The U.S. law firm reporting season is in full swing and a clear theme is emerging.
At first glance, nothing appears all that unusual. As can almost be expected given the strength of the U.S. legal market over the last decade and the current strength of the U.S. economy, the overall picture is fairly good. Quite a few of the largest international law firms—including the likes of Akin Gump Strauss Hauer & Fled, Hogan Lovells, Milbank, Quinn Emanuel Urquhart & Sullivan and Paul Weiss Rifkind Wharton & Garrison—have announced double-digit increases in both revenue and average equity partner profits (PEP) for 2023.
They are the kind of figures that cause law firm leaders across the U.K., Continental Europe and Asia Pacific to turn green with envy.
But look a bit deeper and it gets more interesting. At almost every single large international firm so far PEP has risen more than revenue.
This was true at all the top performers—at Akin and Hogan Lovells PEP was up about 20% while revenue was up about 10%—while also being the case at firms where revenue grew slightly more slowly. At King & Spalding, Paul Hastings, White & Case, and McDermott, Will & Emery, PEP rose by 12% or more despite revenue growth being in the single digits.
It was even true at firms that experienced little to no revenue growth at all, such as Cooley and Bryan Cave Leighton Paisner, while at O’Melveny & Myers, where revenue fell 3.6%, PEP fell only 0.5%.
DLA Piper's PEP also increased more than its revenue and it also had a drop in equity partners.
In fact, of the 15 largest international firms to have announced their results in recent weeks, only three saw revenue rise more than PEP. These were Willkie Farr & Gallagher, Proskauer Rose and Greenberg Traurig. And in each case, there was not a lot in it.
What’s behind the numbers?...
