Date: January 13th, 2007 5:11 PM Author: Crystalline goal in life lodge
EDIT: This list is no longer being updated. Numbers for all AmLaw 200 firms are on Westlaw at 6/2007 AMLAW 151
Law firms are reporting financial info, so I might as well collect them into one list. Sources are in the posts below. As usual, I reserve judgment on whether any of this info is actually "useful" -- if you prefer some other metric like revenue per lawyer, wait for AmLaw or run the numbers yourself. If you have an addition, please post to this thread or use the anonymous email form at http://xoxoreader.blogspot.com/
Date: January 13th, 2007 5:12 PM Author: Crystalline goal in life lodge Subject: Recorder article on SF firms
The Recorder
January 10, 2007
FIRMS SURF M&A WAVE: CORPORATE WORK, LITIGATION BOOST PROFITS FOR MANY MAJOR
FIRMS
NEWS
By Zusha Elinson
The rising tide of M&A deals lifted law firms' bottom lines in 2006, swelling revenue for some firms and keeping others afloat.
'Put a 'B' for billion in the M&A column,' said Morrison & Foerster Chairman Keith Wetmore, whose firm advised on a number of billion-dollar deals last year.
While corporate lawyers were well-occupied, securities litigators got their own boost from corporate clients eager to cleanse themselves of backdating scandals. IP and mass tort litigators were also busy in 2006.
The trends brought big returns for most leading firms, according to The Recorder 's annual survey of California firm finances. More than a dozen firms with major California practices have released financial data thus far, and most reported double-digit gains in revenue from the previous year.
Nearly every firm reported two-digit growth in profit per equity partner, but fewer reported such high increases in revenue per lawyer -- a number that some legal industry observers say gives the best picture of a law firm's economic standing.
'I think that revenue per lawyer is the most accurate measure of a firm's financial health,' said Richard Gary, a law firm consultant with Gary Advisors. 'Profits per equity partner are subject to manipulation and can be all over the map.'
Quinn Emanuel Urquhart Oliver & Hedges boosted RPL 29 percent. With headcount up 20 percent, and some large contingency fees coming in, that helped push the firm's 2006 revenue up a whopping 54 percent to $298 million.
At Pillsbury Winthrop Shaw Pittman, revenue was up just 1 percent as it shed more than 111 lawyers, including 37 partners. But that helped the firm improve its RPL 16 percent, to $770,000.
'We are indeed a leaner firm than we were a year ago -- but that has made us more nimble and efficient and allowed us to draw more effectively on our talented partners and market-leading practices, which is why, despite fewer lawyers, our revenue exceeded what we earned last year, and profits rose considerably,' said new chairman James Rishwain Jr. 'Many lawyers who left were conflicted out as a result of the 2005 merger with Shaw Pittman.'
MoFo boosted its RPL as well -- by working its lawyers harder. The firm's headcount grew just 1 percent, but its revenue swelled 13 percent to $774 million, and RPL increased 12 percent to $820,000.
'We had capacity for our existing team to work a little harder, so we wanted to make sure that everyone's plate was full before adding more lawyers,' said MoFo's Wetmore, adding that recruits were at a premium in 2006.
Littler Mendelson saw RPL increase 10 percent.
It was a different story at Fenwick & West, where revenue per lawyer was up just 2 percent, one of the lowest among the firms that have compiled year-end results thus far. Revenue was up 5 percent even though other Silicon Valley firms, like Wilson Sonsini Goodrich & Rosati and Cooley Godward Kronish, saw double-digit increases, thanks in part to the hot deal market.
Managing Partner Gordon Davidson said that a challenge for Fenwick, known for its emerging companies practice, is replacing those clients when so many are being acquired. Still, M&A deal flow 'continued strong for the fourth consecutive year,' he said.
THE PROFITS PICTURE
Several firms reported PPP above $1 million. Quinn Emanuel topped the list with $2.43 million, followed by Orrick, Herrington & Sutcliffe at $1.43 million -- a 15 percent jump from the previous year.
At Orrick, revenue was up 20 percent to $666 million in part because of its rapid expansion last year. The firm added offices and 116 lawyers, bringing the headcount to 839 -- a 16 percent spike from 2005. Though the new lawyers brought in revenue, the new offices brought in more bills.
'Our revenues are great, but we would have been more ahead without those investments,' said Orrick's Ralph Baxter Jr., whose firm posted a 4 percent gain in RPL.
Wilson saw the most dramatic growth in PPP, which shot up 30 percent to $1.3 million -- due in part to 35 fewer equity partners, according to the firm's 2006 calculations.
'We have one category of partners -- they're equity partners,' said Wilson CEO John Roos. 'We really don't agree with the definition [that ALM uses].'
This year, though, the firm decided to apply the American Lawyer magazine rules, under which 31 partners qualify for nonequity status.
'We sat there and said, 'This is the definition, and let's just apply the definition to be consistent with what's out there. There wasn't any particular reason [to do so this year].'
Pillsbury's PPP picked up 14 percent to $875,000, even as it reported a 40 percent increase in its number of equity partners.
In 2005, when Pillsbury's profits and revenue were flat, the firm reported a big dip in the number of equity partners.
'Increased profitability simply placed more of our partners into the equity range, as measured by Am Law,' Rishwain said. Under Am Law rules, nonequity partners are those whose guaranteed income makes up more than half their total compensation.
MoFo's PPP increased 8 percent to $1.13 million, even while the firm's equity partner ranks swelled by 10 percent. In 2005, the firm shifted about 50 partners from equity to nonequity status.
Reed Smith boosted PPP 17 percent to $940,000.
Littler saw a modest increase in PPP, which was up 4 percent. The San Francisco-based employment firm increased headcount 10 percent as it added six new offices. Revenue was up 20 percent.
Two firms -- Cooley and Heller Ehrman -- reported that their PPP had topped $1 million for the first time. Cooley's PPP grew 10 percent, even though the firm saw more than a 10 percent increase in its number of equity partners.
At Heller, revenue and RPL were up modestly. But PPP grew 17 percent, which the firm attributed in part to partner retirement and defections that trimmed the ranks by 9 percent.
Reporter Zusha Elinson's e-mail address is zelinson@alm.com. Reporters Petra Pasternak and Jessie Seyfer contributed to this story.
Date: January 13th, 2007 5:38 PM Author: Crystalline goal in life lodge
Tried using a tabbed browser? So now I have your post taking up like half the thread, plus you didn't title it so I didn't know what it was at first. But whatever.
Date: January 14th, 2007 11:24 PM Author: Crystalline goal in life lodge
I've heard that seniors and partners don't make very much there, since it's more of a lifestyle place.
The numbers are all self-reported, anyway, and a lot of smaller firms don't report. I have Gunderson on last year's list because there was an article on them, but they aren't on the actual AmLaw 200 table.
Date: January 25th, 2007 10:09 AM Author: Gaped zippy theater stage
Thanks for the link -- but how were you able to get to the Legal Intelligencer's content? I thought it was password protected. Is there a way to access the Legal Intelligencer online without a password?
Date: January 25th, 2007 10:22 AM Author: Crystalline goal in life lodge
It was on law.com today -- I think every day there are one or two articles that you can access without a password, and if it's on law.com you're in luck (same thing with the Cali paper, the Recorder)
Date: January 25th, 2007 10:39 AM Author: Crystalline goal in life lodge
Actually I just realized last year's chart didn't have the numbers for the Magic Circle firms since they are in the "Global 100" list and not the "AmLaw 100" list. Here's an article with the Magic Circle PPP: http://www.thelawyer.com/cgi-bin/item.cgi?id=120843&d=11&h=24&f=46 (scroll to the bottom)
Numbers are in pounds. If you want to see how they stack up in dollars, check Westlaw for the Global 100 issue -- I can't search for it right now.
The numbers for PPP including nonequity partners is my estimate based on PPP * # of equity partners / (# of equity partners + # of non-equity partners). All that info is on the link above.
Date: February 21st, 2007 7:53 PM Author: Crystalline goal in life lodge
On further consideration I decided to delete my estimates for PPP including nonequity partners. I still suspect AmLaw calculates it the way I had it -- it is *profit* per partner, after all -- but I agree that it seems to misinterpret the point of PPP as an indicator of partner comp.
Date: February 21st, 2007 9:06 PM Author: aquamarine internet-worthy national security agency Subject: Second Class Citizens
" it is *profit* per partner, after all -- but I agree that it seems to misinterpret the point of PPP as an indicator of partner comp."
It is so easy to forget -- NEP compensation is not salary; it is paid & taxed (to the NEP), and accounted for (by the firm) as allocation/distribution of partner profits.
The measure we usually call PPP is really PEP, which is: money left over after spending on everything but EP comp, divided by # of EPs.
PPP including NEPs (if we used "PPP" literally, it should include NEPs anyway, but we never use the term that way), would draw the circle around all the partners, including the sham . . sorry, non-equity partners. It would be: money left over after spending on everything but all partner comp, divided by all partners.
I bet AmLaw does it correctly. I know The Lawyer.com does it right for UK firms.
Date: February 21st, 2007 9:30 PM Author: Crystalline goal in life lodge
The reason that I'm not sure AmLaw does it properly is because they are dependent on the firms to give them the info. Now there's a couple reasons why firms wouldn't give the info. First of all they have no real requirement to do so. But more importantly, AmLaw's definition of NEP is their own definition. They define it as any partner who gets 50% of their comp in salary instead of profits or something like that. Not every firm defines nonequity partner that way. So AmLaw would probably get a big mish-mash of results if you tried asking for that info.
However, AmLaw does know 1) total profits and 2) total equity partners and 3) total non-equity partners that match their definition so that's why I think they might take the easy way out.
Date: February 21st, 2007 9:12 PM Author: aquamarine internet-worthy national security agency Subject: NEP Comp
This actually raises an interesting point about information in the market.
Associate salaries and bonuses are generally widely broadcast, precise to the last $. Profits per Equity Partner is published annually by a major trade publication(though some gaming of the accounting does go on).
But NEP comp is an information black hole. The two-tier structure is getting more common, and I bet NEP will be a more likely place than EP for people to end up, but there is no information -- barely even rumors -- on NEP comp.
Date: February 21st, 2007 9:31 PM Author: Crystalline goal in life lodge
Couple of posts here and there about Kirkland's NEP comp. I'll have to look for it again, I think it's on my blog somewhere.
You could also make the point that there aren't very many detailed explanations of equity partner compensation either. The most detailed one I have is Latham's which was posted on Greedy Junior Partners a while ago.
LOS ANGELES -- A boost in M&A deals and intellectual property work propelled revenue and profits ever higher at major L.A.-based law firms in 2006. But most firms saw more measured growth in revenue per lawyer.
Even at the biggest firm in the state -- Latham & Watkins, where revenue was up 15 percent and profits up 16 percent -- the firm's revenue per lawyer advanced just 5 percent.
Firms cited a variety of reasons why growth in RPL may be slowing, not least of which is that it's been soaring for several years running.
'There's nothing wrong with single digits,' said Newport Beach-based consultant Peter Zeughauser. 'We've just gotten spoiled.' That may sound good to O'Melveny & Myers, because single digits was all it could muster: Profits per partner and revenue per lawyer increased by just one percent.
Chairman Arthur Culvahouse attributed those middling results to a 'lumpy year' for the transactional practice.
'We were better at realization and our rates were higher, but we didn't have the hours,' he said. 'It wasn't until the last couple months that all of our 13 offices seemed busy at the same time.'
Gibson, Dunn & Crutcher was somewhere in the middle, with RPL and headcount each up four percent, boosting revenue 8 percent.
Zeughauser said firms have been adding capacity, which brings down RPL in the short term but is still a positive. 'It shows they feel the work will be there, and they're staffing up for it,' he said.
Despite a slow year for bankruptcy, Sheppard, Mullin, Richter & Hampton's corporate and IP practices drove revenue up 14 percent, Managing Partner Guy Halgren said.
Sheppard, Mullin's RPL was also up just 1 percent. Halgren said billing rates leveled off, and the firm spent more on new offices and technology upgrades.
'To some extent, this was a year of investment,' Halgren said.
Munger, Tolles & Olson, which boosted headcount 14 percent, also reported flat RPL figures, though they, like Gibson, are above $1 million. To put that in perspective, it means the average lawyer at those firms would have billed at least 2,000 hours at $500 an hour.
Two firms kept a lid on hiring, and as a result netted larger gains in RPL. Manatt, Phelps & Phillips added just one lawyer, boosting RPL 8 percent. Likewise, headcount at Allan Matkins Leck Gamble Mallory & Natsis was up 3 percent, allowing the firm to boost RPL 8 percent.
But Loeb & Loeb was able to blow through almost all the metrics. The firm posted a 23 percent increase in revenue, and a 27 percent increase in profits on double-digit headcount growth. RPL was up 6 percent.
'We had a significant increase last year as well -- it's a two-year trend rather than something aberrational,' said Loeb Co-Chairman John Frankenheimer. He attributed the growth to Loeb's long-term plan to be mid-sized and focused.
Growth isn't an aberration for Latham, either. The firm, which has 625 lawyers in California alone, saw revenue top $1.5 billion.
'The remarkable thing is that there was no particular area that spiked -- it was an across the board performance,' said Latham & Watkins Chairman Robert Dell said, adding that the firm's offices in Asia and Europe saw higher growth than in previous years. 'We grew the revenue base quite significantly without a merger, and only added 3 percent to the equity partnership.'
The Big Numbers
O'Melveny and Gibson, Dunn came in a distant second and third in overall revenue, at $869 million and $809 million respectively.
Gibson Managing Partner Kenneth Doran pointed to 'extraordinarily strong' litigation and arbitration in Europe as well as the firm's appellate group, which 'was definitely one of the strongest in the country last year,' he said.
O'Melveny's Culvahouse, meanwhile, blamed the firm's flat profits in part on a slow transactional year -- private equity clients were gathering money, he said, not making deals. Jeffrey Skilling, the former Enron executive, didn't help either.
'Our commitment to the Skilling team exceeded the financial return,' Culvahouse said. 'Jeff Skilling asked us to represent him and we continued to put our best team on the field, notwithstanding the fact that circumstances made it very difficult for him to pay us full value.'
Munger, Tolles' gross revenue climbed 14 percent, and PPP was up 11 percent. Along with busy corporate and litigation practices, Co-Managing Partner Bart Williams pointed to 'a tremendous year' in the intellectual property arena.
Manatt's 8 percent increase in revenue was primarily a result of strong performance in litigation, particularly intellectual property, as well as robust M&A and capital markets, said Managing Partner William Quicksilver.
Luce, Forward, Hamilton & Scripp's 11 percent revenue gain was the result of strong real estate and insurance litigation tempered by a slower bankruptcy practice in San Diego, said Robert Bell, the managing partner. They were able to raise billing rates about five percent last year: 'We're a real bargain so we have a lot of room -- [rates] haven't been a problem for our clients,' Bell said.
Quinn Emanuel Urquhart Oliver & Hedges reported last month that revenue soared more than 50 percent.
Paul, Hastings, Janofsky & Walker's fiscal year ended Jan. 31 and financial results still aren't available. But Chairman Seth Zachary said the firm is 'very bullish' about its financials, adding 'our revenue per lawyer will be way up this year,' as well as gross revenue and profits per partner.
Date: February 15th, 2007 11:34 AM Author: ruddy school puppy
"Chairman Seth Zachary said the [London] office was the firm’s “busiest” during 2006, with the office’s 40 lawyers recording an average of 1,900 billable hours - 5 per cent higher than the firm’s global average."
Date: February 26th, 2007 11:20 AM Author: Chestnut point
"People are concerned that they might not make partner for 10 years," says a current Finnegan associate. "It was explained that there's not enough information at the eight-year mark and that the firm needs more time to evaluate an associate before making them partner. I'm sure that's part of it, but it's not the entire picture."
Date: April 15th, 2007 2:12 PM Author: Fear-inspiring Multi-colored Theatre
My guess is legalweek just fucked up. It would be interesting to know the truth, b/c if WLRK's profits remained flat while other firms' profits increased substantially, that could mean that (a) Wachtell is losing market share, or (b) there is some sort of ceiling of profitability beyond which it's hard to push (~$4M), or (c) both.
I've added Kirkland, Simpson, and DPW to the OP. Also took out the Wachtell +10% thing since it hasn't been sufficiently resolved (the Legal Week Top 50 chart now claims Wachtell's previous PPP was $3.55m instead of $3.8m).
Date: April 19th, 2007 1:15 AM Author: impressive milky mood
banking > law. Sadly I just realized this now as a 2L, so it's off to finance after I finish my JD, you risk averse fags can work sweatshop hours for 1/10 the pay
Date: May 7th, 2007 9:46 AM Author: Crystalline goal in life lodge
Not updating this list anymore. I added the Westlaw cite to the OP for the AmLaw 100 list; I'll replace it with the AmLaw 200 list when that is available.
Date: June 11th, 2007 1:44 AM Author: doobsian flirting patrolman
this makes me really sad. The most you can possibly hope for is a measly $4 million a year if everything goes your way? My parents make 7 figures working <30 hours week. This is truly just pathetic.