The profits of some large law firms have grown so rapidly that some partners are beginning to wonder about their future: how long will they have to work? How did Biglaw fare in 2021 after an outrageous performance in 2020? In short: better. Much better. Based on financial data released this week in the latest edition of the Am Law 100, Biglaw`s latest round of salary increases makes perfect sense. To be sure, most law firms have achieved record gross revenues, revenue per attorney, and profits per partner. But that`s true in a typical good year. What has made 2021 such an explosion is that many companies have significantly accelerated their growth rates on these indicators compared to 2020 – a year that has itself been hailed as a staggering success. Either way, 2021 was truly an unforgettable year for the biglaw elite. PEP is shaking up a lot of it. Here are the top 10 affiliate wins: The answer is pretty, pretty, pretty, pretty good. The average PEP increased by 19% in the Am Law 100 in 2021, and some companies really blew it out of the water last year.
Wachtell didn`t do so well in the Am Law 100, which ranks law firms based on their gross revenue in 2021. Wachtell came 45th. The sales figures of the Am Law 100 may be the preferred sorting hat for the prestige of law firms, but they produce crazy results. Companies can rank in the top ranks of companies by simply becoming very, very, very large. Throw enough satellite offices at the problem and you can build a huge death star that makes money that doesn`t necessarily reflect the importance of the business in the legal market. Wachtell remains at the top, but it is now one of three companies with at least $7 million in PEP. Finally, you`ll have to go all the way to 18th place to find a company with a profit margin below 50%, and up to 35th place to find one below 40% (or 30%, since Orrick is at 26%). I`m just going to show that while everyone is upset about rising employee wages, there`s still a lot of neglect at the top of Biglaw to spit out a few more grandparents. • Latham & Watkins, with gross sales of $5.488 billion Meanwhile, Kirkland & Ellis and Davis, Polk & Wardwell were just behind Wachtell in terms of profit per partner, with profits per partner of $7.388 million and $7.01 million, respectively, the US lawyer reports in another article. In total, 14 companies now have earnings per partner of more than $5 million (compared to six in 2020).
In keeping with the long-standing theme of “getting rich” in Biglaw, PPEP growth was strongest at the top of the Am Law 100. While the top quartile increased the PPEP by 22.7%, the bottom quartile of the Am 100 law only managed an increase of 7.7%. Regardless of the rank of their firm, most Am Law 100 partners would have a hard time complaining about 2021. Nine more BigLaw firms have joined American Lawyer`s “Super Rich” list, released this week, as well as the list of the 100 best-selling law firms of 2021. The Am Law 100 doesn`t fall with the same fanfare as the ranking of U.S. law schools, which is a shame because there`s actually much more interesting data lurking in the annual law firm rankings. The “classic” Am Law 100 figure, based on gross revenue, revealed that 52 law firms generated more than $1 billion in revenue last year, but there are a few hidden benefits in the companion partner earnings ranking. There may be a hot side market right now, but notable partnership companies are still there and it`s still doing reasonably well for itself. Wachtell obviously only fishes and Debevoise is at 14 with a PEP of $5,011,000. “After an exceptional year, some partners might decide it`s just not worth it,” Burman said. He joked that retirement could only last as long as Tom Brady spent away from football. “I don`t know if it will be a 40-day retreat at this company.
But it`s certainly tempting after a good year. If earnings per partner had increased by 20% last year, there would be nearly 20 law firms where the average partner would have earned a surplus of $1 million, compared to an 8% profit growth over the past two years. According to AmLaw data, there were more than 4,100 partners in these companies in 2020. In nine other companies, partners would earn $750,000 more than long-term growth trends. Kirkland & Ellis and Latham & Watkins once again dominated the pack, not only retaining their #1 and #2 spots, but also growing revenue faster than other top 10 companies. The composition of the leading group is fairly stable, with Ropes & Gray recording a growth rate of 22% in the top 10 and Jones Day dropping out despite a 10% increase in sales. In total, three companies have a PEP of more than $7 million, with only Wachtell exceeding $8 million. The top five companies all have more than $6 million, the top 14 over $5 million, 23 over $4 million, 38 over $3 million, 56 over $2 million and 91 over $1 million. The smallest PEP to make the top 100 is Littler at $621,000. In companies where profits have not grown as quickly, partners are more tempted than ever to take a step and try to enjoy record compensation elsewhere.