At first glance, Big Law has much to celebrate in the recently released 2017 Am Law 100 figures. The data shows revenue growth of 4.3% for the United States’ largest 100 law firms. This is twice the growth rate of the broader economy. More importantly, firms are reporting record profitability. Profits per equity partner, for the average Am Law 100 firm, now sit at a towering $1.6 million. This is an all-time high for the Am Law 100, even after adjusting for inflation. Other year-on-year metrics show equally strong performance. In fact, nearly every important metric of health suggests the legal industry’s largest firms had a good year.

Before celebrating these successes, law firm leaders should dig deeper into the Am Law 100 data. While the year-on-year trends look appealing, a longer-term analysis reveals that many key metrics are showing signs of pressure, and firm performance is growing increasingly erratic. The Am Law data reveals that the past year has been good to Big Law but it also shows growing signs of problems on the horizon.

Slowing Growth in Many Key Metrics

Among the more worrying trends revealed in this year’s Am Law 100 numbers is that the growth rate of several key metrics appears to be slowing. Revenue per lawyer (RPL), profits per lawyer (PPL), and profits per equity partner (PPP) are, arguably, the most important measures of health in the legal industry. These key metrics provide insights into firms’ success at raising rates on clients, boosting internal efficiency, controlling costs, and improving profitability.


While RPL, PPL, and PPP all continued to grow in 2017 across Am Law 100 firms, they did so at a slower pace than in the previous years. Growth in RPL slowed from 2.6% last year to a measly 1.5% this year. PPP slowed from 3.9% to 3.0%. Worryingly, the Am Law data shows this year’s slowdown is not a one-year blip. Growth has slowed in all three of these metrics in each of the past three years (see graph above). This points to a trend that could, in the near future, transform slowing growth into declining performance.

Increasing Volatility

The second trend that should cause managing partners anxiety is a steady increase in volatility. An analysis of the Am Law 100 numbers shows that nearly a third of firms which saw RPL increases last year reported decreases this year. Conversely, nearly a quarter of firms reported decreases last year and increases this year. In total, nearly half of firms reported a reversal in fortune from the prior year, with RPL changing from growth to decline or vice versa. Similar volatility was seen in other key metrics. Sixty percent of firms reported a reversal in PPL growth from the prior year.


A broader look at the Am Law 100 data reveals that volatility is on the rise in almost every key metric. The percentage of firms that have reported reversals in RPL, PPL, or PPP growth has increased in each of the past three years (see graph above).

Divergence in Performance

The Am Law 100 data reveals some firms are managing these difficulties better than others. The most common method of analyzing the Am Law 100 data is to segment the group by revenue size. This strategy reveals that larger firms are doing slightly better than smaller firms. These numbers are misleading, however, because larger firms tend to be more profitable. A more telling strategy of analysis is to account for size and profitability. Accounting for both factors reveals that profitability, rather than revenue, is the key variable.


Wealthier firms – those with PPP above $1.5 million – increased their RPL nearly twice as fast as their less wealthy peers. Importantly, the firms with the highest profitability also saw growth in every key metric accelerate, while the rest of the market saw growth decelerate. Wealthier firms, for example, saw average RPL growth increase from 1.5% last year to 2.6% this year. Similar trends were seen across a broad range of metrics, including PPL and PPP. This suggests wealthier firms are, on average, facing less pressure. Their high-value services tend to have fewer substitutes. This provides them greater leverage when negotiating rate increases with clients.

Given these findings, many may assume the wealthiest firms are well-placed to succeed in the years to come. Such assumptions are overly simplistic. While firms with higher profitably are outperforming, winners and losers exist at every level of the market. Fourteen percent of firms with PPP above $2 million saw profitability declines last year. Meanwhile, 17% of firms with PPP below $1 million saw profitability increase by 10% or more last year (see graph below). That data shows that wealthier firms are outperforming, but not uniformly.


The Am Law data tells a rich story. Declining growth rates and increased volatility are clear signs that the legal market is under pressure. Despite these difficulties, many firms are doing exceedingly well. This is good news for managing partners.

Many legal market commentators have openly worried about the future of law firms. Some have even suggested their demise is imminent. While there is little evidence to support such gloomy, sky-is-falling predictions, a close analysis of the Am Law data reveals there are areas of deep concern among the bright spots.

ALM Intelligence Notes:

  • .A Look Behind the Numbers: an interview with ALM Intelligence’s Senior Analyst Nick Bruch on what the numbers really show when you remove the noise.
  • The 2017 Am Law 100: complete coverage on the Am Law 100 from The American Lawyer.
  • Intelligence in Your Inbox: Subscribe to the ALM Intelligence Analysts Brief, featuring the latest thinking from our analysts, delivered straight to your inbox each week.

Nicholas-Bruch - EditedNicholas Bruch is a Senior Analyst at ALM Legal Intelligence. His experience includes advising law firms and law departments in developing and developed markets on issues related to strategy, business development, market intelligence, and operations. He can be reached by Email, Twitter, or LinkedIn.