A Guide to Our Methodolgy

The American Lawyer

HOW WE REPORT LAW FIRM FINANCIALS

The Am Law 100 is reported by staff members at ALM’s publications throughout the United States, including The American Lawyer, The Connecticut Law Tribune, Daily Business Review (Miami), Fulton County Daily Report (Atlanta), The Legal Intelligencer (Philadelphia), The National Law Journal/Legal Times, The New Jersey Law Journal, New York Law Journal, The Recorder (San Francisco), and Texas Lawyer.

Most law firms provide their financials voluntarily for this report. Some choose not to cooperate, so we make estimates based on our reporting. But all data is investigated by our reporters. In the event that an error in reporting a previous year is discovered, we will correct the numbers and base the percentage changes in future years on restated numbers.

DEFINITIONS

Gross Revenue is fee income from legal work only. It does not include disbursements or income from nonlegal ancillary businesses.

Net is compensation paid to equity partners.

Equity Partners are those who receive no more than half their compensation on a fixed-income basis.

Nonequity Partners are those who receive more than half their compensation on a fixed basis.

Lawyer Counts are full-time-equivalent (FTE) figures for the 2010 calendar year taken from The National Law Journal’s most recent NLJ 250 survey. Retired partners and of counsel are not counted as partners, nor are payments made to them counted in net operating income.

HOW WE CRUNCH THE NUMBERS

This year’s report is the first to use full-time-equivalent (FTE) lawyer counts for the calendar year for our calculations; to obtain valid year-over-year growth rates for individual firms, we recalculated their 2009 financials using these FTE figures. We then based our growth rates on those recalculations.

Revenue Per Lawyer is calculated by dividing gross revenue by the number of lawyers.

Profits Per Partner is calculated by dividing net operating income by the number of equity partners.

Compensation–All Partners is calculated by adding per-partner profits to compensation paid to nonequity partners.

Average Compensation–All Partners is the net operating income plus compensation to nonequity partners, divided by the number of equity and nonequity partners.

Value Per Lawyer is calculated by dividing compensation–all partners by the total number of lawyers. We then divide that figure by $10 million to determine how many lawyers it takes to generate that amount.

Profitability Index includes leverage, which is the ratio of all lawyers (minus equity partners) to equity partners, and profit margin, which is the ratio of net operating income to gross revenue multiplied by 100. It can also be obtained by dividing profits per partner by revenue per lawyer.

OUR CONVENTIONS

On the A to Z chart, firm names are spelled out in their long form. On all other charts we publish shortened firm names.

We round gross revenue and net operating income to the nearest $500,000. Profits per partner, revenue per lawyer, and compensation–all partners are rounded to the nearest $5,000.

Firms that are tied in the rankings are -listed in alphabetical order.

HOW WE DESIGNATE LOCATION

Firms are placed in the “international” or “national” categories according to the distribution of their lawyers. Vereins are broken out separately because their structure, particularly regarding profit-sharing, differs significantly from that of other Am Law 100 firms.

These breakouts are obtained from the most recent National Law Journal NLJ 250 survey. If 40 percent or more of the firm’s lawyers were located outside the U.S., we identify the firm as international. If no more than 45 percent of the firm’s attorneys were located in any one region of the country, we identify the firm as national.

DESIGNATION OF REGIONS AND MARKETS

We use the following classifications for identifying the geographical concentration of a firm’s offices and attorneys:

New England Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont
New York City
Mid-Atlantic Delaware, Maryland, New Jersey, New York State (excluding New York City), Northern Virginia, and Pennsylvania
Washington, D.C.
South and Southeast Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Southern Virginia, Tennessee, and West Virginia
Midwest Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and -Wisconsin
West and Southwest Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Oklahoma, Texas, Utah, and Wyoming
West Coast/Pacific Rim Alaska, California, Hawaii, Oregon, and Washington State

CHART FOOTNOTES

* Vereins differ structurally from other Am Law 100 firms, especially in regard to profit sharing.

(1) Because we are publishing global statistics for DLA Piper for the first time, there is no year-over-year comparison for the firm.
(2) Hogan & Hartson joined with Lovells in May 2010 to form the Hogan Lovells verein, so there is no year-over-year comparison.
(3) Fiscal year ends on March 31. Results are projected in order to meet The Am Law 100’s publication deadline.
(4) Fiscal year ends on March 31. Results are projected in order to meet The Am Law 100’s publication deadline.
(5) Sonnenschein joined with Denton Wilde Sapte in September 2010 to form the SNR Denton verein. Results are for the legacy U.S. operation only.
(6) Squire, Sanders & Dempsey joined with Hammonds to form a verein effective January 2011.