The American Lawyer reports that the legal industry added nearly 5,000 jobs last month, marking the sixth straight month of job gains for the legal sector, according to recent data released by the Bureau of Labor Statistics. Though law firms have continued announcing job cuts, the latest data — which includes attorneys, paralegals, legal secretaries and others who make their living in the law — shows total U.S. legal jobs now stands at 1,117,400. While that is still well below the 1,153,700 jobs in place this time last year, the legal industry, like the wider economy, continues to recover from the loss of 64,000 jobs in April due to pandemic-related layoffs and austerity measures, the report notes.
“The steady growth was not immediately apparent several months ago, as preliminary data from August showed no growth over July. But those figures have since been adjusted upward, indicating a clear positive trend line,” notes Dan Packel of Law.com. The legal industry had 1,112,600 jobs in September and 1,110,900 jobs in August, according to numbers revised since last month. Those revised numbers show that the industry gained 1,700 jobs in September and 2,500 jobs in August (up from 1,108,400 jobs in July). “These improvements in the labor market reflect the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it,” notes the department of Bureau of Labor Statistics.
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The American Lawyer released its 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 4.7 percent to $119.6 billion, and profits per equity partner increased, on average, by 0.4 percent. Attorney headcount also saw an increase this year, with an annual growth of 8.0 percent. Additionally, that same assessment can be applied to the Global Second Hundred, which grew at a 3.6% clip, resulting in total revenue of $33.1 billion, bringing the aggregate figure for the full Global 200 to $152.7 billion. According to the report, much of this growth can be attributed to head count increases, particularly in the Second Hundred, where firms increased their complement of lawyers by 10.2%.
The report revealed that a total of 50 firms cracked the $1 billion mark, up from 46 firms last year. Of the Global 200 firms on the list, United States accounted for 139 of the world’s top-grossing firms, followed by 25 from the United Kingdom, 10 firms from China, and 7 firms from Canada. Seventy-five firms equaled or topped $1 million in PEP, compared with 73 firms last year, the report notes. Additionally, this is the fifth time in the history of Am Law’s global ranking that U.S.-based firms occupied the top four spots. The top five firms in their respective order were Kirkland & Ellis, Latham & Watkins, DLA Piper, Baker & McKenzie and Dentons.
A wider look at the Global 100, ranked by revenue, offers a picture of stability, the report adds. Eight of the firms in 2019’s top 10 remained there this year, as Allen & Overy and Linklaters both slipped slightly. And only one firm, recent trans-Atlantic merger product Womble Bond Dickinson, exited the top 100, replaced by labor and employment specialists Jackson Lewis. The Global Second Hundred does have a handful of newcomers. The highest among them is Spain’s Uría Menéndez, at 167. The other fresh faces are Australia’s Corrs Chambers Westgarth, China’s Jingsh Law Firm and U.S. firms Foley Hoag and Fisher Phillips, (as quoted in The American Lawyer).
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The American Lawyer released its annual A-List rankings of the top 20 “most well-rounded” law firms in the United States. According to the report, law firms are ranked based on a combination of financial and cultural factors including revenue per lawyer, pro bono commitment, racial diversity, associate satisfaction and gender diversity among the equity partnership level. The last metric was added to A-List’s calculation in 2017 to recognize firms for supporting women and making them partners.
In a year that’s been marked by upheaval and uncertainty, there’s also plenty of continuity in the upper reaches of the A-List. For the second year in a row, Munger Tolles & Olson claimed the No.1 spot on this year’s list, while landing in the top five for a fifth time in the last five years. Ropes & Gray landed the No. 2 spot, improving across all five categories, most notably associate satisfaction. At O’Melveny & Myers, improvements in the firm’s metrics for racially diverse attorneys and women in the equity partnership fueled a four-place jump into the No. 3 position, marking the firm’s third straight year in the Top 10 and its fifth time on the list in the last five years.
Los Angeles-based Manatt, Phelps & Phillips returned to this year’s list following two years off, rising seven places to No. 15, thanks to a 20.5-point improvement in the female equity partner category. Two more firms new to this year’s A-List rankings included Cravath Swaine & Moore (No.17), and Arnold & Porter (No.19). A few firms on the list made last year’s Top 20 but faced shortcomings in vital areas, forcing them off in 2020. Those four firms were Shearman & Sterling, Buckley, Milbank, and Simpson Thacher & Bartlett.
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The American Lawyer recently published results from its annual Am Law rankings, the Am Law 200 report, noting that for the first time in years the second hundred largest grossing law firms matched the growth of the top one hundred in nearly every key financial metric. Overall, the Second Hundred increased gross revenue on average by 5 percent, profit per equity partner grew 4.6 percent, revenue per lawyer increased 2.9 percent, and overall headcount rose 2.1 percent.
According to the report, twenty-one Am 200 law firms saw double-digit revenue growth and forty firms saw revenue increase by more than five percent. Within those numbers, there were pronounced differences among different groups in the Second Hundred, as firms ranked 151 through 200 nearly doubled the growth of those ranked 101 through 150, posting a 7.2% revenue increase on average, compared with 3.9% for the top half of the list, the report notes.
Among the Second Hundred firms, Burr & Forman had the largest increase in revenue, jumping 14 spots to No. 155, up 32% from last year. Two firms dropped from the Am Law 100 to the Second Hundred this year: Baker Donelson (101) and Williams & Connolly (102). Meanwhile, three firms joined the Am 200 law firms: Cole Scott & Kissane (163); Hanson Bridgett (192); and Pryor Cashman (178).
Additionally, twenty-five Am Law 200 law firms based or founded in the Midwest increased their revenue on average by 8% last year. Seven of them posted double-digit gains, far exceeding the average 5% growth the Am Law 200 and the 6% growth Chicago-based firms saw in 2018. Those seven firms were Barnes & Thornburg, Polsinelli, Ice Miller, Porter Wright, Robins Kaplan, Benesch, and Spencer Fane.
“Now, as this year’s Second Hundred stare down another major financial crisis, one that will likely be worse than the last, they can learn from the lessons of the past: focus on strong leadership; stay nimble; capitalize on their smaller size; stick with growth strategies; and diversify services when appropriate. Faced with a daunting future, it could mean the difference between success and failure,” (as quoted in The American Lawyer).
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The American Lawyer released their 33rd annual Am Law 100 report, which includes data and rankings for the nation’s 100 highest grossing law firms. Overall, gross revenue grew by 5 percent in 2019, coming in at a record breaking $104 billion. Additionally, net income increased by 4 percent, profit per equity partner grew by 5 percent, and revenue per lawyer rose by 3 percent.
According to the report, forty-two firms posted gross revenue over $1 billion in 2019, four more law firms than in 2018. Additionally, eighty-six firms reported gains in revenue and increased profits per partner in 2019. The results revealed that Kansas-city based Polsinelli reported the greatest increase in average profit per equity partner, up 28.3% from 2018.
Like in 2018, the 10 highest-grossing firms ranked in roughly 26% of the revenue the Am Law 100 generated last year, the report revealed. The next 16 firms accounted for another quarter of the year’s revenue, meaning that half of the revenue generated by the Am Law 100 came from the top 26 law firms. In terms of parity, it was a step forward after the top 10 firms alone brought in 38% of the group’s total revenue just two years ago, (as quoted in The American Lawyer).
For the third straight year in a row, Kirkland & Ellis landed the No. 1 spot as the highest grossing law firm in 2019, with $4.154 billion in revenue, up 10.6% from 2018. Latham & Watkins remained in the No. 2 spot, rising 11.3% in total revenue to $3.767 billion. DLA Piper moved up one spot from last year coming in at No. 3 with $3.112 billion. Baker & McKenzie claimed the No. 4 spot, with $2.920 billion in revenue. Skadden Arps retained the No. 5 spot, down 1.5 percent to 2.632 billion in 2019.
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The ABA Journal reports that the legal services sector gained 4,500 jobs in January, with total employment surpassing the previous 10-year high set in November, according to recent data by the U.S. Bureau of Labor Statistics. The legal industry, composed of attorneys, paralegals, legal secretaries and others, climbed to 1,160,700 jobs last month. That’s an increase of 16,000 jobs from January 2019, when the legal services sector had 1,144,700 jobs, the report noted.
Additionally, a recent report by Citi Private Bank’s Law Group reported that 2019 was a year of solid growth for the legal industry. The Citi results, based on a sample of 201 firms including members of the Am Law 200 and boutiques, showed thatBig Law net income grew significantly in 2019, driven in part by the strongest billing rate increases since 2008 and stagnation in the number of equity partners. Citi’s quarterly flash report found that over 2019, revenue growth outpaced the increase in expenses at Big Law firms, due in part to a 4.5% increase in billing rates.
Gretta Rusanow, writing for The American Lawyer, adds there were, however, two factors that dampened revenue growth in 2019: a slight drop in realization and a longer collection cycle. We saw continued consolidation and dispersion with the majority of firms (58%) reporting demand growth, but with 42% of firms seeing a demand decline during 2019, it remains a challenging environment for many firms, (as quoted in The American Lawyer).
“We believe that 2020 will be another year of growth, albeit more modest than 2019. Demand growth continued to gain momentum in the fourth quarter. Rate growth has been strong. Year-end inventory levels are high, providing a strong basis for first-quarter collections. While we are likely to see continued dispersion driving further market consolidation, we expect average industry revenue growth of 5-6% in 2020, with profits per equity partner growth in the mid-single digits,” Rusanow notes.
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The American Lawyer reports that the U.S. law firm industry had another strong year in 2019 and revenues for 2020 are predicted to continue growing at a healthy rate, according to a new report from Citi Private Bank’s Law Firm Group and Hildebrandt Consulting. The report found that after a slow start to the year, firms progressively improved their financial performance, and are expected to grow revenues between 5.5% and 6.5% over the course of the full year.
As in other post-recession years, the primary driver of revenue growth was an increase in billing rates, rather than demand growth, the report revealed. During the first nine months of 2019, billing rates had the highest growth rate since before the recession, growing by an average of 4.7 percent. By contrast, demand grew far less than in 2018 at a rate of 0.9 percent. The most significant impact on revenue growth was the continued trend of a lengthening of the collection cycle, which was largely driven by clients delaying payment of their bills, the report revealed.
The report also identified an active lateral recruiting market as a key trend in 2019, combined with a majority of firms hoping to grow the size of their equity partnership in the coming years.“The success rate of laterals has improved. In the past, half the laterals weren’t really accretive to the firm,” explains Brad Hildebrandt, Chairman of Hildebrandt Consulting. “But firms have become much more cautious about who they’re hiring.”
The key reason for the better success rate is even greater rigor on the lateral hiring process, Hildebrandt argues. Firms are aligning hiring with their overall strategy, improving their due diligence, and working harder to integrate new partner hires. “This eagerness to add talent at the top of the leverage pyramid will likely continue, with 61% of leaders surveyed saying they aim to add equity partners in the next two years,” Hildebrandt adds.
“Looking ahead, we expect that the most successful firms will continue to expand and innovate—despite ongoing geopolitical and macroeconomic uncertainty and volatility, and a challenging talent market. For those firms, expansion will be closely aligned to the firm’s business strategy—more so than pursuing opportunistic growth,” Gretta Rusanow, Head of Advisory Services at Citi Private Bank concluded. “For many firms, the steps they are taking to do more with existing clients and broaden their client base, focus on growth practices, industries and regions, and introduce further efficiencies in the way they deliver legal services will go a long way to ensuring that 2020 is a successful year.”
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The American Lawyer reports on law firm financial performance for the first nine months of the year, concluding that for the first time this year, law firm revenue growth outpaced expense growth, according to a recent report by Citi Private Bank’s Law Group. The Citi results, based on a sample of 190 firms including members of the Am Law 200 and boutiques, showed that revenues grew at 5.1% for the first nine months of the year, compared to 4.1% from just the first half. The bulk of that increase stems from higher rates, which grew 4.7%, compared to demand, which grew 0.9%.
“While the first nine months of 2019 saw slower revenue growth than we saw through the same period in 2018, there are several positive trends in the results. Demand growth continued to gain momentum. Rate growth has been strong. Expense pressure has moderated, easing margin pressure. Dispersion and volatility remain but are less acute than we saw earlier in the year,” notes Gretta Rusanow, research co-author and head of Citi Bank’s advisory services. “Looking ahead, inventory levels are high. The biggest challenge to a strong year-end is the continued lengthening of the collection cycle. If firms are able to collect on strong inventory levels, 2019 should end well,” she adds.
The report also revealed that law firms headquartered in Chicago and the Midwest matched or exceeded the revenue growth across the legal industry for the first nine months of 2019. Law firms headquartered throughout the Midwest reported their revenue is 7.8% higher this year when compared to last year, the report found. “Demand is up 1.6%, which is higher than the industrywide average of 0.9%, and rates have gone up 5.8%—more than anywhere across the United States,” Rusanow notes.
“Chicago is one of the most popular legal markets in the country. From a revenue point of view, they’re matching where we’re at for the industry. On top of that, they’re sitting on pretty healthy inventory levels going into year-end,” Rusanow adds. “I’m pretty optimistic about what the top-line stories will be for Chicago through the end of the year,” (as quoted in The American Lawyer).
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The American Lawyer released its 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 8.1 percent to $114.2 billion, and profits per equity partner increased, on average, by 4.6 percent. Attorney headcount also saw an increase this year, with an annual growth of 5.7 percent. According to the report, law firm mergers, rapid growth among Chinese law firms, and a healthy American market coalesced to turn 2018 into a spectacular year.
The report revealed that a total of 46 firms cracked the $1 billion mark, up from 34 firms two years ago. Of those 46 billion-dollar firms, United States accounted for 77 of the world’s top-grossing firms, followed by 12 from the United Kingdom, and five from China. Additionally, this is the fourth time in the history of Am Law’s global ranking that U.S.-based firms occupied the top five spots. The top five firms in their respective order were Kirkland & Ellis, Latham & Watkins, Baker & McKenzie, DLA Piper and Skadden Arps.
“Globally, most key practice areas were subject to brisk demand. The merger and acquisitions environment was active, albeit stronger in some markets than others. Disputes work, particularly international litigation and arbitration, kept practitioners busy. And an anticipated dip in investigations did not materialize, with sanctions, the Foreign Corrupt Practices Act and money laundering matters dotting the headlines. Other factors, beyond growing demand, also helped boost the numbers including two significant mergers between U.S.-based firms and two significant trans-Atlantic mergers: Nelson Mullins combination with Broad and Cassel and Hunton & Williams merger with Andrews Kurth Kenyon on the domestic side, and the creation of Womble Bond Dickinson and Bryan Cave internationally,” (as quoted in The American Lawyer).
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