The American Lawyer released its 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.
Ropes & Gray 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 revenue per lawyer, pro bono work, and number of female equity partners. Wilmer Hale climbed two spots to claim this year’s No.2 spot with high scores in almost all categories. Slipping from 1st place last year, Munger Tolles landed spot No.3, declining in all categories, particularly in the female equity partners category. Orrick Herrington moved six spots to claim 4thplace, thanks to high scores in pro bono, associate satisfaction and female equity partners.
New firms added to this year’s A-List rankings included Morrison & Foerster (No.11), Patterson Belknap (No.17), Morgan Lewis (No.18), and Jenner & Block (No.19). A few firms on the list made last year’s Top 20 but faced shortcomings in vital areas, forcing them off in 2018. Those firms included Gibson Dunn (No.22), Hughes Hubbard & Reed (No.29), and Manatt Phelps & Phillips (No.30).
Additionally, The American Lawyer released a list of the next 20 A-List firms (No. 21-40), The A-List Runners-Up. Washington, D.C.-based Buckley Sandler jumped 25 spots to land 26th place, due to large improvements in RPL, female equity partners, and associate satisfaction. Appearing for the first time on this list, Arnold & Porter Kaye Scholer claimed 31st place, thanks to an impressive score in the pro bono category. Dechert climbed 10 places to land the 34th spot on this year’s list, due to increases in its associate satisfaction and diversity scores.
See highlights from the full article on The American Lawyer.
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The American Lawyer reports that recent data released by ALM Intelligence shows female attorneys have ascended into Big Law’s partnership ranks at a faster pace than ever before in the wake of the #MeToo movement. According to the analysis, the pace of promotions for female lawyers since the #MeToo movement began has soared from 125 per month to 265 a month —or more than double the rate from the previous period.
Mary Leslie Smith, who became managing partner of Foley & Lardner’s Miami office earlier this year, notes that the movement has raised awareness. “What the Harvey Weinstein and #MeToo movement has done is raise awareness,” Smith said. “Firms began to look internally and ask, ‘Are we doing right by our women?’”
In addition, the article reports on several high-profile elevations of women in Big Law including Donna Wilson, named to become CEO and managing partner of Manatt, Phelps & Phillips in July 2019; Julie Jones, who will become the first female chair of Ropes & Gray at the end of 2019; and Patricia Brown Holmes, who became managing partner of Riley Safer Holmes & Cancila in April.
Debra Baker, a lawyer and managing director at GrowthPlay, concludes that “the most significant force now encouraging firms to promote women is an increased demand by clients for diversity. Clients are looking for diverse lawyers, not just to appear politically correct, but because they want advisers that know something about their businesses, will share fresh perspectives and work collaboratively, added Baker, noting that women often do better on those fronts since they “tend to score higher on social sensitivity.”
See highlights from the full article on The American Lawyer.
Contact Bill Sugarman for more information.
The American Lawyer reports on a mistaken and dangerous belief pervading the current U.S. legal market: that it is consolidating as larger firms grow more quickly than the market by taking share from their smaller rivals. However, an in-depth analysis of Am Law data over the last 20 years reveals that in fact consolidation is not happening. Rather, worldwide revenue growth from larger firms expanding overseas has been mistaken for consolidation of market share.
In Am Law’s latest article, Debunking the Consolidation Myth, the authors argue that the mistaken perception of consolidation has driven firms to bulk up—by merging, acquiring and hiring laterally—to avoid being at a competitive disadvantage. Such moves are high-risk, disruptive distractions for leaders whose attention is better focused elsewhere. Despite the intense effort involved, they create no strategic advantage. Wise partner groups and firm leaders will see past the prevailing dogma and focus instead on optimizing the performance of organically growing businesses, (as quoted in The American Lawyer).
In a tightly argued analysis, the authors conclude that “Consolidation is not happening. The imperative for law firms to grow is groundless. Smaller firms that don’t expand internationally are not losing share; in fact, they’ve gained share through the Great Recession. The data could not be clearer. And yet we know that this simple truth will be ignored. Facts are an ineffective counterweight to long-held belief. It’s too bad. Running a U.S.-centered, organically growing law firm well is a strategy with enormous validity and tremendous potential for strong profit growth.”
See highlights from the full article on The American Lawyer.
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Law firms have a lot of room to increase leverage, despite clients pushing back against the use of more junior lawyers, reports ALM Intelligence Analyst, Nicholas Bruch from The American Lawyer. Bruch notes that real-world pyramid structures will never be perfect, nor will work cascade down them smoothly. However, he adds it’s hard to escape the inference that there is a lot more room for increased delegation and leverage. In addition, there are many forces that align against increasing leverage, however, they can be overcome.
Nicholas Bruch notes that a starting point is that partners be clear on what increasing leverage requires. “It is not achieved, as some partners initially think, by adding associate hours on their matters, something they know to be difficult given the pushback they get from clients on ‘overstaffing.’ Rather it is about replacing partner hours with associate hours, keeping total hours close to constant, and bringing down total billings,” Bruch adds.
According to Bruch, it helps to also track and report out on leverage as closely as firms track partner hours; to get profitability measurement right (i.e. not just realization, but the combined effect of realization and leverage); and to have structured discussions about increasing leverage among partners (so all can see leverage can be increased without departing from the group identity as great lawyers). Curiously, raising partner billing rates also plays a role: some partners like to keep their rates low as they know not all they do is true partner work; raising partner rates leans against this, (as quoted in The American Lawyer).
Nicholas Bruch concludes that that the overarching message is that firms need to grow PPP to be competitive in the market for partner talent; increased leverage is a proven driver of PPP growth; today’s leverage levels are about half of what they could be; and firms have proven they can raise leverage despite the forces that align against doing so. The implication: leverage increases have a lot further to go.
See highlights from the full article on The American Lawyer.
Contact Bill Sugarman for more information.
The American Lawyer published results from its annual Am Law 200 report, which includes data and rankings for the nation’s Second Hundred highest grossing law firms. Overall, gross revenue decreased on average by 0.2 percent, net income decreased by 1.4 percent, profit per equity partner decreased by 1.4 percent, revenue per lawyer decreased by 0.3 percent, and headcount rose 0.1 percent.
Although the group as a whole declined in all major metrics, the report revealed that eight Second Hundred firms saw double-digit revenue growth and 22 firms had growth of 5 percent or more. Among the Second Hundred firms, Kobre & Kim had the largest increase in revenue, up by 49 percent. According to the report, one firm dropped from the Am Law 100 to the Second Hundred this year: Pepper Hamilton. Meanwhile, six firms moved onto the Am Law 200. They were Buchalter; Cole Schotz; Eckert Seamans; Goldberg Segalla; Herrick Feinstein; and Marshall Dennehey Warner Coleman & Goggin, (as quoted in The American Lawyer).
“The 2018 Am Law 200 data reflects a stark contrast to this year’s Am Law 100,” notes Gina Passarella, Editor-in-Chief of The American Lawyer. “The declines in key financial metrics among the Am Law Second Hundred were more to do with the firms who fell off the list via merger or closure than an overall decline in financial health of the group as a whole. These stats show there is much more volatility in the Second Hundred when it comes to who is on or off the list than we saw with the Am Law 100.”
Senior Analyst at ALM Intelligence, Nicholas Bruch adds, “Two important findings emerge from the Am Law 200 data. First, many firms within the Second Hundred are struggling with the transition the legal market is undergoing right now. Am Law Second Hundred firms fared less well, on average than their larger peers. The second finding is more hopeful. Many firms within the Second Hundred produced strong years. This points to a fact we see very clearly in the Am Law data: that some firms are finding ways to manage difficult market conditions and outperform the market.”
See more highlights from The Am Law 200 on The American Lawyer.
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Legal industry professionals say prospects for their future legal business look bright, but cite pricing pressures and cybersecurity as the biggest challenges their firms face, according to a recent survey published on The American Lawyer. The survey, conducted by legal software company Aderant, indicated that law firm professionals have a rosy view of their potential business. More than half of the survey’s respondents—some 57 percent—reported that business was “better” or “much better” at their law firms than it was over the prior year.
Beyond the survey’s findings about law firms’ business optimism, Aderant also asked respondents to name the most significant challenges facing their firms. According to the survey, the top five challenges facing law firms included pricing pressure, cybersecurity, operational efficiency, technology adoption and competition. Among respondents polled from US firms, cybersecurity jumped from sixth place in this survey the previous year to tie for the top spot with pricing in 2018, (as quoted in The American Lawyer).
The survey also included questions about innovation and new technology. While innovation is a hot topic in the legal industry, Aderant reported that more than 70 percent of respondents said their firm does not have anyone on staff specifically dedicated to innovation. But that response changes as law firm size grows, according to the survey. Just shy of 56 percent of respondents from firms with more than 500 lawyers said their firm had a staff member focused on innovation and new technology issues, (as quoted in The American Lawyer).
See highlights from the full report and article on The American Lawyer.
Contact Bill Sugarman for more information.
The American Lawyer released their 31st annual Am Law 100 report, which includes data and rankings for the nation’s 100 highest grossing law firms. Overall, gross revenue increased on average by 5.5 percent, net income increased by 6.1 percent, profit per equity partner grew by 6.3 percent, revenue per lawyer moved up 3.2 percent, and headcount rose 2.2 percent.
According to the report, thirty-one firms posted gross revenue over $1 billion in 2017, four more law firms than in 2016. Additionally, eighty-five firms reported gains in revenue, up from 82 firms last year. Kirkland & Ellis landed the No. 1 spot as the highest grossing firm in 2017, with $3.165 billion in revenue, up 19.4% from the previous year. Latham & Watkins, who had been on top for the last three years, dropped one spot to No. 2 with a record $3.064 billion in revenue. Baker & McKenzie remained in the No. 3 spot, with $2.670 billion in revenue. DLA Piper advanced one spot to No. 4 this year, after a 6.6% increase in revenue, knocking Skadden Arps down to the No. 5 spot.
“Despite increasing pressures on price and demand, more firms saw growth in revenue and profits in 2017 than they did in the prior year. A closer look at the data shows the firms toward the top of the 100 are growing at faster rates than the bottom half of the list, continuing a trend of stratification we have seen building over years. But all in all, most firms figured out a way to show increasing returns in 2017,” notes Gina Passarella, Editor-in-Chief of The American Lawyer.
See highlights from the full report and article on The American Lawyer.
Contact Bill Sugarman for more information.
Law firm mergers remained robust during the first quarter of 2018, with a strong outlook for cross-border combinations, according to a recent report by legal consultancy firm Fairfax Associates. In the first quarter of 2018, Fairfax tracked 20 completed mergers, which counts combinations once they are completed. According to the report, this number is slightly lower than the 22 mergers completed during the same time last year, however, is still on par with historical averages.
Despite a fairly quiet cross-border merger market in the first few months of 2018, Fairfax principal Lisa Smith notes that there continues to be a lot of interest in combinations that transcend national boundaries. “We see an awful lot of interest from particularly U.K. firms continuing to look at the U.S. market, but U.S. firms also continuing to look at their international strategies,” Smith said. “I think that’s a continuing big trend,” (as quoted in The American Lawyer).
On the domestic front, many mergers completed within the first quarter were smaller or at the regional level. Nearly 75 percent of the firms involved had between five and 20 lawyers, according to Fairfax, with the largest purely domestic tie-up being between Ballard Spahr and Minneapolis-based Lindquist & Vennum, a union that became effective on Jan. 2. “We see a mix of a lot of smaller firm acquisitions, many of which are smaller mid-sized firms combining with other smaller mid-sized firms,” Smith said (as quoted in The American Lawyer).
See highlights from the full report and article on The American Lawyer.
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Frustration with high legal fees and demand for local regulatory knowledge may give small and medium-sized law firms an edge with larger clients, according to a survey reported by The American Lawyer. The survey, released by the Economist Intelligence Unit and business-to-business marketplace Globality, found that multinational companies are seeing benefits in working with small and medium-sized firms because they can offer the same quality of legal advice at more reasonable prices.
According to the report, smaller firms can be more cost-effective because they have lower overheads, allowing them to charge more moderate rates. As a result, they are able to provide the same legal expertise at a lower cost. They can also often provide regional or specialized expertise because they focus on providing services in a specialized community or area of the law. That can be appealing for multinational organizations that may have legal issues in different international jurisdictions [as quoted by Globality].
“Companies often highlight that they like the personalized experience and top-level attention from senior lawyers that smaller providers can bring to them, which is something that larger law firms need to determine how to emulate,” notes Stefan Zorn, Vice President of Customer Success at Globality.
See highlights from the full article and survey on The American Lawyer.
Contact Bill Sugarman for more information.