10.6 percent was the rate of profit growth at Am Law 100 firms in 1999, the last full year of the stock market boom. But the 1.5 percent figure is wrong, too. That was the rate of profit growth at Am Law 100 firms in 1992, the last time the economy languished in the second year of a downturn.
The correct number is 6.9 percent. And The Am Law 100’s other results are strong, too: Gross revenue increased by 8.5 percent and revenue per lawyer rose by 4 percent. (In 1992 revenue per lawyer at Am Law 100 firms grew by 4 percent as well, but gross revenue rose by only 3 percent.)
How, in the face of a lingering economic downturn, did The Am Law 100 manage to rack up robust numbers?
It’s a story of contingency planning. With the dark days of the early ’90s in mind, law firms planned for the worst in 2002 and scaled back their ambitions. Call it the year of living modestly.
The healthy composite averages mask deep pockets of pain, most notably on Wall Street and in Silicon Valley. This year’s sharpest decrease in revenue per lawyer — the best measure of a firm’s ability to command premium fees and top billing rates — was at Cravath, Swaine & Moore, one of the premier Wall Street firms. Of the 15 firms where revenue per lawyer declined last year, seven were New York firms and two were Silicon Valley firms.