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Big Law has grown international offices disproportionately despite overseas markets being lower profitability than their U.S. counterparts. The logic presumably is that a global footprint differentiates a firm’s client offerings and leads to a strengthening of the firm’s U.S. practices. However, the data show no evidence of this happening. In fact, there’s evidence the reverse is occurring: the strength of the U.S. practices of many preeminent global firms is losing ground to rivals. This is a critical warning for firms that aspire to grow internationally; it’s also a critical call-to-action for already-global firms: refocus attention on U.S. partners and practices now.

Introduction

In total, Am Law 100 firms today have 1,500 less U.S. lawyers, and 6,550 more international lawyers, than they did in 2007[1]. This is seriously disproportionate growth. A quarter of Am Law 100 lawyers now work outside the U.S., compared with one sixth a decade ago. Only 14 Am Law 100 firms now don’t have an international office, down from 22 a decade ago.

This global offensive came at the same time that Am Law 100 profitability went through the wringer. Profits per equity partner (PPP) took an 8 percent hit from 2007 to 2008 and didn’t regain their 2007 levels (inflation adjusted) for seven years. Given that international offices are lower profitability than their U.S. counterparts (with the possible exception of some London practices), these numbers show an industry responding to a seismic profitability shock by growing disproportionately its less profitable business lines. Normal businesses don’t do this.

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