Remember when after the 2008 economic meltdown, some pundits were predicting that law firms based in Washington would benefit from the increased regulatory work, somewhat at the expense of New York-based firms. Well, it hasn’t turned out that way, and a look at a five-year history of revenues and profits among leading law firms seems to confirm it.
Of the 19 New York law firms in which economic data is available, only two reported an overall decrease in profits per partner between 2008 and 2013; one other firm reported no change. During the same time frame, three out of eight D.C.-based firms have reported decreases in that metric, with one other reporting no change.
Interestingly, the results were much different on the revenue side. Eight New York-based firms have seen overall revenues decline since 2008, while only one D.C.-based firm has reported a decline in revenues. Those results suggest that New York firms have done a better job of cutting costs than their D.C. counterparts and/or limiting the number of equity partners.
Overall, the study of the 85 law firms reveals virtually the same aggregate increase in both revenues and profits during 2013. The average increase in revenues totaled 2.67 percent, while profits increased by an average of 2.72 percent. Not surprisingly, over the past five years, profitability increases surpassed that of revenues, with the firms reporting an aggregate increase in profits per partner of 21.22 percent, as opposed to an increase in overall revenues of 13.92 percent.
This study was based on reports from American Lawyer Media and other public sources. For a chart listing each firm’s reported results for 2008, 2012, and 2013, please contact Steve Nelson at snelson@tmg-dc.com.
TMG’s Take is a regular e-mail advisory produced by The McCormick Group. The company’s Legal, Government Affairs, and Law Firm Management groups combine the expertise of more than 15 Consultants to help law firms fulfill all of their lawyer and administrative recruiting needs. TMG’s Take covers topics across the spectrum of law firm management, including associate and partner compensation, growth strategies, marketing and business development, operations and facilities management, finance and accounting, professional development, and technology.
Please direct all inquiries to Steve Nelson, Managing Principal at (703) 841-1700 or snelson@tmg-dc.com.
