After watching profits per partner sink 4.3 percent in 2008 and revive only 0.3 percent in 2009, Am Law 100 firms finally posted a healthy increase--8.4 percent--in 2010. But much of that gain is attributable to firms’ aggressive cost-control measures, especially in the area of headcount, which dropped 2.7 percent over 2009. As a result, growth in revenue per lawyer--the most reliable measure of the overall financial health of law firms--was more tepid, 4.4 percent.
Gross revenue rose 4 percent in 2010, in effect making up for the 3.4 percent loss The Am Law 100 posted in 2009, as firms benefited from the nascent recovery in capital markets and M&A. However, much of that growth came from two giants--DLA Piper and Hogan Lovells, a pair of vereins whose worldwide revenues were included in this year’s report for the first time, due to a change in our methodology. Leaving out those two anomalies, The AmLaw 100’s average gross revenue increased a meager 1.4 percent in 2010.
| THE CHARTS
Gross Revenue (Free) This year four more firms crossed over the $1 billion revenue threshold, including Cleary Gottlieb Steen & Hamilton; Gibson, Dunn & Crutcher; Sullivan & Cromwell; and the newly merged Hogan Lovells. After two years of declines, revenue per lawyer for The Am Law 100 rose 4.4 percent in 2010. Four firms from the Second Hundred made it into The Am Law 100 this year. New to the top 100 are Jackson Lewis and McKenna Long & Aldridge. The profitability index looks at a firm’s ability to convert revenue into profits. Only 15 firms posted declines in CAP this year. The rest were flat or showed positive growth. Wachtell, Lipton, Rosen & Katz is head and shoulders above the rest for the seventh year in a row. Five Am Law 100 firms had revenue per lawyer gains greater than 15 percent, while only one had a double-digit drop. The profit margin is the ratio of net income to gross revenue, multiplied by 100 and rounded to the nearest whole number. THE FEATURES Overview: Back in Black Madoff work has brought in $120 million to Baker & Hostetler. And, the firm hopes, that's just the beginning. Grow your way to the top? Some common ideas about Am Law 100 profit margins don't hold up, our five-year analysis shows. One year after Hogan and Lovells paired up, the firms are figuring out how to turn two into one. Some of the entrants on this year's Am Law 100 list are firms in name only, contends K&L Gates chairman Peter Kalis. METHODOLOGY The Am Law 100 is reported by staff members at ALM’s publications throughout the United States, including The American Lawyer, The Connecticut Law Tribune, Daily Business Review (Miami), Fulton County Daily Report (Atlanta), The Legal Intelligencer (Philadelphia), The National Law Journal/Legal Times, The New Jersey Law Journal, New York Law Journal, The Recorder (San Francisco), and Texas Lawyer.
Most law firms provide their financials voluntarily for this report. Some choose not to cooperate, so we make estimates based on our reporting. But all data is investigated by our reporters. In the event that an error in reporting a previous year is discovered, we will correct the numbers and base the percentage changes in future years on restated numbers. |
