Let’s start with one fact: There is now a $1.1 million gap between the average profits per partner of the top 23 firms on The Am Law 200, as ranked by PPP, and the average of the next 27 firms. In 2001, the gap between them was about half that, or $590,000. Both grew their profits at roughly the same pace–about 88 percent over the decade–but the gap in absolute dollars became a chasm.
This chasm has consequences. It has put the firms at the very top–let’s call them Tier 1 firms–in a position to cherry-pick those just below (Tier 1A) in ways almost unthinkable a decade ago. It has forced the firms in Tier 1A and below to react, to further distort their partnership pay in the hopes of retaining star performers while picking off a few others from tiers below them. And, combined with a developing set of economic and technology factors, it has set the stage for law firms to approach differently the way they work for and relate to their clients. The first two consequences are already being felt. The third? Not so much.
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