Law.com Compass: The Am Law 100 Balancing Act – Rising Costs and Diminishing Productivity
With costs increasing and productivity waning, Am Law 100 firms are heading into a period of rightsizing.
April 24, 2023 at 10:38 AM
3 minute read
Last week saw the release of this year's highly anticipated Am Law 100, providing a fascinating look into the financial health of the US's top 100 largest law firms. Total gross revenue for the Am Law 100 in FY 2022 grew 2.7% to $130B amid a complex business and economic environment.
However, looking beyond this top-line figure, examining how other key financial metrics fared is essential. This includes the performance of average costs per lawyer (CPL), which grew by 2.3% year over year. While representing a slowdown on the 9.1% growth exhibited in FY 2021, it still represented a higher growth rate than average revenue per lawyer (RPL), which declined by 1.9%. This trend of CPL outpacing RPL is not a route that Big Law should be looking to go down.
The softening of demand across transactional practices such as M&A and capital markets impacted the decline in RPL exhibited by the Am Law 100 last year. This softening of demand is inextricably linked to the slowdown seen in the tech and financial worlds, where the slowdown in activity has led to the slashing of jobs in these industries.
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