profits per partner also ranked #1 (down 17.8%) .
- The figures for actual average compensation of partners (both equity and non-equity) show Wachtell at the top ($4,300,000 per partner), with e.g. Paul Weiss at 4th position ($2,690,000 per partner).