Growth at the 250 largest law firms in the country receded this year, likely a reflection of the economic downturn of 2008.
The results of the 2008 NLJ 250, The National Law Journal's 31st annual survey of the nation's largest law firms, show that they added 4.3 percent more attorneys this year, compared with 5.6 percent growth in 2007. The total number of attorneys working at the 250 law firms was 133,723, compared with 128,213 attorneys in 2007.
The gains last year represented the largest increase of attorneys since 2001, when the census ballooned by 8.2 percent. In 2006, law firm growth was 4 percent, and in 2005, it was 4.4 percent
DLA Piper held its position at the top of the list, with 3,785 attorneys. It grew by 4.5 percent in 2008.
Last year, DLA Piper unseated Baker & McKenzie as the nation's largest firm, a spot that it had occupied since the NLJ 250's inception. Baker & McKenzie held the No. 2 spot this year with 3,627 attorneys.
The law firm taking the No. 250 position, with 174 attorneys, was Columbia, S.C.-based Nexsen Pruet.
The results of the 2008 NLJ 250 indicate that law firms continued to add attorneys to meet clients' needs, which increasingly are fanning out domestically and abroad. The expansion, however, apparently was tempered by an economic slump that included bank failures, rollercoaster oil prices, an erratic stock market and a $700 billion government bailout to resuscitate credit sources.
The 2008 NLJ 250 was based on attorney census information covering the period between Oct. 1, 2007, and Sept. 30, 2008, which was provided by the nation's 300 largest law firms.
This year, the cutoff point was a bit higher than in 2007, which was 172 attorneys.
Although the 4.3 percent increase in the number of attorneys was a slowdown from last year's growth, the decline was not graver for a couple of reasons, said James W. Jones, vice president of Hildebrandt International, a law firm consultancy.
First, associate hiring generally runs two years behind the actual start date of those attorneys, since most large firms bring aboard associates during their second year of law school for full-time employment after they graduate.
"You have a pipeline that runs for a long time," he said. "You can ratchet down your associate intake somewhat, but it is really hard to turn off the spigot."
Second, with law firms facing the retirement of many of their baby-boomer partners, they still need to hire new blood, even in a down economy, he said.
"Those realities aren't going to change," Jones said.
A YEAR OF BELT-TIGHTENING
Even so, 2008 proved to be a year of relative belt-tightening. Indeed, associate growth slowed by a full percentage point. This year, law firms added 4.3 percent more associates, compared with 5.3 percent expansion in 2007. The NLJ 250 law firms employed 67,648 associates this year, compared with 64,885 in 2007. Associate growth in 2006 equaled 4.8 percent.
Also lagging notably behind 2007's results were partner totals. This year saw an increase in partners of 3.5 percent. Some 52,980 partners worked at NLJ 250 firms in 2008, compared with 51,191 in 2007, when partner growth equaled 4.6 percent. In 2006, partner growth was 5.1 percent.
The percentage of partners among all attorneys was about the same this year. The 52,980 partners (including equity and nonequity) represent 39.6 percent of all NLJ 250 attorneys in 2008. In 2007, the number of partners, 51,191, among all attorneys represented 40 percent.
Law firms at the top of the list this year stayed put for the most part. Those in the top nine positions in 2008 were the same as those in the top nine spots last year. New to the top 10 was K&L Gates, which moved up from the No. 13 slot it held last year. The law firm, with 1,726 attorneys, grew by 25 percent in 2008. Knocked out of the top 10 was Reed Smith, which moved to No. 11.
The NLJ 250 law firms continued to boost their ranks with a large number of nonequity partners. Among the 221 law firms that provided equity and nonequity partner breakdowns, the average number of nonequity attorneys -- 60.4 -- represented a 9.4 percent increase compared with 2007, when the average of number of nonequity partners was 55.2. The nonequity partner results in 2007 were an 8.2 percent increase from 2006, when the average number of nonequity partners was 51.
Regarding women attorneys, the average number of female partners among the NLJ 250 firms fluctuated little in 2008. It was 39.4, compared with 39.3 in 2007. Female associates fared a little better this year, when the average number was 124.7 compared with 120.7 last year.
A look at the totals of women attorneys among the 234 law firms that provided gender breakdowns shows that the increase of women attorneys in 2008 was significantly lower than last year. In 2008, law firms added 2.7 percent more women attorneys, compared with 6.6 percent growth in 2007, when 233 law firms provided gender breakdowns. A total of 42,693 women attorneys worked in these NLJ 250 firms, compared with 41,558 in 2007.
The year-over-year difference in part is attributable to two large firms -- Chicago-based Mayer Brown and Reed Smith -- that did not provide 2008 gender breakdown information by the survey's deadline. Those firms were included in last year's totals.
The average number of lawyers this year identified as part of the "other" category -- meaning those who were nonpartner and nonassociate attorneys -- was 50.1, a negligible difference from last year's average of 49.5.
NOT A YEAR OF MEGAMERGERS
In 2008, law firm mergers continued to play a significant role in the legal services market, as firms looked to remain viable and competitive in the changing economy. But 2008, at least so far, is not a year of megamergers. Indeed, only three mergers occurred in which both firms already held NLJ 250 positions.
In July, K&L Gates merged with Kennedy Covington Lobdell & Hickman, a Charlotte, N.C.-based law firm that was ranked No. 202, with 210 attorneys, on the NLJ 250 last year. The merger boosted K&L Gates' number of attorneys to 1,726, and helped put it among the 10 law firms that increased the most. Its growth equaled 25 percent.
Effective on Oct. 2, 2007, was a merger between Dallas-based Locke Liddell & Sapp, which ranked No. 104, with 421 attorneys in 2007, and Chicago-based Lord, Bissell & Brook, which ranked No. 151 with 290 attorneys. The new firm, Locke, Lord, Bissell & Liddell, has 707 attorneys and is ranked at No. 54 this year.
In March, St. Louis-based Husch & Eppenberger, ranked No. 136, with 332 attorneys, last year, paired with Kansas City, Mo.-based Blackwell Sanders, ranked No. 138, with 326 attorneys, last year, to create Husch Blackwell Sanders, a 629-attorney firm this year. Now No. 68, the firm also was among the 10 law firms that increased the most in 2008.
Several NLJ 250 law firms paired with foreign firms this year to expand their international presence. For example. Mayer Brown merged with Hong Kong's Johnson Stokes & Master; Reed Smith merged with Hong Kong's Richards Butler and the following firms merged with European shops: Orrick, Herrington & Sutcliffe; Paul, Hastings, Janofsky & Walker; Boston's Edwards Angell Palmer & Dodge; and Howrey, based in Washington.
Smaller domestic mergers this year included K&L Gates with Hughes & Luce, a 150-attorney law firm based in Dallas. Another combination was Richmond, Va.-based McGuireWoods, ranked No. 35 this year, with Helms Mullis & Wicker, a Charlotte, N.C.-based firm, that had about 160 attorneys. In addition, Taft Stettinius & Hollister, a Cincinnati-based firm ranked No. 139 this year, merged with Sommer Barnard, an Indianapolis-based firm with about 100 lawyers.
Also this year, Denver-based Holland & Hart, ranked No. 114 with 406 lawyers, merged with Hale Lane, a law firm in Reno, Nev., with about 65 attorneys.
Not surprisingly, among the firms that expanded the most were those that underwent the largest mergers. Law firms included on the charts of those growing or shrinking the most were determined by the number of attorneys gained or lost and ranked by the percentage of attorneys gained or lost.
Husch Blackwell Sanders grew by 297 attorneys, or by 89 percent. Locke Lord Bissell & Liddell, ranked No. 54, jumped by 286 attorneys for a 68 percent gain, and K&L Gates, No. 10, rose by 345 attorneys, or by 25 percent.
Among the other top 10 law firms that grew the most was Baker & McKenzie, which added 292 attorneys for an 8.8 percent jump. Jones Day added 185 lawyers for 8 percent growth; and Skadden, Arps, Slate, Meagher & Flom brought aboard 165 more lawyers, also for an 8 percent increase. Rounding out the top 10 law firms that increased the most was DLA Piper, which added 162 attorneys for a 4.5 percent jump.
CHANGES FOR ATLANTA FIRMS
Also expanding significantly this year was Atlanta's King & Spalding, which added 178 attorneys, equaling a 22 percent increase. Ranked No. 28 this year, it jumped from the No. 37 spot in 2007. Its number of attorneys climbed to 992 from 814.
King & Spalding Chairman Robert Hays said that building a global platform enabled the firm, originally focused on the Atlanta market, to go where the business is.
"While [attorneys] live here in Atlanta, much of their practice doesn't have much to do with Atlanta," he said.
Indeed, two law firms with significant decreases were based in Atlanta. Powell Goldstein lost 55 attorneys, for a 22 percent decline. In 2007, the firm had 250 lawyers, compared with 195 this year. It dropped to No. 218 this year, from the No. 169 spot in 2007.
Late last month, Bryan Cave announced that it was merging with Powell Goldstein, effective on Jan. 1, 2009. The new firm will have about 1,050 attorneys in 25 offices. The move gives Bryan Cave a presence in the Atlanta, Dallas and Charlotte, N.C., markets.
Another Atlanta law firm that showed a marked decrease was Sutherland Asbill & Brennan. Its reported numbers indicated a drop to 429 attorneys from 511 in 2007, or by 16 percent.
According to a spokeswoman for Sutherland, the firm's decline in attorney numbers was actually 2.5 percent. The spokeswoman said that the figure of 511 total attorneys provided by the law firm last year was a number reflecting a total head count of attorneys, not a full-time equivalent figure. She said that the full-time equivalent number last year was 440 attorneys.
Mark Wasserman, managing partner of Sutherland, said that although transactional work slowed for the firm in 2008, litigation, tax and energy practices were strong. He said that established Atlanta firms such as Sutherland will be able to weather the downturn, but he added that the law firm is looking to expand its other offices, particularly its regulatory practice in Washington.
Also showing a double-digit decline was Cadwalader, Wickersham & Taft, ranked No. 71 this year, compared with No. 50 last year. Its attorney census dropped to by 15.4 percent, to 610 lawyers from 721. While its number of partners increased by two -- to 114 from 112 -- the law firm's number of associates sank to 410 from 501, an 18.2 percent plunge.
In July, the New York-based law firm laid off 96 associates, which followed 35 associate cuts in January. The firm has said that the layoffs primarily stem from losses in its mortgage-backed securities practice.
Another law firm among the top 10 that declined was Thelen, which, after the NLJ 250 survey period closed this year, voted to dissolve. Ranked No. 70 in 2007, the 84-year-old law firm had 600 attorneys a year ago, including 250 partners and 263 associates.
Slumping by 59 attorneys, or 6.2 percent, was Fulbright & Jaworski; Pillsbury Winthrop Shaw Pittman, dropped 45 attorneys, or 5.9 percent. Washington-based Arnold & Porter sank by 40 attorneys, or 5.8 percent. Declining by 53 attorneys, or 5.1 percent, was Akin Gump Strauss Hauer & Feld. Dropping 42 attorneys, or 4.6 percent was New York-based Shearman & Sterling. Holland & Knight fell by 47 attorneys, or by 4.1 percent.
LEAVING AND JOINING THE LIST
Eight law firms that made last year's list did not make the cut in 2008. Among those firms, three fell off due to mergers with other NLJ 250 firms, four dropped below the cutoff point of 174 attorneys, and one -- Heller Ehrman -- dissolved.
The 118-year-old San Francisco Bay Area firm began winding down business in September. Observers pointed to the firm's failure to diversify its practice areas and to expand into the global legal market as reasons for its demise.
The disappearance by eight law firms from the NLJ 250 made room for eight more. Four of those firms were brand-new to the list this year or had not appeared in many years.
They included No. 236 Fragomen, Del Rey, Bernsen & Loewy of New York; No. 238 Stradley Ronon Stevens & Young of Philadelphia; and No. 239 Shumaker, Loop & Kendrick of Toledo, Ohio. The other four firms had not made the NLJ 250 last year, but had appeared on the list in prior years. Two firms -- Syracuse, N.Y.-based Bond, Schoeneck & King and Charleston, W.Va.-based Jackson Kelly -- had not appeared on the list since 2004.
NLJ 250: Firms 1 through 50
NLJ 250: Firms 51 through 100
NLJ 250: Firms 101 through 150
NLJ 250: Firms 151 through 200
NLJ 250: Firms 201 through 250
For additional related articles, see The National Law Journal's special annual report. (free registration required)