The American Lawyer on Wednesday released its complete list of the top 200 law firms in the U.S. as ranked by revenue, which showed the industry as a whole posted $105.7 billion in revenue in 2016, an incremental 3.7 percent gain from 2015.
We earlier reported on the dominant trends among the top 100 law firms ranked, but the new numbers on the second hundred law firms provide a more complete picture of the health of the industry.
Most law firms voluntarily disclose their financial data to the The American Lawyer. But not in some cases, and either way ALM assigns a team of more than 30 researchers and journalists over several months to scrutinize the numbers.
Below, in Q and A format, we highlighted several significant data points and takeaways.
Q: How did law firms in the second hundred fare?
A: In 2016, the second hundred law firms (i.e., firms ranked 101-200), collectively posted $19 billion in gross revenue up from $18.78 billion in 2015 — for 1.17 percent growth.
Overall, during that time frame, the number of lawyers working at those firms basically held steady, at nearly 29,000 (they did lose about 100 people, for a .35 percent decline in headcount to 28,834 from 28,937 in 2015.)
But the total number of equity partners shrank by 1.24 percent to 9,064 from 9,178, and nonequity partners also shrank, by 1.7 percent to 6,438 from 6,551. Therefore, roughly the same number of lawyers were producing an incrementally higher revenue that was split amongst fewer partners.
That’s why average profits per lawyer budged up .65 percent to $235,423 from $233,893 in 2015, but average profits per partner increased faster at about 1.56 percent to $748,960 from $737,470 in 2015.
Q: How does this compare to the first 100 law firms?
A: The AmLaw 100’s gross revenue increased faster, at 4.28 percent, from $83.15 billion in 2015 to $86.7 billion in 2016.
Overall, its headcount also grew by 2.73 percent, up to 95,515 from 92,981 in 2015. The number of equity partners grew, by 2.12 percent to 20,768 from 20,337 in 2015; and nonequity partners also grew 5.52 percent to 15,342 from 14,540.
Its average profits per lawyer increased 3 percent to $361,326 from $352,898 in 2015 while average profits per partner increased 2.39 percent to $1,661,772 from $1,613,439.
The first 100 grew more than the bottom 100, although neither group posted extraordinary gains.
Q: But every part of the second hundred grew?
A: Not evenly. Among the second hundred, the law firms that ranked 101-150 as a group experienced a .51 percent increase in gross revenue while the law firms ranked 151-200 experienced a 2.47 percent increase in gross revenue.
The disparity in performance between these groups led the American Lawyer to title its analysis of the AmLaw 200, the “hollow middle,” a nod to law firm consultant Bruce MacEwan who attributed slow growth in middle tier firms to “relentless” client pressure on rates and fees.