A growing number of U.S. law firms are posting some astonishingly high financial results
BY:
Lawyer Reporter
PROJECT COUNSEL MEDIA
1 February 2021 (Paris, France) – Chaos, disorder, turmoil: that means someone, somewhere is making a buck. Often, it’s someone with a law degree.
It’s still early doors but a growing number of U.S. law firms have already started posting some astonishingly strong financial results. Akin Gump’s City revenue is up by almost 20 per cent, from $125m to $149m, while globally turnover was up 6.5 per cent last year from $1.135bn to $1.209bn. McDermott Will & Emery’s global revenue is up by 18 per cent to $1.4bn, partly helped by that mega influx of well over 50 DLA Piper lawyers a couple of years back, and has boosted PEP by around 25 per cent to an all-time high of $2.5m. It has not disclosed its London financials.
And then of course there’s Quinn Emanuel. Its London office fee income has gone through the roof, up 27 per cent to an all-time high of £127.4m.
More record results from US firms are sure to follow. In fact, there are indications that several, including Latham and Milbank, smashed their 2020 budgets as long ago as September. The deals data for 2020 underlines just how active the top firms – and their ranks of lawyers – have been during lockdown. Indeed, much of the work includes fundraisings, financial restructurings, corporate reorganisations and major disputes, all directly or indirectly relating to the impact of the pandemic.
Global M&A rankings 2020 by deal value: eight of the top 10 are American headquartered firms
This is hardly the first time that so many firms have prospered during times of adversity. That’s what well-hedged law firms are designed to do. Because it is not the “practice of law”. It’s the “practice of making money”. Chaos, disorder, turmoil: there’s money in them thar hills!!! 🙂
But now there is another issue. As we have noted before, we have scores of contacts at many Big Law firms and a few have told us (off-the-record) that there is an immediate PR concern facing many of these firms: how they manage the unveiling of these sky-rocketing financials during the darkest days of the pandemic. A much bigger problem is how they look after their highly stressed associates, fee-earners and staff attorneys – plus the business services teams supporting them – that are putting in lengthy hours and generating these record financials. Legaltech vendors are being dragged in, too. Especially those that provide e-discovery document review services. Hourly rates for contract attorneys in the U.S. have been crushed, with the old mean standard hourly rate of $35 ratcheted down to a mean of $25, and some even paying beer money rates of $19. We’ll save the brutality of contract attorney pay and the reality of document review pricing for another post. Suffice it to say any tabloid wanting to take aim at firms and vendors profiting hugely during the pandemic will have ready-made fodder … and a few “WTF is going on” pieces are in progress.
Firms that are generating huge returns off the back of their talent now find they need to make it abundantly clear that they are supporting their staff. Recently the likes of MoFo, McDermott and others have gone public with one-off “thank you” payments to fee-earners (and in McDermott’s case, all business services personnel). That goes some way towards achieving this goal of providing tangible, practical help. And if these firms do not support the working parents in their ranks through meaningful and practical measures, then they can expect to be attacked for it. Legaltech vendors cannot do any of this because the margins and competition are too tight. They don’t really make money for anybody. Their reason for being is to save them money. Which I guess, thinking about it, means they do help law firms make money. But being so far down the food chain they are kind of stuck passing on any kind of one-off “thank you” payments. They are merely a service industry to law firms, which are themselves a service industry, to corporations.
Yes, cash-rich firms putting their hands in their pockets is a decent gesture, but support measures will need to go further than hand-wringing, kind words and a few dollars more as we have slowly realized this pandemic is far from over, and sky-rocketing financials continue. Ah – chaos, disorder, turmoil. Don’t you just love it!!!
