Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Big Law has surpassed its pre-recession levels of profitability. Of the 100 firms in the new Am Law ranking, 78 reported 2017 profits per equity partner (PPP) levels that are higher (even adjusted for inflation) than their levels in 2007, the year before the Great Recession’s onset, according to data from ALM Intelligence’s Legal Compass.

Looking to buy the report or leverage the Am Law 100 data with powerful data visualizations and expert analysis? Access Premium Content

We compared the 2007 and 2017 performance metrics of these firms to identify those that have led this resurgence and how they’ve done it. Two observations from this comparison stand out. First, the notion that Big Law is bifurcating into haves and have-nots based on size or profitability is simply wrong; stronger (and weaker) performances are recorded by firms of all sizes and profitability levels. Second, responding to the market’s new normal, many firms have managed their way to higher profits rather than simply letting the rising tide lift them. Only 20 of the 78 firms that raised PPP also grew revenue, lawyer head count and their partnership faster than the economy; the other 58 worked their way to higher PPP by combining equity partner reductions, higher leverage and lowered cost-per-lawyer.

These two observations are interrelated. The variability in performance across firm size and profitability mirrors the variation in the way firms manage lawyer numbers and costs. This variation in how managed a firm is has profound implications. More management creates higher profitability, which firms use to lure commercially powerful partners from less-profitable rivals. It suggests Big Law will bifurcate based not on size or profitability ranking but on the intensity of basic management. It’s important that partners everywhere take this to heart: If partners want their firms to be secure and vital, they should look for profitability to rise, and thus cede greater management control to firm leaders.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


Talent On The Move

Where are established partners moving? What firms are increasing partner headcount and in which markets & practices? Track Partner moves by firm, region, and practice area with your Legal Compass subscription. Log in or get your free trial today.

Get More Information

WIPL.UK Awards 2021Event

The WIPL.UK Awards honors the industry standouts and rising stars who are making a mark within the profession.

Get More Information

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.