In the American Lawyer webinar “The Am Law 200: Finding the Opportunities and Challenges Amid Slower Growth,” the editorial team analyzed the unique challenges the Am Law Second Hundred (comprised of the second hundred largest law firms in the country) experienced in comparison to the 100 largest firms above it, and the National Law Journal 200-500 below it. Within this, the speakers examined financial performance, success stories and what the future holds for this segment of firms.
If you missed out on listening in, we’ve recapped the key takeaways:
Slowed Growth Among the Second Hundred
With another recession looming, there’s concern with revenue growth and headcount for the Second Hundred group. The second largest law firms in the country experienced:
- 3 percent increase for new equity partners
- 1 percent increase in gross revenue
- 6 percent in revenue per lawyer
- 5 percent increase in headcount
Nearly a quarter of the Am Law 200 firms are significantly profitable and diverse in nature; however, compared to the First Hundred law firms (who saw double the results), the Second Hundred’s growth appears less profitable despite seeing the best results since 2011. Moreover, the data reveals another quarter of the Second Hundred firms shrank in headcount, which is concerning given the current healthy economy. Panelists noted that the Second Hundred group may be negatively impacted by industry changes, such as mergers, legal technology and alternate service providers within the legal industry.
Regional Salary Trends
Hundred group, however, data revealed firms nationwide generally didn’t participate in the salary wars because of the low volume of cases and competition in their respective location.
One area that was able to keep up with the top 100 was Northern California—this region outpaced other areas around the country due to the economic growth in San Francisco and its relationships with major technology companies, thus allowing them to match the Cravath system and deliver the strongest revenue growth.
Branding Your Firm’s Specialties and Industries
Branding matters now more than ever for the legal industry and helps firms stand out amongst the competition. From changing the firm’s name to developing a niche practice that is not easily replicable, this helps law firms define themselves in a crowded market. For the firms in the lower revenue range and headcount, the way to grow into the Am Law 200 is realizing you’re not going to serve everyone for everything and being focused in your services.
To Scale or Not to Scale
When it comes to operations, firms are strategizing on how to make the delivery of legal services more efficient by scaling. Some consider legal services as an expertise that can’t be scaled because it’s a human service. The speakers predicted a divergence will occur on how the mid-size firms behave and the strategies they pursue to accomplish this. With a quarter of firms in the Am Law 200 shrinking, it may be time to change their business model.
Building and Maintaining Relationships
The majority of law firms have had some system in place to track the way relationships are developed and fostered, and now they’re looking to take it a step further. Firms are institutionalizing the ROI for referral networks and making sure the conversations with the right firms for future partnerships or referrals are happening. This starts with networking and building relationships with new and existing firms for a stream of potential work. With larger firms planning to expand across the nation, mergers and acquisitions will be another approach to achieving growth and profit goals.
Want to listen for yourself? Check out the recorded webinar here.
