The American Lawyer reports on several key trends from this year and what we can expect for the legal industry in 2018. According to the article, key trends that we can expect to continue into 2018 include increases in law firm mergers, lateral moves within groups, and enhancements in legal technology innovation and the business operations of firms.
2017 is set to be a record year for U.S. mergers. So far this year, there have been 85 mergers and acquisitions involving U.S. law firms in 2017, according to Altman Weil data—just six shy of the all-time record, set in 2015. But while several large-scale tie-ups hit the headlines, the overwhelming majority of deals in 2017 were extremely small: Over 90 percent involved at least one firm of under 100 lawyers, while more than two-thirds were acquisitions of firms with 10 lawyers or fewer (as quoted in The American Lawyer).
Last year also saw a large number of lateral moves that involved practice groups within targeted geographic markets. “I think there’s more and more pressure to grow breadth and depth, and laterals and groups are a big part of that for many or most firms,” notes Kent Zimmermann, a consultant at The Zeughauser Group.
In 2017, law firms continued adopting legal project management techniques to get a better grip on what matters actually cost. Am Law’s article reports more firms will adopt better pricing tools; legal operations staff will gain power inside legal departments; and the traditional competition for Big Law work will be upended. That won’t happen everywhere all at once next year. But better technology will make the change begin to gather speed. “The entire industry is stuck on the billable hour because it doesn’t understand its unit costs,” says Keith Lipman, President of the legal tech company Prosperoware. “If we get to the point of managing unit cost, law firms can actually get away from the billable hour. So, the faster you collect data to understand that is critical” (as quoted in The American Lawyer).
See highlights from the full article on The American Lawyer.
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Millennials make up the largest generational group among lawyers at large and midsize firms, according to a report released by ALM Intelligence on Law.com.
Data collected by ALM Intelligence reported millennials (ages 18 to 36) now outnumber lawyers from Generation X (ages 37 to 52) and baby boomers (ages 53 to 71) at firms in the Am Law 200 and The National Law Journal’s NLJ 500. According to the report, millennials make up 43 percent of lawyers at nearly 400 of the nation’s top law firms included in ALM’s data. Millennials represent 88 percent of associates and only 5 percent of partners. Generation X lawyers make up 52 percent of partners, and baby boomers make up 40 percent of partners.
“The numbers starkly illustrate the reality facing law firm leaders: Millennials will soon take over the legal profession in sheer numbers—and soon enough they’ll dominate leadership positions and partnerships too,” ALM journalist, Lizzy McLellan reports. “Employing millennials appears to go hand-in-hand with profitability—illustrating how Big Law continues to use rainmakers to land major clients and young lawyers to put in long hours serving them.”
See the full report and article on The American Lawyer.
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The American Lawyer released its annual New Partners Survey, which included responses from 400 lawyers promoted to firm partnerships in 2015, 2016 or 2017. The report revealed that an overwhelming 88 percent of new partners said their firms adequately prepared them for partnership. Almost 80 percent of new partners who answered the survey said their business development efforts increased, along with their compensation and information they received regarding their firm’s finances.
The ALM survey this year also found that two-thirds of new partners were elevated into non-equity or income partner roles. About 40 percent had spent seven, eight or nine years as associates at the firm where they made partner, and more than half had never changed firms. No single practice area dominated in partner promotions, though litigation represented almost a quarter of the survey pool.
See highlights of the full report and article on The American Lawyer.
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When is the best time for partners to make a lateral move? According to a report released by ALM Intelligence, the most important factors in making a successful lateral move include time of year, stage in a partner’s career, and whether the move is to a firm with a higher or lower PPP.
ALM Intelligence journalist, Hugh Simons, notes “fall seems to be the time of year to start exploring seriously so that you can move early in the new year.” According to the report, early in the year moves are more common and more successful with 35 percent of moves occurring in the first quarter compared to 15 percent in the fourth quarter.
A second aspect of timing is the stage of career at which a partner decides to move. Data from the report revealed lateral success rate is highest for movers in their 50s. The last factor affecting lateral success included whether the move was to a firm with a higher or lower PPP. The data revealed that retention was higher for moves made to higher PPP firms.
“The key takeaway for law firm leaders is more fundamental than the dynamics of lateral partner moves. Rather it is to observe that PPP is not just a reflection of performance; it is also, and more importantly, a critical determinant of competitive strength. Ultimately, as the best lawyers go, the best clients follow – competition for the strongest partners is competition for the great clients that underlie a firm’s long-term strength and vitality,” Hugh Simons notes.
See the full report and article on The American Lawyer.
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The American Lawyer published results from its annual Midlevel Associates Survey, finding that “associates generally continued to report high levels of satisfaction with their jobs,” and report being happier with their compensation than they were a year ago.
Each year, the publication surveys third-, fourth-, and fifth-year associates on several aspects of job satisfaction, including compensation and benefits, training and guidance, interaction with partners and other associates, the interest and satisfaction level of the work, the firm’s policy on billable hours, and management’s openness about firm strategies and partnership chances. The participating firms were ranked on a scale from 1 to 5, with 5 being the highest score possible.
According to the report, “the greatest increase in associate satisfaction came in the area of benefits and compensation,” with respondents giving firms an average score of 4.29, up from an average of 4.17 last year. Of the 102 firms surveyed, the top five firms in terms of midlevel associate satisfaction in numerical order were Cozen O’Connor, O’Melveny & Myers, Gibson Dunn & Crutcher, Paul Hastings and Orrick, Herrington & Sutcliffe.
See highlights of the full report and article on The American Lawyer.
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The American Lawyer released their annual Global 100 report, a ranking of the world’s 100 largest law firms by gross revenue, profits per partner, and total attorney headcount. Overall, gross revenue grew by 2.8 percent for The Global 100, and profits per partner increased, on average, by 0.5 percent. Attorney headcount also saw an increase this year, with an annual growth of 2.7 percent.
American firms accounted for 81 of the world’s top-grossing firms, matching a record set in last year’s survey, the report revealed. The remaining places are filled by 12 British firms, three from Canada, two from China, one from Australia and one from South Korea. According to the report, this is the second time in the history of Am Law’s global rankings that U.S.-based firms occupy the top five spots.
Latham & Watkins reigns in at No. 1 again this year, with the highest gross revenue of The Global 100. Baker & McKenzie retained the No. 2 spot, leading the top 5 in terms of total attorney headcount with 4,719 attorneys. Kirkland & Ellis advanced two spots to No. 3 this year, thanks to a 15% increase in gross revenue and 14% jump in profits per partner. Skadden Arps remained in its respective spot from last year, coming in at number 4. DLA Piper, on the other hand, dropped two places this year to claim the No. 5 spot, after a 3% decrease in total revenue.
See the full rankings and highlights from The Global 100 on The American Lawyer.
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Law firm mergers and acquisitions are on track to reach an all-time high in 2017, according to the latest report released by legal consulting firm Altman Weil. So far this year, there have been 52 combinations announced, including 24 in the second quarter, topping the prior mid-year peak of 48 in 2016.
Altman Weil’s MergerLine report revealed acquisitions of firms with twenty or fewer lawyers accounted for 86% of all deals in the first quarter and 71% in the second quarter of 2017. For these deals, acquirers’ primary focus was the Midwest, including firms in Ohio, Indiana, Missouri and Michigan, and the Southern US, including firms in Florida and Texas.
“The chief driver of combinations is the battle for market share that’s being waged in response to flat or decreasing demand for law firm services, and we don’t expect that to change any time soon,” said Altman Weil principal, Eric Seegar. “Law firms of all sizes are vying to acquire new clients, expand into new markets, and upgrade their brands through quality combinations. Many of the largest U.S. firms are now routinely looking outside the domestic market for those opportunities.”
See the full report and article on The American Lawyer.
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The American Lawyer released its 15th annual A-List rankings of the top 20 “most well-rounded” law firms in the United States. Firms are ranked based on a combination of factors including revenue per lawyer, pro bono commitment, racial diversity, associate satisfaction and percentage of female equity partners.
Munger Tolles ranked No. 1 on this year’s A-List. Climbing from last year’s number two, the firm moved up thanks to high scores in diversity, pro bono work, and number of female equity partners. Ropes & Gray came in second place on the A-List with high scores in almost all categories except for diversity. Paul, Weiss jumped 23 spots to claim the No.3 spot, thanks to a strong female equity score and significant increase in associate satisfaction. Kirkland & Ellis landed spot No. 17, slipping from 8th place last year, due to a decrease in its associate satisfaction and diversity scores. Skadden Arps moved up four spots to claim 12th place, thanks to an increase in its associate satisfaction and pro bono scores.
New firms added to AmLaw’s A-List were Paul, Weiss (No.3), Sherman & Sterling (No.8), Simpson Thacher & Bartlett (No.14), Manatt, Phelps & Phillips (No. 15), Arnold & Porter (No.16), and Hughes Hubbard & Reed (No.19).
Additionally, The American Lawyer released a list of the next 20 A-List firms (No. 21-40), The A-List Runners Up. A few firms on the list made last year’s Top 20 but faced shortcomings in vital areas, forcing them off in 2017. Those firms were Morrison & Foerster (No. 22), Jenner & Block (No. 23), Sullivan & Cromwell (No. 24), Willkie Farr & Gallagher (No. 25), and Cleary Gottlieb Steen & Hamilton (No. 26).
See the full report and article on The American Lawyer.
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Law360 released its fourth annual Glass Ceiling Report, which surveyed 300 law firms on gender diversity and ranked firms based on the percentage of female equity partners in the United States.
According to the report, women make up just 34% of all attorneys and 23% of partners in law firms across the country. Law360’s editor in chief, Anne Urda, notes, “Intentions among law firms are good, and some slight progress has been made, but overall the numbers indicate that law firms need to do much more to close the gap among male and female associates and partners.”
Firms with the highest levels of female equity partners tend to focus on building a clear pipeline to equity partnership for women and offering benefits like work schedule flexibility, mentorship programs and greater leadership opportunities in order to retain top-performing attorneys.
Among the 300 law firms surveyed, small firms (20-149 attorneys) had the highest percentage of female equity partners, including Adelson Testan (60%), Walsworth (57.1%), Stokes Lawrence (43.5%), Berry Appleman (42.9%) and Verrill Dana (41.5%).
For medium to large sized firms (150-599 attorneys), the top five best firms for female partners were Fragomen (40.7%), Miller Nash (37.7%), Hanson Bridgett (37.1%), FordHarrison (33.3%) and Chapman & Cutler (31.2%).
In the biggest category of ‘Big Law’ firms (600+ attorneys), firms with the highest percentage of female equity partners were Littler (28.5%), Faegre Baker (27.2%), Jackson Lewis (26.1%), WilmerHale (25.1%), and Ropes & Gray (25%).
See the full article and rankings on Law360.
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