Legal Commentary

The Lawyer on the US Top 50

The current issue of The Lawyer features the cover story, "US top 50's £23.4bn haul makes 2007 the best year ever."  (That's $46.8-billion to us.)  Top-line:

• Year over year revenue for the 50 largest US-headquartered firms was up more than 16%, from $40.27-billion in 2006
• The average PPP rose 11% from $1.55-million in 2006 to $1.72-million in 2007
• The leaders in revenue growth were:
  • DLA Piper, +110% largely by virtue of consolidating its EMEA operations with its US operations
  • K&L/Gates, +51.3%, and Reed Smith, +38.2%, helped by mergers
  • Debevoise and Latham, each up 23.5%, on sheer performance
• The laggards in revenue growth were:
  • WilmerHale, 4.8%
  • Akin Gump, 3.4%
  • Pillsbury, 1.9%
  • Jones Day, flat
  • Holland & Knight, -0.2%
• Highest PPP:
  • Wachtell, $4.48-million
  • Cravath, $3.30
  • Sullivan & Cromwell, $3.13
  • Simpson Thacher, $2.87
  • Cadwalader, $2.72—notable for also being 49th out of 50th in "growth in PPP," at -6.2% [see below]
• Lowest PPP:
  • Hunton & Williams:  $850-thousand
  • K&L/Gates: $800
  • Fulbright & Jaworski:  $777
  • Jones Day:  $770
  • Holland & Knight:  $699

As always, take all PPP figures with a tablespoon of salt.  "Your mileage may vary."  That's why it may be more informative to look at strongest and weakest PPP growth—at least we can assume (can't we?) we're comparing last year's apples with this year's apples.  So:

• Strongest PPP growth:
  • Baker Botts, +30.0%
  • Debevoise, 27.2%
  • Latham, 22.7%
  • Baker & McKenzie, 21.8%
  • Paul Hastings, 20.0%
• Weakest PPP growth:
  • Fulbright & Jaworski, +0.9%
  • Jones Day, flat
  • Holland & Knight, -0.1%
  • Cadwalader, -6.2%
  • Akin Gump, -7.0%

Here's the cover page, the second page of the article, and the key 50-firm table.  With all this information out now, why wait for the AmLaw 100?

I'm also happy to report that I was able to contribute a few thoughts, including the warning:

"that while the record results were partly down [sic: due] to increased levels of work across most practices last year, a large portion of the increase in revenues was driven by rate hikes.

"On the extremely plausible assumption that activity cools this year, additional rate hikes are essentially the only tool firms have left if they expect to generate year-on-year revenue growth," said MacEwen. "One has to question whether corporate clients will have the stomach for additional rate increases in this economic environment."

What’s striking about these results is how fast firms have to run just to stay in place.  Solid double-digit increases in revenue and profitability would be the envy of many a corporate CEO.  (And we have enjoyed this for several years in a row, now.) 

But this year the challenge for these firms will be avoiding the temptation to stand pat in a worrisome environment.  Challenging times tend not to re-cement the status quo but rather to make for the emergence of new leaders.

Full post as published by Adam Smith, Esq. on March 26, 2008 (boomark / email).