Credit: Jon ValkHow We Calculated the 2020 Am Law 200
A guide to the methodology we use in reporting on firm financials.
May 18, 2020 at 09:55 AM
5 minute read
The Am Law 200, a ranking of the 200 highest-grossing law firms in the United States, is reported by ALM business of law journalists and researchers. The first portion of the list, the Am Law 100, was published in the May 2020 issue of The American Lawyer. The Second Hundred consists of firms ranked 101-200 by their gross revenue.
What data are you using to stand out in a crowded market? Get the interactive Am Law 200 Data exclusively with Legal Compass. |Most law firms provide their financials voluntarily for this report. Some choose not to cooperate, so we make estimates based on our reporting. But all data is investigated by our reporters. If we discover we made an error in reporting a previous year's financials, we correct the numbers and base the percentage changes in future years on restated numbers.
|Definitions
Gross revenue is fee income from legal work and revenue from ancillary businesses that generate profits shared by the firm's partners.
Net income is total compensation to equity partners.
Profit margin is the percentage of gross revenue devoted to net income.
Lawyer counts are average full-time equivalent (FTE) figures for the 2019 calendar year. Temporary and contract attorneys are not included. Retired partners and of counsel are not counted as partners, nor are payments made to them included in net income.
Equity partners are those who receive no more than half their compensation on a fixed-income basis.
Nonequity partners are those who receive more than half their compensation on a fixed-income basis.
Leverage is total lawyers (excluding equity partners) divided by the number of equity partners.
|Calculated Metrics
Compensation—all partners is net income (total payouts to equity partners) plus the fixed-income compensation paid to nonequity partners. A related metric, Average Compensation—All Partners, is net income plus compensation to nonequity partners, divided by the number of equity and nonequity partners. These metrics provide a snapshot of compensation to the entire partnership, both equity and nonequity.
Profitability index is profits per partner divided by revenue per lawyer. It demonstrates how efficiently a firm converts revenues into profits.
Profits per lawyer is net income divided by the total number of lawyers. It reduces the importance of such factors as leverage in assessing firm profitability.
What data are you leveraging to sell strategy internally? Get the interactive Am Law 200 Data exclusively with Legal Compass. |Profits per partner is net income divided by the number of equity partners. This represents the average compensation to equity partners.
Revenue per lawyer is gross revenue divided by the total number of lawyers, measured on an average FTE basis. We have long considered this metric the best measure of a firm's overall financial health.
Value per lawyer is compensation—all partners divided by the total number of lawyers. We then divide that figure by $10 million to determine how many lawyers it takes to generate that amount. This metric demonstrates how much each of a firm's lawyers contributes to total partner compensation.
|Our Conventions
We round gross revenue and net income to the nearest $1,000. Profits per partner, revenue per lawyer, value per lawyer, profits per lawyer and average compensation—all partners are also rounded to the nearest $1,000. Firms that are tied in the rankings are listed in alphabetical order.
|How We Designate Location
Firms are placed in the "international" or "national" categories according to the distribution of their lawyers.
International firms are those with 40% or more of their lawyers outside the United States.
Vereins are broken out separately on our charts because their organizational structure, particularly regarding profit sharing among offices, differs significantly from other, traditionally structured Am Law 200 firms.
National firms are those with no more than 45% of their lawyers located in any single region of the U.S. We recognize eight regions for this purpose: New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont); New York City; Mid-Atlantic (Delaware, Maryland, New Jersey, New York [excluding New York City], Northern Virginia and Pennsylvania); Washington, D.C.; South/Southeast (Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Southern Virginia, Tennessee and West Virginia); Midwest (Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin); West/Southwest (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Oklahoma, Texas, Utah and Wyoming) and West Coast/Pacific Rim (Alaska, California, Hawaii, Oregon and Washington).
Contact Jeanne Graham at [email protected].
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