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CAVEAT READER Some of these figures are official; some of them are not. We’re not telling which is which. By official, we mean that either the numbers were provided by the firm or its management or the figures were specifically approved by the firm or its management after they were pieced together through less official channels. We don’t tell which numbers are official and which ones are informed estimates for a simple reason: We promise the firms that do cooperate that they will not be identified. Thus we can assure our readers only that every number on these charts is an informed estimate that we feel confident with, based on research and numerous interviews from a variety of knowledgeable people associated with the firms. This is the only project for which we use this method of reporting without attribution. We do this because comprehensive financial data is a cornerstone of our business of law coverage. Firms are privately owned and are under no obligation to report their financial data, and so we use every bit of information we can find about a firm’s finances to come up with results in which we are confident. METHODOLOGY To arrive at the 25 highest-grossing firms, we surveyed 35 firms that, based on the number of attorneys and reputation, appeared to generate enough revenue to be included. Profits per partner are calculated based on equity partnership. Retired partners and of counsel are not counted as partners, but rather as salaried employees, such as associates. Because counting entering associates — who typically start in the fall of each year but do not begin producing revenue until sometime later — would distort the revenue-per-lawyer data, we counted the number of lawyers as of Aug. 31, 2001. The financial information is for the year 2001, except for Dallas’ Gardere Wynne Sewell, which had a fiscal year ending March 31, 2002. Gross revenue and net income figures are rounded to the nearest $100,000. Figures for revenue per lawyer and for profits per partner are rounded to the nearest $1,000. PROFITABILITY INDEX METHODOLOGY EXPLAINED To calculate a firm’s profitability, Texas Lawyer uses the profitability index, a mathematical formula. The formula, developed by our affiliate, The American Lawyer, is this: Profitability = profits per partner/revenue per lawyer. The formula takes some of the variables — although not all — out of gross revenue, net profits, leverage or even profit-margin comparisons. It shows whether the equity partners in a particular firm are taking home more or less than the average revenue their respective lawyers are bringing into the firm. Essentially, if the profits per partner are more than revenue per lawyer, the firm is producing profits for its partners. If not, the firm may need to take a hard look at its expenses or its leverage. Using the profitability index as the measure, 18 firms were profitable in 2001, compared to 16 of 25 in 2000. Seven firms were unprofitable in 2001, compared to nine the previous year. Profitability improved at a dozen of the firms in 2001, it declined at 11 of them and showed no change at two of them. The firms showing the greatest increase in profitability are the Texas offices of New York’s Weil, Gotshal & Manges and Cleveland-based Jones, Day, Reavis & Pogue, along with Locke Liddell & Sapp and Houston’s Beirne, Maynard & Parsons. Some firms posted relatively large declines in profitability, including Houston-based Susman Godfrey, Dallas’ Akin, Gump, Strauss, Hauer & Feld, the Houston office of Washington, D.C-based Howrey Simon Arnold & White and the Texas offices of San Francisco’s Brobeck, Phleger & Harrison. Locke Liddell and Dallas’ Jackson Walker moved from unprofitable territory into profitable territory in 2001, while Dallas’ Jenkens & Gilchrist and Carrington, Coleman, Sloman & Blumenthal dipped below the break-even point. While still unprofitable according to the index, Austin, Texas-based Brown McCarroll made a big improvement for the second year running.

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