Law firms got bigger in 2012, but just barely. This year’s NLJ 350, The National Law Journal‘s annual survey of the nation’s biggest law firms by number of lawyers, shows that firms grew by just 1.1 percent during 2012, a retrenchment from 1.7 percent growth in 2011. A full 140 firms on this year’s list shrank in size — 40 percent of the group.
Particularly telling were the low numbers of associates hired. As detailed in our overview story, "The Old Rules No Longer Apply," the results reflect the apparent once-and-forever demise of the business strategy of boosting revenues by deploying armies of associates. The 350 firms on this year’s list added a scant 622 associates — a particularly troubling figure given that U.S. law schools continue to pump out 45,000 graduates each year.
What little gains occurred largely were in the partner numbers, which climbed by 1.5 percent — a figure itself far removed from the pre-recession boom days when partner increases ran in the 5 percent range. Most of the additions during 2012 came among nonequity partners, whose number increased by 1.8 percent; the ranks of equity partners grew by 1.3 percent.
In all, this 36th edition of the NLJ’s annual ranking counted 141,056 lawyers working in more than 3,500 offices around the world.
In crunching the numbers (aided by insights from firm leaders, consultants and scholars), we’re left with a few takeaways. First, law firms are hiring fewer attorneys mainly because they lack confidence in the economy. Second, to retain work and land new matters, they are bowing to clients’ refusal to pay to train beginner-associates. Third, firms have become more ruthless about cutting loose attorneys who can’t keep up in the more rigorous marketplace, partly to keep their profits per partner strong.
This is the second year that we evaluated so many firms — for years, it was the NLJ 250 — and the difference in size between the firms at the top and bottom is striking. We think expanding our analysis provides useful insight into an industry in which midsize law firms, with their lower rates and highly skilled attorneys, are absorbing practices that pay good money — just not enough to carry large-firm overhead.
We’re publishing the NLJ 350 this year in two consecutive issues. This first installment gives the broader perspective — which firms were the big gainers; the big losers; standout performers (good and bad); and new arrivals. On June 17, we will provide region-by-region details about attorney census and geographic trends, and we’ll present lawyer headcounts in top U.S. and international markets. You might also want to check out the additional content at NLJ.com during the next two weeks.