‘The State of the Big Law Market” which they have described as the first of
what will be an annual report. The inaugural report was authored by Aric Press, Editor in Chief
and Mary Cho, Legal Intelligence Analyst. It is not only the content and analysis that is new but the
report represents a more in depth and historical treatment of law firm trends than ALM has undertaken in the past.
Finally ALM is taking deep dive into the ALM
Intelligence data archive they have been building for the past few decades. The ALM metrics are also supplemented with data from the US Census, Tymetric, Peer Monitor,
Citigroup and Wells Fargo in order to provide multiple perspectives on complex
and sometimes contradictory trends. I hope that ALM with continue to find new
ways of utilizing their data archive to provide new insights into legal market
all painfully familiar. Nothing has been the same since the collapse of Lehman in 2008.
Legal spending by corporations has still not
recovered from the Great Recession, yet firms continue to increase their hourly
Amlaw 200 firms have collectively increased
their share of the market.
Fewer partners are getting a greater share of
The law firm market is increasingly segmented.
The top 10 firms are getting richer and pulling away from the rest.
send to law firm, the rates paid by clients have increased.
In 2013 law firms set records for gross revenue
and profits per partner. But in inflation adjusted dollars firms actually had
the lowest profits per partner since ALM began tracking the AmLaw 200 in 1998.
Partnership ain’t what it used to be. It is less
available, less permanent, and more transferable.
The ranks of non equity partners continue to
Non equity partners get a bad rap but this
report suggests that they offer a considerable upside if they can be managed
effectively. Most law firms have not figured this out and non equity partners
remain a drag on profitability.
Law firms are segmented by size, reach and
economic success. Within each of these microcosms the gap between largest and
smallest/ most and least profitable is growing.
The success segment. The top 10% have several
things in common, most started in New York, most continue to get premium rates,
and they can afford the best laterals.
More AmLaw 200 firms will disappear.
For all the hype about technology and nimble
innovators, Big Law has still not been replaced by lower cost alternatives and
they report suggests this will not happen any time soon.
create client needs…Law firms must sit and wait for business. This, I assume
is based in the traditional model of lawyers as litigators or dealmakers.
They must wait for events to occur which are beyond their control and then
compete for the opportunity.
and risk management services? Haven’t consulting firms generated huge revenue streams
from selling their expertise? As commercial trade becomes more global and as regulations
become increasingly complex … there is certainly an opportunity for law firms
to “create the need” for preventive law and advisory services.
overarching rubric for law firm success. Yet there was a recurring theme that some law firm trends simply defy analysis.
The final analysis seems to be that each law firm is so unique that it
essentially exists in its own “micro-climate.”
So firms using similar strategies may
experience dramatically different outcomes. To use the prevailing trope… all
law firm strategies are “bespoke.” There is no one answer that fits all law