Top 100 US firms buck corporate trend to record 8.5% income jump to $38bn

The 100 biggest US law firms recorded an 8.5% increase in turnover last year to $38 billion (26 billion), bucking the trend among their clients, a survey has revealed.

The annual American Lawyer magazine survey said that while revenue of the Fortune 500 companies declined by 6% in 2002, law firms' income went the other way through higher fee rates, consolidation, less recruitment and cost cutting.

Skadden Arps Slate Meagher & Flom retained its top spot on turnover, rising 6.9% to $1.3 billion.

Baker & McKenzie was the only other firm to top $1 billion, just creeping past the mark with a 6% rise.

It was followed by Jones Day ($908 million), Latham & Watkins ($906 million) and Sidley Austin ($831 million), all of whom managed at least 15% growth.

Jones Day's figures will be boosted next year by February's merger with City firm Gouldens.

US/UK firm Mayer Brown Rowe & Maw entered the table as a merged entity in sixth place with a turnover of $705 million.

Clifford Chance, which would top the table, is not included because most of its lawyers are outside the US.

Profits per partner across the 100 firms rose 6.9%, which the magazine put down to 'serious cost cutting and holding down the size of the equity partnerships'.

While the firms with big mergers and acquisitions practices saw revenue per lawyer either stay static or decline, counter-cyclical practices such as bankruptcy, litigation and regulatory work produced steady income.

Wall Street firm Wachtell Lipton Rosen & Katz, though the smallest of the top 100 in terms of number of lawyers, continued way out ahead on profits per partner, even though a 7.7% drop took it down to $2.9 million.

It was followed by Cravath Swaine & Moore, which, despite seeing the sharpest drop in revenue per lawyer of any firm (22%), saw only an 8% drop in profits per partner to just under $2 million.

In total, 25 of the top 100 managed profits per partner of $1 million or more.

But the survey warned that in 2003, clients are slowing payments and demanding discounts.

With little left to cut, it predicted that managing partners may struggle to repeat the growth trick in 2003 unless there is an economic recovery.

Neil Rose