Color me surprised – or even shocked. I’ve followed the American attorney’s early coverage of the Am Law 200 law firm’s 2020 financial data, and the numbers so far are good, even great.
Despite the coronavirus pandemic and recession that made life so miserable for millions of people over the past year, law firms have done very well. Take a look at this table, which shows the law firms Am Law has covered to date and the year-over-year change in Revenue Per Attorney (RPL) and Profit Per Equity Partner (PPEP):
(If you want, you can access this table here as Google Doc. This way you can also sort the companies according to the change in their RPL and PPEP.)
Of the 29 companies listed above, all saw profit increases per partner, many of them in the double digits. The highest number yet, a 46.6 percent increase, was reported by Crowell & Moring (which led me to name Crowell Law Firm of the Week last week). But the company had many companies, and eight other companies saw PPEP increases of 20 percent or more.
Now, the increase in earnings per partner might be a bit understandable as the pandemic and remote working have dramatically reduced spending for many companies, such as: B. Rent (in some cases), utilities, travel and entertainment. And yes, some firms have made layoffs last year as well.
But revenue per lawyer, which industry observers generally consider to be the better metric of law firms’ financial health (as they are less manipulated than PPEP), also rose for almost all law firms – not as dramatically as PPEP, but still significant. In recent years, low single digit RPL growth has been rampant in Biglaw. But last year, if those early numbers are representative of the whole, maybe half of the Am Law 200 law firms saw RPL growth of 5 percent or more in 2020.
Given these robust revenues and profits, one can understand why law firms have been giving out “COVID bonuses”. Take Cooley, who started the trend with the announcement of “appreciation bonuses” in September 2020. The company recorded a whopping 25.4 percent PPEP growth in 2020. Had Cooley not paid special bonuses and then reported PPEP growth of over 25 percent, it would have had many unfortunate campers among its employees and employees.
Congratulations to these law firms on their strong performances in 2020. People like to say that lawyers are not good business people, but lawyers are clearly doing something right. The legal sector’s ability to do so well in a very difficult time for many other industries is testament not only to the talent and hard work of Biglaw’s lawyers and staff, but also to the firm leadership. So the next time you meet one of the leaders of your company, perhaps in a Zoom town hall rather than a hallway or conference room, thank them for successfully running your company through some very dark days.
What do these strong numbers mean for lawyers interested in sideways movement? They indicate that now is a safe time to move on to a new opportunity. Last spring, when the pandemic peaked, the economy was in recession and law firms were very concerned about how they would fare. It was a risky time to move. Candidates feared moving to companies that, upon arrival, could get into trouble and jeopardize their job security as employees or their practices as partners. But now that the economy is recovering and law firms are not only surviving but thriving, it’s a good time to move to a law firm where you will be happier.
If you are considering a possible move, please feel free to contact me or one of my colleagues to discuss possible options. We are happy to hear from them.
Ed. Note: This is the latest in a series of contributions from the Lateral Link team of experts. This position comes from David Lat, a general manager based in the New York office, where he is focused on placing top employees, partners and partner groups in preeminent law firms across the country.
Prior to joining Lateral Link, David founded and served as the Managing Editor of Above the Law. Prior to starting Above the Law, he served as a federal attorney, litigator at Wachtell Lipton Rosen & Katz in New York, and as a clerk to Judge Diarmuid F. O’Scannlain of the U.S. Court of Appeals for the Ninth Circuit. David is a graduate of Harvard College and Yale Law School. You can connect with David on Twitter (@DavidLat), LinkedIn, and Facebook and email him at [email protected] For more information on his writing on law and advocacy, see his latest publication, Original Jurisdiction.
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