Photo: Jon Valk

A smaller number of Pennsylvania-founded law firms appear on the 2018 Am Law 100, released Tuesday morning, in a year when the cut-off for gross revenue rose to over $349 million.

Ten homegrown firms appeared on the Am Law 100 for 2018, based on their 2017 financial performance. Seven of them climbed in the rankings by modest amounts, thanks to rate-driven revenue growth, and at a few firms, head count growth.

The largest of those firms by revenue were Morgan, Lewis & Bockius (ranked eighth), Reed Smith (25th), K&L Gates (32nd), and Dechert (ranked 34th). As they have grown, those four firms now have their largest offices outside Pennsylvania.

Read More: The 2018 Am Law 100

Of law firms with their largest office in Philadelphia, six appeared on the Am Law 100, all clustered in the lower half with gross revenue between $353 million and $466 million.

Falling in close succession were Duane Morris (ranked 73rd), Drinker Biddle & Reath (74th), Fox Rothschild (75th) and Blank Rome (77th). Cozen O'Connor appeared at 84th and Ballard Spahr at 98th.

Philadelphia-based Pepper Hamilton fell off the Am Law 100, with gross revenue of $341.8 million in 2017. Last year, the firm had been 98th in the rankings, and its gross revenue decreased slightly year-to-year, despite improvement in the firm's profitability from 2016 to 2017.

Slight Shuffling

It took sizable revenue increases to move up at all in the top 50. Among the top Pennsylvania-born firms, Morgan Lewis and Dechert each jumped one place in the rankings, after Morgan Lewis grew revenue by 8 percent and Dechert by 7.3 percent in 2017.

Reed Smith stayed steady at 25th, even as its gross revenue increased by 4.1 percent.

K&L Gates, however, saw a major change in where it landed on the list. The firm dropped from 23rd to 32nd in a year, as it saw gross revenue go from $1.18 billion in 2016 to $989.9 million in 2017. When ranked by revenue per lawyer, the firm fell toward the bottom of the Am Law 100, to 96th on the list.

In reporting its financial performance for 2017, K&L Gates noted that 2016 had been bolstered by a major contingency fee. Adjusting for that fee, the firm said, K&L Gates experienced revenue growth of more than 2 percent from 2016 to 2017.

Most of the Philadelphia firms in the second 50 saw modest improvements in their rankings from last year. The greatest jumps of five places were by Fox Rothschild, which saw revenue increase by 8 percent, and Cozen O'Connor, which grew revenue 10.7 percent. Drinker Biddle, Blank Rome and Ballard Spahr each improved their ranking by one place.

Duane Morris fell slightly in the rankings, by two places, after posting 2.6 percent growth in gross revenue year-to-year.

Most Profitable

While Morgan Lewis far outranked other Pennsylvania-born firms in terms of gross revenue, Dechert outpaced the rest on profitability. It was the only firm of the 10 to have profits per equity partner above $2 million, at $2.68 million.

Morgan Lewis and Reed Smith both posted PPP above $1 million, at $1.368 million and $1.178 million, respectively.

Legal affiliate The American Lawyer also compares firms using a profitability index, which is their PPP divided by RPL.

Again, Dechert came in first on the profitability index, among Pennsylvania-born firms, at 2.55, making it the 13th most profitable firm in the Am Law 100.

K&L Gates and Reed Smith were the next two on that list, at 50th and 53rd, with profitability indexes at 1.69 and 1.63, respectively.

Ballard Spahr was the only Philadelphia firm with a profitability index less than one, as its RPL was higher than PPP.