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Profit — that’s what it all seems to boil down to. While the 20 highest-grossing firms in this year’s survey made it onto the chart because of their overall revenue figures, it’s their profit — more specifically, profits per partner — that creates buzz in the marketplace. Profits per partner, it seems, outranks revenue in importance in the minds and pockets of many in the District. After all, a firm could gross hundreds of millions of dollars and still have trouble luring and keeping top talent if its profit numbers aren’t also stratospheric. Many of D.C.’s top rainmakers seem to have decided that the best firm culture in the world can’t compete with a million-dollar payday. And in the continuously competitive D.C. marketplace — where the D.C. 20 firms alone accounted for $3.7 billion in revenue — the ability to land rainmakers can mean the difference between thriving or becoming vulnerable to defection, merger, or collapse. So, for better or worse, the pressure is on. Some pump up profits by stripping “underperforming” partners of their equity stakes and trimming the number of associates — there were 37 fewer lawyers employed at the D.C. 20 firms than in 2002. Some drive profits up by demanding almost impossibly high billable hours — revenue per lawyer among the D.C. 20 firms averaged $700,000 in 2003, up $52,000 over the previous year. Some, such as Dickstein Shapiro Morin & Oshinsky, benefit from a one-time windfall. Some sources suggest a few even indulge in a little creative accounting. Which makes this project all the more challenging for those of us at Legal Times. For the first time, the main revenue chart eliminates the column for net operating income and subs in a listing of average compensation for all partners — a number gleaned by pooling total compensation for all partners, equity and non-equity alike, and dividing by the total number of equity and non-equity partners. We felt this was a needed addition to chronicle the trend among firms to defer bestowing equity stakes on many of those they dub partners. We altered nothing else in our methodology or presentation. As we’ve done for the past three years, we calculated financial figures based on the performance of a firm’s metro D.C. office. If a firm had more than one office in the D.C. area, we combined the revenues to reflect total revenue for this region. We defined the D.C. metro area as the District of Columbia, Northern Virginia, and Prince George’s and Montgomery counties in Maryland. Head counts of total lawyers and partners are as of Aug. 31, 2003, and include only full-time equivalent positions. Even when a firm cooperates in the survey, we make every effort to test the financial figures it provided. We not only do our own calculations, but also call current and former partners, clients, and competitors, and pore over court and public records to discern billing rates and compensation figures, among other things — all in an effort to provide as accurate a picture of a firm’s financial state as possible. — The Editors

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