The Am Law rankings reveal the largest firms in the US legal market. Higher revenue, though, does not necessarily equate to superior overall financial performance. Indeed, firms with lower revenue often have enhanced performance metrics. Consider DLA Piper, which ranks 4th on revenue, but 78th on revenue per lawyer and 85th by profit margin. On the other hand, Quinn Emmanuel ranks 1st on profit margin and 3rd on revenue per lawyer, but places only 21st on revenue. Firms with similar revenues may have very different financial profiles, as with Skadden Arps and Baker McKenzie; or Jenner & Block and Fox Rothschild.

Is there another way to rank firms in line with their financial performance? Our quest for an answer led us to a multi-dimensional approach, where we combine revenue with two reasonably non-correlated metrics: revenue per lawyer (RPL) and profit margin. Together, these fully describe the financial condition of any law firm. Revenue measures a firm’s size, RPL measures the market value of a lawyer and profit margin the ability to convert revenue to profits. In other words, size matters, but so do equally lawyer value and profitability. Our construct is built on fundamentals, in assuming that individual lawyers with revenue generation capacity aggregate to form a law firm, which then manages costs to eventually generate profits.

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