Welcome to Original Jurisdiction, the latest legal publication by me, David Lat. You can learn more about Original Jurisdiction by reading its About page, and you can email me at firstname.lastname@example.org. This is a reader-supported publication; you can subscribe by clicking on the button below. Thanks!
If I had to pick a word to describe 2022 for Biglaw, I’d go with “transitional.” Think of last year as a bridge connecting the boom times of 2021 with… whatever 2023 ends up being, but it’s probably not going to be good.
To get an idea of what the future might hold, let’s look back at the past—specifically, how the year 2022 went for Biglaw, as reflected in the 2023 Am Law 100 rankings. Collectively, the nation’s 100 largest law firms by revenue turned in a mixed performance:
Total gross revenue: $130.8 billion, up by 2.7 percent.
Average revenue per lawyer: $1.16 million, down by 1.9 percent.
Profits per equity partner: $2.56 million, down by 3.7 percent.
As I discussed with my co-host Zach Sandberg when we recently dissected the new Am Law 100 rankings on Movers, Shakers & Rainmakers, it’s unusual to see these three key indicators pointing in different directions. In recent years, they’ve all gone in the same direction, and that direction was up:
As noted in Lateral Link’s write-up of the rankings, an increase in gross revenue coupled with a decrease in revenue per lawyer meant that total headcount increased in 2022. The total number of lawyers working in the Am Law 100 increased by 4.7 percent, to 112,962. The number of equity partners grew by 1 percent, while the number of nonequity partners grew at a much faster clip, by 6.4 percent.
The dips in revenue per lawyer and profits per equity partner might make 2022 something of a disappointment, at least compared to the past few years—but it’s hard to be too disappointed. As noted by Patrick Smith in his analysis of the Am Law 100 for the American Lawyer, for many firms it was their second-best year ever, falling short only compared to 2021—which was itself an insanely busy, aberrational year for the transactional work that drives Biglaw profitability. Some firms might have thought the glory days were going to last longer than they did—and many of these firms are now in the process of retrenching, having overhired in 2021 and early 2022—but it was not realistic to have expected the party to go on forever.
That should suffice in terms of macro-level observations about Biglaw’s financial performance in 2022. For paid subscribers, I’ll now dig into the crucial metrics—gross revenue, revenue per lawyer, profits per equity partner—and show you the top 20 firms in each category.