Last year was great and all, but Biglaw’s second hundred better not get used to it

The Biglaw ranking festival that is the Am Law 200 is out today. While the top 100 companies were previously published, today’s spotlight is on the second hundred companies, i.e. those ranked from 101st to 200th.

Let’s start with the good news, because there’s a lot of positives in the numbers. Global gross revenue for the Second Hundred was up 9.1%, as were headcount, up 1.3%. Other health indicators performed strongly last year, with revenue per lawyer up (7.7%) and earnings per equity partner also (11.8%).

But as ALM reports, there are cracks to be seen:

The industry continues to consolidate as the Am Law 100 moves away from the Second Hundred. The gap between the largest Am Law 200 firm and the smallest is also widening. Economies of scale will become more important as costs continue to rise, such as increased marketing spending, sustained salary increases for partners and staff, and growing client demands for law firms. lawyers of all sizes to maintain state-of-the-art cybersecurity and data infrastructure.

And when the crisis is here, well, expect to see partners who feel like they’re not getting what they deserve in this sideways market:

“We will definitely see disgruntled partners and an increased level of corporate moves,” says Marcie Borgal Shunk, law firm consultant, president and founder of The Tilt Institute. “This is not going to be a general scenario where all businesses will be affected equally. Companies that haven’t cut their expenses to the bone, that have used the extra capital to invest rather than distribute to partners, will be better positioned exiting this high-flying market than companies that have chosen to give all the money to their partners. »

But just because it’s Biglaw’s future problem doesn’t mean some cracks aren’t visible. Like stratification – which is getting worse. The revenue gap between the 101st and 200th ranked companies narrowed to $299 million from $261 million a year earlier.

So which companies are the big winners? The companies with the most revenue growth last year were: Fisher Broyles; Prior Cashman; Foley Hoag; Spencer Fane; and Benesch, Friedlander, Coplan & Aronoff.

And when there are winners, there are losers. While most companies saw their revenue increase, that wasn’t always true. Although there are at least some explanations as to why these companies have struggled:

Of the handful of firms that saw revenue declines in 2021, the bottom five focused primarily on litigation and other countercyclical work. High-end litigation firms like Robins Kaplan and Boies Schiller Flexner were the biggest losers, laying off lawyers and dropping revenues by 10% and 8%, respectively.

Eckert Seamans Cherin & Mellott also struggled, reducing revenue by 6.6%. Sources told The Legal Intelligencer, an affiliate of The American Lawyer, that the firm had struggled to institutionalize corporate relationships. Kobre & Kim, a firm that prides itself on litigating against banks, saw a 3.4% decline in revenue. Lathrop GPM, a more balanced firm that grew significantly in a January 2020 merger, lost 4.8% of its lawyers and 14.8% of its equity rating in 2021, driving a decline of 2 .4% of its income.

Overall, it’s hard to be worried about strong numbers like what we saw in 2021. But caution? It is certainly justified.

Kathryn Rubino is an editor at Above the Law, host of The Jabot podcast and co-host of Thinking Like A Lawyer. AtL’s tipsters are the best, so please connect with her. Feel free to email her with any tips, questions or comments and follow her on Twitter (@Kathryn1).

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