Last year was a better one than 2015 for the Am Law 50, and especially for the most profitable firms. The same can’t be said for the rest of the industry. At 4.1 percent average growth in profits per equity partner (PPEP), 2016 was a decent year, but it fell short of 2015, with marginal demand growth and the midyear associate salary increases being key factors. Rate increases and faster collections were the primary drivers of revenue growth, while operating expense management helped blunt the impact of those associate salary increases. Looking ahead, 2016′s year-end inventory growth trailed 2015′s, setting up a softer start to 2017′s collections.
These results are based on a sample of 193 firms (77 Am Law 100 firms, 53 Second Hundred firms and 63 niche/boutique firms). Thirty-seven of these firms fit our definition of either “international” (less than 25 percent but more than 10 percent of lawyers based outside the United States) or “global” (at least 25 percent of lawyers based outside the United States). Citi Private Bank provides financial services to more than 600 U.S. and U.K. law firms and more than 35,000 individual lawyers. Each quarter, the Law Firm Group confidentially surveys firms in The Am Law 100 and the Second Hundred, along with smaller firms. In addition, we conduct a more detailed annual survey and the Law Firm Leaders Confidence Index. These reports, together with extensive discussions with law firm leaders, provide a comprehensive overview of current financial trends in the industry as well as forward-looking insight.
