The Global 100 for 2004 is out, courtesy of our friends at The American
Lawyer. First, the chart of revenue by rank:
This has what statisticians call "a long tail"—and
this is only the top 100 firms, recall; imagine what it would look like
for the top 200 or the top 1,000.
The moral is that while it’s easy (all things being relative)
to be big ($200 million/year seems big to me, anyway), it’s much more
difficult to be enormous. Consider:
- Firm #100 is Duane-Morris, with $229-million in 2003 revenue.
- Doubling that revenue number (to $458-million) takes you to firm
#34, Winston & Strawn. - Doubling that revenue (to $916-million) takes you
to firm #9, Sidley & Austin. - And all of the top 8 firms are over $1-billion in revenue.
Other ways of dimensionalizing this skew:
- The total revenue of the top 10 firms ($11,349-million) is essentially
equal to the total revenue of the last 30 firms ($11,688-million) - To move from rank #100 to rank #50 requires a 74% increase in revenue;
to move from rank #50 to rank #1 requires a 289% increase in revenue.
In more qualitative terms, UK firms dominate the top ten, taking 4 of
the top 10 and 3 of the top 5: Clifford Chance #1, Freshfields
#3, Linklaters #4, Allen & Overy #6. But they proceed to make
only 4 further appearances between 10 and 50: Lovells #20, Eversheds
#33, DLA #35, and Slaughter & May #49.
And, of the top 100 as a whole, 84 are US-based, and only 16 from elsewhere: One
German, one French, one Canadian, three Australian, and 10 UK.
I have no pat hypotheses why the US dominates, although surely our very
large domestic economy with its concomitant "big back yard" for firms
to grow in is a key factor. But it cannot be the only factor. (A
somewhat cute explanation for US dominance, at least vis-a-vis UK firms,
is that UK partners retire
too young.) Taking a very simplistic approach to demonstrating
why something else must be afoot is this argument: US law firms
occupy 5.25 times as many places on the Global 100 as do firms from the
countries listed above. If the US GDP were 5.25 times as large,
we might have an explanation. But it is nowhere near so much larger. Using
the most recent figures available, with comparisons based on PPP (purchasing
power parity), GDP totals are:
- US: $9.612 trillion
- Germany: $2.062
- France: $1.427
- UK: $1.404
- Canada: $856-billion
- Australia: $493-billion
The sum of the GDP’s of (Germany through Australia) is $6.210-trillion,
or just about exactly 60% of US GDP. But of course firms from those
countries do not represent anywhere near 60% of the Global 100. QE(simplistically)D.
What those other factors might be will be the subject of many additional
posts, I have every confidence.
