Paul L. Caron

Sunday, December 23, 2018

The Richest Law Firms Are Getting Even Richer, The Richest Law Firms Are Getting Even Richer:

The most profitable firms in the Am Law 200 are pulling away from the rest of the industry.

That’s the takeaway from an analysis of data gathered by ALM Intelligence going back to the year 2000. A look at the top 25 firms by profit per equity partner (PPEP) in this year’s Am Law 200 ranking reveals a wide and still growing gap in profitability between the upper crust and everybody else.


Why might that be the case? Probably because the industry’s most elite ranks—firms that include Latham & Watkins, Kirkland & Ellis, and Davis Polk & Wardell—have been mostly immune from pressures to cut their rates. They are sought after to do the most complex, valuable M&A deals and the riskiest litigation.

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Um, doesn't the chart show #1-25's profits increasing by a *smaller* proportion than 26-50 and not much faster than 51-100?

A log scale might be more appropriate if it wouldn't just confuse their audience :)

Plus there's that weasel word, "equity partner." Didn't the TIFD III-E "Castle Harbour" case explain what it means to really be a "partner"? Are these people trying to confuse their recruits, their customers, their girl (/boy) friends...or just themselves?

Posted by: Anand Desai | Dec 27, 2018 8:50:11 AM

It's like looking at NBA salaries and saying you'll devote all your time and energy to playing basketball starting at age 12, because obviously it pays off. It just ignores the statistics of what a negligible percentage of people it pays off for.

Posted by: ruralcounsel | Dec 27, 2018 4:45:40 AM

Yes, because everyone who goes to law school becomes an equity partner at a Vault 25 firm. I think this is enshrined in the Third Amendment? Sigh. This might be the dumbest of all your hot takes, and you have created a lot of competition for that mantle.

Meanwhile in non-LSAC-funded reality, law school enrollment is still FAR below 2008 levels, and real-dollar median starting salaries are still down 20% from that time, even as some law schools have increased their annual tuition by more than 50%. The future of graduate school financing and repayment is still uncertain. Oh, and the #11 law school in the country just had public layoffs. And yet some desperate and insecure law profs comment incessantly on the Internet how there's never been a better time to be a lawyer, which you can tell is genuine because they left the legal profession as quickly as humanly possible.

You know where the bright college kids are heading? Private equity funds, which are giving $300k/year offers to undergrads after their requisite two years at a bulge bracket. No MBA necessary. $300k/year at age 24 with no graduate school debt or (at best) $190k/year at age 27 with possibly as much as $350k to attend HYSCCN? Gosh, this sounds like a tough problem for a junior McKinsey analyst to solve!

Posted by: Unemployed Northeastern | Dec 26, 2018 10:38:38 PM

Profits and salaries are up big time. Yet some legal commentators and self-proclaimed unemployed commenters still discourage college students from attending law school. Thankfully, the message of the naysayers is not getting through as law school enrollment continues to climb. A lot of college students are smart enough to realize the complainers just want to discourage competition.

Posted by: Great time to go to law school | Dec 26, 2018 9:44:36 AM