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Some managing partners just hand us their firm’s real numbers. A few appear to offer financial access, yet gently try to lead us astray. Others stonewall us entirely. Given the challenges of collecting intimate financial data from private businesses with no public reporting requirements, people always ask how we get the numbers. It’s like this. Managing partners head up organizations that have several hundred employees –sometimes more than 1,000 — and they can’t possibly hope to keep everyone quiet. So after numerous lunch meetings, phone calls and promises of anonymity; after tapping old sources and cold-calling new ones inside the firms; after conversations with former partners, former associates and sometimes former spouses; after trolling the Internet, checking court records and any other public source we can find, we eventually get the numbers — or something close to them. For every source who has shared with us over the years, we are sincerely grateful. Thanks to their help, another Daily Report Dozen is born, after a more than four-month gestation. The process takes a long time because of the number of figures that must be collected, estimated and verified. When our information gathering is complete, we present our financial estimates to the managing partner or chairman at each firm, who is given ample opportunity to comment prior to publication. Now, a word about numbers and definitions: We base our calculations on a firm’s census — its actual number of full-time equivalent lawyers — as of the firm’s fiscal year end or Aug. 31, 2001, whichever is earlier. The rationale: Work billed by lawyers after those dates likely will be collected in 2002. We round revenue and income figures to the nearest $500,000. Profit per equity partner, revenue per lawyer and the Am Law Profitability Index are derived directly from revenue and income numbers. Revenue is defined as all realized income, and does not include disbursements or income from ancillary businesses or investments. Net income is defined as the profits that go to equity partners after all expenses are paid. The salaries of nonequity partners, counsel, associates and nonlawyer employees are considered overhead. An equity partner is someone who receives a Schedule K-1 and has full voting rights on all significant matters. No more than half of an equity partner’s compensation is fixed. We define a nonequity partner as someone without an ownership share or whose compensation is mostly fixed and does not vary with the fortunes of the firm, except perhaps for a bonus component.

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