The 2017 Am Law 100

Much to the delight of legal market wonks and law firms on the rise, ALM has recently released the 2017 Am Law 100. The Am Law 100, ALM’s detailed ranking of the United States’ 100 highest-grossing law firms, has been published annually for roughly three decades, and tracks individual firm statistics like gross revenue, revenue per lawyer (RPL), profits per equity partner, and number of lawyers among many others. With law firm strategy taking center stage in this issue of The Practice, the serendipitous release of the latest Am Law 100 offers a chance for us to take a deeper dive into some of the numbers that major firms will be pouring over as they formulate their strategies moving forward.

On the whole, fiscal year 2016 was a good year for top U.S. law firms. Collectively the group saw increases in gross revenue (4.3 percent), RPL (1.5 percent), profits per equity partner (3 percent), and total attorneys (adding 2,534 lawyers total, or 2.7 percent) to name just a few. The only notable combined measure to decrease from the previous year’s report was net income (a drop-off of 11.1 percent).

The ranking itself is organized by gross revenue. Real estate in the bottom 50 spots (those ranked 51–100) was much more volatile than in the top (1–50)—those in this year’s bottom 50 tended to move up or down the rankings nearly twice as many spots as those in the top 50. The biggest jump came in at 16 spots, while most firms moved only two spots or less from the ranking they earned in last year’s report. Only three firms fell off the Am Law 100 from the previous year’s report, sticking close to the 3.9 average of the past decade.

As others have noted, despite the general upward trend in this year’s Am Law 100 statistics, there is another story playing out—one of growing segmentation (See “Bank on More Failures”). Take, for example, the RPL statistic. This year’s overall RPL growth (1.5 percent) was somewhat low compared to recent years, but this picture changes depending on which firms you consider. The difference in RPL growth among the higher-ranking firms versus the lower-ranking firms supports this story of segmentation.

It is important to note that we are not comparing how RPL changed for the same firms between the 2016 Am Law 100 to the 2017 Am Law 100 but rather how this measure changed for firms ranked in the same positions on those lists from one year to the next. And the numbers are telling. RPL for the top 50 rose by 2.8 percent while the bottom 50 actually saw a decrease of 1.3 percent. Looking closer to the margins, RPL for the top 25 increased by 3.2 percent from the previous year—more than twice as much as the overall average—while RPL for the bottom 25 was largely stagnant, decreasing by 0.2 percent. Moving, then, to the middle, firms 26–50—the only quadrant whose RPL exceeded $1 million—fared close to the overall average RPL, coming in at a 1.9 percent increase. This means that firms 51–75—which actually comprised 26 firms due to a tie at no. 75—experienced the hardest hit to RPL growth at a decrease of 2.2 percent from the previous year. In short, despite modest gains in RPL on the whole, those firms toward the top of the list are clearly improving while those in the bottom half are actually losing ground.

So, while most measures are trending upward for the Am Law 100, the newly available data tells a slightly different story when taken in sections. If we take RPL as the best available measure to signal a firm’s overall financial health, the 2017 report was far from good news for all 100 of the country’s top firms.