The AmLaw 100 is an annual report on BigLaw financial performance, and the just-released 2013 AmLaw 100 it shows what American Lawyer calls “modest gains” across the top 100 firms, although that cuts two ways. Profitability was up from last year for the top 50 firms, but profits actually dropped for the bottom half. And at least one analyst says that up to 20% — that’s 20 of the country’s biggest firms — are “badly weakened” and approaching the failure point.
He bases this on the measurement of average hours. At those 20 firms, average hours billed are less than 1,600, and their realization rates on those bills are dropping, too. Makes sense. If a firm can’t keep its lawyers busy and can’t get its clients to pay, that spells trouble.
Worse, some firms are considering asking partners to pony up cash to bolster the firms’ health. As Bloomberg’s Lee Pacchia says “being a BigLaw partner these days can be a rather expensive proposition.”
So what does this say for the legal market as a whole? No idea. In fact, I’m not sure that the health of BigLaw is particularly relevant to the other half of the legal market: solos and small firms. If anything, I would expect a seesaw effect. The decline of BigLaw (which some have been predicting as a larger trend) might bode well for SmallLaw.
Regardless, big firms seem to be slowly coming to the realization what most small-firm lawyers have known for a while: the “golden years” of law practice pretty much ended in 2008. Firms that want to be successful after the recession have to adapt to the new market. It’s just that nobody is really sure how to do that or what that means.
There are also some fun stats in the AmLaw 100 report. The average BigLaw lawyer is worth $391,136, for example. Meanwhile, the most non-AmLaw 100 lawyers still pull in $40,000 to $65,000.