In this week's Law Firm Disrupted, we hold two truths in our mind at once: Big Law is performing well. But the heady days of growth have not returned.

I'm Roy Strom, the author of this weekly newsletter on the changing business of Big Law, and I can be reached here or you can sign up to receive this email here.  

A Reminder: The Golden Years Have Not Returned

Last year Latham & Watkins grew its revenue by more than 10 percent to about $3.4 billion. This was, without a doubt, a great result for the global firm. Since 2009, it has only accomplished higher single-year revenue growth rates twice: from 2013 to 2014 and 2010 to 2011.

With Citibank reporting that large law firms last year experienced the greatest top-line growth since the Great Recession, there is plenty of reason to be optimistic about the current state of the legal services market. No reason to turn the lights on at this dance.

But I have to do it. I have to put out what is now something of an annual reminder: The golden era for law firms has not returned.

If the Am Law 100 in 2018 ends up growing revenue by 6.4 percent—the average Citi reported for all firms in its survey—the nation's 100 largest firms will have grown revenue from 2009 to 2018 by 50 percent. Nothing to scoff at! But it doesn't stack up to what happened in the preceding nine-year period: 108 percent revenue growth.

The story is the same even at Latham, one of the Golden Children of today's legal market.

Consider: In the nine years since 2009, Latham's revenue has risen 86 percent, according to ALM data. Very impressive! What about from 2000 to 2009? 183 percent revenue growth. Dreamy.

While Latham can rightfully celebrate its year-over-year 10.5 percent revenue growth in 2018, that would have been its third lowest single-year revenue growth rate from 2000 to 2009. And that's only because, you know, there was a pretty bad recession in 2008 and 2009 (both years that saw negative revenue growth). More common in that decade were years like 2006 to 2007, when Latham's revenue rose 24 percent.

If Latham saw that same kind of revenue growth next year—let's just say the Golden Years return (they will not)—the firm's revenue would blow past the $4 billion mark in 2019. Just two years after it broke the $3 billion barrier.

It is some level of absurd that law firms experienced the kind of growth they did in the pre-recession 2000s. To be sure, part of the slowdown is likely to do with the law of large numbers. Law firms are significantly bigger than they used to be, and it's hard to keep up that kind of growth.

But I also think this background is helpful when thinking about the slow pace of legal market change. If your argument is that law firms need dramatic change to respond to a stagnant market, you might want to temper your expectations. Because two things can be true at once: Law firms can be performing very well. Even if they haven't returned to the glory days.

Roy's Reading Corner

On Law Firm Legal Tech Investments: The Artificial Lawyer reports that an Am Law 200 firm was part of the investor group that put $4.8 million into a legal tech contracts platform, LinkSquares. Strikes me as a logical response for law firms to invest in companies that are eating into the legal services market. Diversifying your investments is a pretty basic strategy. And in most industries, incumbent players buy up their threats.

On Lateral Hires: My colleague at The American Lawyer, Dan Packel, writes this week about lateral partner hires—and why they fail. The story says that $17 billion worth of legal work changed firms thanks to lateral hires from 2014 to 2017. But a lot of that gets wasted along the way.

On Legal Operations: Barnes & Thornburg is launching a “legal operations department.” The firm has long had an innovation brand, known as BT ValueWorks, but they say that aligning their language with corporate legal departments will help clients understand what that means. The story includes an anecdote of a partner who brought the firm's legal ops pros into a pitch meeting. The experience changed her practice.