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The client-sensitive service providers, which is to say the lawyers, of The Am Law 100 can rest a little easier this month. For the first time since 2001, your growth hasn’t equaled or exceeded that of your clients. That’s one key finding of the 2005 Am Law 100 report this month. Gross revenues hit a new record, $46 billion, or an increase of 10 percent. By comparison, the gross for the Fortune 100 was up 11 percent to the somewhat more lofty $4.9 trillion. (We understand that not all of your clients are Fortune 100 companies, but it’s a useful benchmark.) You don’t have to be embarrassed before your clients, or, for the most part, your partners. For the second consecutive year, revenue per lawyer, the key metric of law firm economic health, grew faster than head count. That hasn’t happened in a decade. It’s the result of an unending flow of big-ticket litigation, the return of deals and finance, and slower growth in head count. Total lawyer count in 2004 increased by just 2 percent, while RPL improved by 8 percent, as a result of more hours worked at higher rates. Law firms are created by and for the partners, and their success is remarkable. By most standards they are anything but beacons of efficiency. It’s always an arresting moment when a managing partner brags about productivity gains at his firm, and I realize that he doesn’t mean improving the ability of his lawyers to do more in less time, but to do more (or the same) in more time. The main exception: their ability to convert revenue into compensation. Since 1999, our Compensation-All Partners metric (CAP) as a percentage of total revenue has hovered comfortably around 40 percent. To put it more simply, on average, 42 cents of every dollar that firms took in last year went to the partners. That’s a return that might make your clients envious. Some firms, of course, are more efficient at that conversion process than their peers and competitors. To judge that, we introduce a new measure this year, Value Per Lawyer. We compute that by dividing CAP into total lawyer head count. To put it simply, VPL tells us how many lawyers it takes to generate $10 million in partner comp. At Wachtell, Lipton, Rosen & Katz, it’s about seven. At Coudert Brothers, even before it became beleaguered Coudert, it took 91. VPL correlates closely to revenue per lawyer. But it also rewards lean management and, by extension, lower overhead. Over the last three years, VPL has grown, on average, faster than RPL, 22 percent versus 15 percent. A fuller discussion of VPL and the attendant charts ranking The Am Law 100 by VPL begins here. VPL will promote further competition along with analysis. It also will promote some sense of appreciation. That associate you’re about to berate: She’s worth a quarter-million in cash, so please restrain yourself. We, too, appreciate the efforts of the many who bring this report to you annually. The Am Law 100 and Second Hundred issues involve virtually everyone in our newsroom. In addition, we call on the considerable reporting skills of the ALM newspapers: The Connecticut Law Tribune, Daily Business Review, Fulton County Daily Report, The Legal Intelligencer, Legal Times, New Jersey Law Tribune, New York Law Journal, The Recorder, and Texas Lawyer. Each paper produces its own local report on firm finances and contributes to our national project. We in New York salute them. This project is managed by two key staffers: senior editor Jim Schroeder and research editor Rosemarie Clancy. It falls to them to keep the data straight, the deadlines met, and the staff’s spirits afloat. They do a splendid job, though by this time each year, they both have the weary look of folks who may know more than they ever wanted to about your business. From where I sit, their value per lawyer is simply immeasurable.

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