Published for Thomson Reuters Legal Executive Institute on June 2, 2015
The American Lawyer magazine completed its survey of America’s 200 highest grossing law firms this week. So, what can we glean from this year’s annual report?
First, and perhaps foremost, we can see that the market still pays attention to it. Whatever its flaws and limitations, nearly all observers continue to read and talk about it. For The American Lawyer magazine, it is equivalent to the swimsuit edition for Sports Illustrated. For the market, it remains the most universally relied upon set of metrics on large American law firms.
Aric Press, long-time AmLaw editor-in-chief, wrote a characteristically intelligent piece on the impact of the AmLaw financial reports this week on the website of his new firm, Bernero & Press. Among other points, Press asserted that this data would have become public in one way or another over the years, even if Steve Brill had not opened Pandora’s Box 28 years ago when the magazine became tracking the AmLaw 100. I am not sure Press is right on this, but it no longer matters. The data is out there and we all will continue to pay attention to it.
Second, thoughtful examination of the AmLaw data shows us how much we need to move to different, or at least additional, metrics. Most significant, the headline AmLaw number—Profits per Equity Partner (PPEP)—is not really a measure of profits. It is a measure of how much money the firms pay to their partners, all of whom work prodigious hours for the money they are paid. It is akin to adding back into the profits of a manufacturing company all of the compensation of the highest paid half of the workforce.Read More