Top US firms rake in record $35 billion by lifting headcounts

The top 100 US law firms achieved record income of more than $35 billion (23 billion) in 2001, a 13% rise on the year before, but only by upping their headcounts dramatically.

The annual American Lawyer magazine survey of the top firms found that the 11% rise in headcount - the biggest since the survey started in 1985 and the legacy of the boom in work - masked what was actually sluggish growth in revenues per lawyer (RPL).

Whereas RPL rose by an average of 6.4% in each of the previous five years, 2001 saw a tiny rise of just 0.5%.

Profits per partner (PPP) rose by just 2% to an average of $792,550.

However, 18 firms now have average PPP of more than $1 million, compared to 16 in 2000.

Of the big-name firms, Shearman & Sterling suffered the most.

Having increased its workforce by 30% - with many joining its overseas offices - the Wall Street practice managed just a 5% rise in turnover and saw RPL drop 19% to $595,000 and PPP fall 30% to $950,000.

Skadden Arps Slate Meagher & Flom remained top of the pile, its 2001 revenues of $1.2 billion representing a 6.2% rise on the previous year.

However, RPL dropped 4.4% to $765,000 with PPP down 2.2% to $1.6 million.

Clifford Chance is shortly expected to report the first 1 billion income ($1.53 billion) but it is not included in the list.

By contrast, Brobeck Phleger & Harrison - which was recently raided by Clifford Chance to set up its new San Francisco office - suffered a 44% PPP drop on falls of 6% in revenues and 10% in RPL.

This reflected the hit taken by many Silicon Valley practices with the end of the Internet boom.

But New York firms suffered from the slowdown in big corporate work.

The most profitable firm remains New York's Wachtell Lipton Rosen & Katz.

Despite a drop of almost 4%, PPP were $3.2 million, which was more than $1 million ahead of those in second place at Cravath Swaine & Moore.

Neil Rose