The AmLaw 200 (technically, the AmLaw 101—200) is now
out and the most important generalization to be offered is
that this group is not susceptible to generalizations.
On a macro level, the news is good for these firms: Revenue
was up year-over-year by 7%, revenue per lawyer by 9%, and
profits per partner by 11%. On the other hand, to underscore
a theme sounded often in these pages, "the
reality is that the Second Hundred is still the poor cousin
of The Am Law 100-firms 1-100 in our ranking-and getting poorer
by comparison." Average PPP of the group is $566,000,
only 59% as high as the first 100 ($959,000). And
the gap is widening: Increasing by 21.7% in the last
three years, from $323,000 in 2001 to $393,000 for 2004.
A fair summary of the tenor of the The American Lawyer‘s
coverage of this year’s AmLaw 200 is as follows (emphasis supplied):
"While legal Brahmans dominate The Am Law 100’s profits
per partner rankings, in the Second Hundred it’s not always
the firms with the most sophisticated work and the fanciest
pedigrees that haul in the big bucks. Nor does the avenue to
riches for Second Hundred firms necessarily start and end on
Wall Street, though the most profitable Second Hundred firms
tend to be clustered in New York, Los Angeles, and Washington,
D.C. In short, there is no typical million-dollar
Second Hundred firm. The categorization encompasses elite and pedestrian practitioners,
old guards and arrivistes."
Business models certainly include the contingency-fee shops,
with radical volatility in earnings from year to year, but at
the opposite end of the spectrum try a newcomer to the AmLaw
200 with PPP healthily in excess of $1-million. Who? An
immigration boutique with an unheard-of 3:1 paralegal:lawyer
ratio. Can you say "leverage?" Couple that with fixed fees per
project, 90% of the clientele being corporations wanting to bring
in high-end employees as opposed to individuals seeking entry,
and welcome New York’s Fragomen, Del Rey,
Bernsen & Loewy. Their model is, no surprise,
built on volume, as they’re now handling about 100,000
immigrants per year.
Immigration law a backwater? That’s so yesterday; Fragomen-Del
Rey could be a case study for Clayton Christiansen’s next "Innovator’s Dilemma" book.
Fragomen-Del Rey may be a new name to you (it certainly was
to me), but consider how "reinvention" is available even to
the oldest of the old-line:
"The two old-line firms on the Second Hundred’s most-profitable
list—Hughes Hubbard and Patterson Belknap—were dismissed
as dinosaurs less than a decade ago. But both firms have made
successful turnarounds in recent years, without destroying
their long-standing reputations for collegiality. Patterson
Belknap has retained an all-equity-partner structure, while
Hughes Hubbard has just six nonequity partners among its 76
partners."
(Almost) all-equity partnerships; what a concept! Another
idea that many would reflexively call "so yesterday."
So I propose a generalization about the AmLaw 200: They
may be seedbeds of innovation. Calling all contrarians: Find
your home in the AmLaw Second 100.
