Profitability During the Pandemic: Law Firms Survive and Thrive

• Author: Daniel S. Wittenberg
• Pages: 28-29

Published in Litigation News Volume 47, Number 1, Fall 2021. © 2021 by the Ameri can Bar Association. Re produced with per mission. All rights re served. This info rmation or any porti on thereof may not be c opied or disseminated in any f orm or

by any means or stored in an el ectronic database or r etrieval system w ithout the expre ss written cons ent of the American Bar A ssociation.

ig Law in the United St ates saw protability sky-

rocket in 2020 despite t he pandemic. On average,

rms in the A m Law 100 noted prots per equity

partner (PPE P) increased more th an 20 percent in

2020, according to t he 2021 Am Law 100 report.

Comparatively, the same group saw PPE P increase by less

than 10 percent from 2018 to 2019.

The Am Law Se cond Hundred, tho se rms ran ked 101 to

200 for gross revenue, d id not fare too poorly either. PPEP

for those rms g rew roughly 20 percent. The unprecedent ed

growth for thes e rms “wasn’t somethi ng that was driven by

increased dema nd,” notes James R. Jones, Washi ngton, DC,

in a press statement for t he 2021 Repor t on the State of the

Legal Ma rket. Rather, according to Jones, it was all about

cost cutting a nd “being able to avoid certain expenses.”

By the Numbers

Notwithst anding the chaos of t he past year, the top 100

U.S. rm s enjoyed extraordina ry protabilit y. Eight rms

notched income of more tha n $1 billion. PPEP in t he Am

Law 100 increased 13.4 perc ent over the prior year, and

the average prot margi n reached 43 percent. Within the

Am Law 100, PPEP i n 2020 improved at over 90 percent

of the law rms. PPE P averaged $2.23 m illion across thos e

rms. Prot s were so robust owing to a combinat ion of high

demand for certa in services needed during t he pandemic,

lower expenses, a nd other related cuts. More t han half the

Am Law 100 rm s had growth of at least 10 perce nt. This is

almost double from the pr ior year.

The largest i ncrease in PPEP w ithin the Am Law 100 was

46.6 percent. T he largest drop was 22.9 percent. A nother

factor in the large nu mber of rms showing increased prot-

ability was de- equitization. A lmost half of the Am Law 100

rms showing i mproved PPEP de-equit ized partners in 2020.

The Am Law Se cond Hundred had a respe ctable year in

2020, but their number s were still well below those of law

rms in the top 100. G ross revenue for the Second Hundred

increased 1.1 percent to $20.8 bi llion. Revenue per lawyer

increased 3 perce nt to $707,506. PPEP for these rm s grew

8.8 percent to $863,449. Lawyer he ad count went down 1.8

percent to 29,359.

Almost hal f of the law rms in t he Second Hundred took

Protability During the Pandemic:

Law Firms Survive and Thrive

By Daniel S. Witte nberg, Litigation News Associate Editor

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