Despite flat demand in the legal industry, the biggest law firms overwhelmingly grew their New York offices last year.
This year’s New York Law Journal 100, which ranks firms by their total number of full-time equivalent lawyers in New York state in 2016, shows that large New York law offices had one of their strongest periods of broad head count growth in post-recession times.
In all, about 66 firms showed a net gain in New York, two had no net change and the rest had net losses. That’s in contrast to 2015, when head count gains and head count losses were roughly equal among the firms surveyed.
While the average head count change of all 100 firms was 2.6 percent, the top 15 of the NYLJ 100, which includes several Wall Street and Am Law 50 firms, was about 3.5 percent, possibly reflecting the high revenue or profit increases these firms have experienced.
For instance, Cravath Swaine & Moore’s head count grew by nearly 7 percent to 461 attorneys and moved up to No. 8 rank; Latham & Watkins expanded by 10.5 percent to 380 New York attorneys and is now No. 12; and Kirkland & Ellis, ranked No. 10., boosted head count by 11.7 percent to 420 lawyers in New York.
And unlike recent years, growth came quickly to many. At least 14 law firms had a net gain of more than 10 percent last year in New York. The largest percentage gains were at Bond Schoeneck & King, now ranked No. 27; Norton Rose Fulbright, now No. 75; and Cooley, now ranked No. 93.
The broad growth pattern among the NYL100 firms is consistent with the legal industry’s head count gains reported by Citi Private Bank’s Law Firm Group’s survey of 2016. The industry’s head count grew on average by about 1.7 percent in 2016, higher than the previous three years, according to Citi’s figures. And firms within the Am Law 50 grew their headcount by about 2.4 percent, again a record high in the past four years.
The growth is many times in the lower ranks. Among New York based firms, equity partner ranks contracted slightly but these firms grew their associate ranks by an average of 1.9 percent, Citi said.
But whether firm growth will lead to more revenue for firms is another issue.
Average productivity in the industry dropped by 1.4 percent in 2016 and demand growth—measured by number of billable hours—was almost flat a 0.1 percent, Citi’s figures show.
“Demand growth is slower than the pace [firms] are adding lawyers,” said David Altuna, client adviser for Citi Private Bank Law Firm Group.
Head count growth may also come from lack of attrition. While the lateral market continues to be active, Altuna said, firms are anecdotally reporting this year that their associate attrition rate is slower. “Associates are staying put,” he said.
Sharp Gains and Losses
According to figures collected by ALM, only two law firms in the NYLJ 100 had net losses of more than 10 percent: Hogan Lovells, dropping New York head count by 16 percent to 173 attorneys and falling to the 51st rank, and Dentons, falling by 17 percent to 162 attorneys and dropping to the 55th rank.
Other large net losses include Freshfields Bruckhaus Deringer, declining by 9.5 percent to 133 in New York and now ranked No. 67; and Rochester-based Woods Oviatt Gilman, declining by 8.6 percent to 95 lawyers in the state and now ranked No. 90.
Yet all four of these firms told the NYLJ that they had misreported figures and that their office head count stayed steady year to year. Hogan Lovells said the firm included contract attorneys in 2015 and didn’t in 2016; Freshfields said its 2015 figures inadvertently included paralegals; and Dentons said it included public policy professionals in 2015 but didn’t in 2016.
“Dentons continues to grow, not only in New York but across the United States,” a spokeswoman said.
Woods Oviatt executive director Paul Farnsworth said while a few attorneys left toward the end of 2016, the firm hired three more in early 2017. “It’s a timing thing more than anything, it’s certainly not a trend,” he said.
The sharpest growth among the NYLJ 100 firms was at Syracuse-founded Bond Schoeneck & King, growing by 24 percent to 250 attorneys in the state, following the firm’s merger with Buffalo’s Jaeckle Fleischmann & Mugel in 2016.
Norton Rose Fulbright, the product of a 2013 mega-merger between Houston-based Fulbright & Jaworski and London-based Norton Rose, had the second highest New York head count growth, leaping by 21 percent to 120 attorneys last year. The firm said in a statement that the majority of the expansion can be attributed to new hires in public finance and intellectual property and it expects further growth through a merger with Chadbourne & Parke.
“Growing our New York office has been a priority since our 2013 global combination, and joining forces with Chadbourne this year will make our New York office one of the top 25 among all law firms,” Norton Rose said.
Cooley grew by 15 percent to 92 lawyers. Firm CEO Joe Conroy said in a statement that the firm has hired in practice priorities, including corporate and private equity, capital markets, international arbitration and intellectual property.
At the top financial firms, growth is driven by a combination of large associate classes, lateral partner hiring and deal flow. For instance, Kirkland & Ellis’ incoming first year associate class, in New York alone, is about 70 this year, after hiring six equity partners in 2016.
Meanwhile, Paul, Weiss, Rifkind, Wharton & Garrison continues to dominate the No. 1 spot in the NYLJ100, employing 789 attorneys in New York.
Even as Big Law gets bigger, the largest law office in the state is now New York City’s legal department, where attorney head count grew by more than 10 percent to 853 attorneys, surpassing the number of New York attorneys at Paul Weiss.
A spokesman confirmed the city employed about 80 more attorneys last year. “Additional staff was targeted to improve the overall handling of the high volume of tort cases, to work on everything from discovery and motions all the way to trial,” said a Corporation Counsel spokesman.
At the state attorney general’s office, head count stayed flat at 680 attorneys, while the four U.S. attorney offices in New York all saw slight growth. The Southern District added two more, up to 226 attorneys; the Eastern increased by five, up to 180; the Western by two, up to 55; and the Northern, up by one, to 46.
Following pledges by Bronx district attorney Darcel Clark to reduce criminal case backlogs, the number of prosecutors there grew by 28 percent to 565. The Staten Island DA’s office had the second highest growth in the city, up by 23 percent to 58. Prosecutors’ offices in Queens, numbering 318, and Brooklyn, numbering 526, were down slightly by about 1 percent each, while the Manhattan DA’s office grew by about 2 percent to 598 prosecutors.