Law Firms Breaking Records for Revenues and Profits Per Partner
Remember last month's news about impending hard times for law firms? Forget all that! This month, law firms are celebrating record growth for 2007. For example, as Legal Week reports, Weil Gotshal broke the $2 million barrier for partner profits in 2007, up from last year's number of $1.9 million. And firm revenue increased to $1.175 billion.
But even that number pales in comparison to Latham & Watkins' $2 billion revenues for 2007. As noted in Conde Nast's Portfolio, just 11 law firms belong to the "billion dollar club," so reaching $2 billion is a big deal indeed.
So what's up with all of this? We're always reading about corporate gripes about law firms charging too much, and recently, the news has brought stories of associate layoffs. While those developments may make interesting headlines, at the end of the day, corporations still believe "that there is great advantage to breadth and depth [of large law firms], that's what their purchasing patterns indicate," says Peter Zeughauser, an expert quoted in the Portfolio piece.
Size also matters when it comes to profits. Ralph Baxter Jr., chairman of Orrick says that even firms of 500 lawyers will have trouble competing with larger firms and will either "shrink or get gobbled up."
My only question is how large can law firms grow? In the business world, antitrust law keeps businesses from establishing monopolistic control. I assume that ethics rules -- such as those prohibiting client conflict -- will prevent a situation in which a small handful of law firms dominate the globe. Or are we heading towards a track where the Am Law 100 becomes the Am Law 10...and everyone else?
Posted by Carolyn Elefant on February 14, 2008 at 02:40 PM | Permalink
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