MLA released its 2024 Partner Compensation survey, including responses from 1,718 partners in the AmLaw 100 and 200.  Partners in all practice areas saw compensation increases relative to the 2022 and 2014 surveys, reflecting firms' continued profit growth, largely due to continued rate increases. 

Law firms are on track to produce "one of the strongest years we see," according to Gretta Rusanow, head of advisory services for Citi's Law Firm Group (Law Firms Could Post 'One of the Strongest Years We See', Andrew Maloney, 8/19/24, American Lawyer). Citi's recent report analyzed the first 6 months of 2024, relative to the same period in 2023, and found demand and productivity growth of 2.9% and 2.1% respectively and double-digit revenue growth (11.4%).  

Q2 was a productive quarter for most law firms, according to Thomson Reuters Law Firm Financial Index which tracks and analyzes billing and financial data for 171 U.S.-based law firms, including 51 Am Law 100 firms, 55 Am Law Second Hundred firms, and 65 Midsize firms (Law Firm Financial Index Q2 2024 Executive Report “LFFI Report”, 8/5/24).  Most practice areas experienced demand growth relative to Q2 2023.

The American Lawyer reported last month that the "Am Law 100 upped its average equity partner pay spread from 9.8-to-1 in 2022 to 10.3-to-1 in 2023" (Largest Law Firms Increase Partner Pay Spread, as Comp Models Hit 'Inflection Point', Andrew Maloney, 5/28/24).  In my experience, median equity partner pay spread figures are more instructive than averages.  Averages among the AmLaw 100 and Second Hundred have been skewed by outliers like Fisher Broyles.

The new AmLaw 100 survey was released last month, revealing that 2023 was a good year for many firms. Out of 100, only 10 posted revenue declines in 2023. Only 20 declined in profits per equity partner. And nearly three-quarters of Am Law 100 law firms raised the average compensation of all firm partners, equity and non-equity.

Firms are increasingly using bonuses structured as forgivable loans to compensate laterals and current partners. These loans not only help with retention, but also give firms flexibility to compensate outside of their typical formula or structure without raising eyebrows from the partnership at large, since firms do not have to report these loans on a partner's compensation schedule.

Profits per equity partner (PEP) among surveyed law firms grew by 6.6% in 2023, according to Citi’s Global Wealth at Work Law Firm Group (Law Firms Witnessed a 'Return to Profit Growth' in 2023 ("Return to Profit"), Justin Henry, 2/9/24, American Lawyer). There was dispersion however, as 39% of firms surveyed reported decline in PEP (Return to Profit).

2023 was a better year than 2022 on several key performance measures, according to Thomson Reuters and the Center on Ethics & the Legal Profession at Georgetown University Law Center (2024 Report on the State of the U.S. Legal Market “Report”, Jim Jones - Lead Author, 1/8/24) (analyzing data through Nov. 2023 from 179 US-based law firms, including 48 Am Law 100 firms, 49 Am Law Second Hundred firms, and 782 Midsize firms).

Most law firms believe they will meet or beat expectations in 2023," largely due to conservative budgeting. However, Thomson Reuter's Law Firm Financial Index Q3 Report ("Q3 Report") predicts disparate year-end results by law firm segment.

Remote work flexibility is an attractive recruiting chip across industries; a mid-year survey of more than 4,500 companies found that those that embraced hybrid policies added head count at almost twice the rate of those that required full in-person attendance. But what if law firms are not trying to increase headcount? Utilization is at an all-time low

“2023 could turn out all right, if law firms can collect on what they’re owed” concludes Citi’s Global Wealth at Work Law Firm Group after reviewing the results of Citi’s mid-year survey, polling 209 firms.

An article by the Wall St. Journal examining banker and lawyer pay revealed partner profits at major law firms have tripled over the past two decades, while pay for similarly situated banking directors has remained stagnant (On Wall Street, Lawyers Make More Than Bankers Now, Cara Lombardo, 6/22/23, Wall Street Journal). The Journal cites several reasons for the inversion:

NALSC podcast featuring Tina Solis, a partner at Nixon Peabody and NALSC collaborator, who advises law firm partners on the legal and ethical aspects of making a lateral move; Tina covers a range of considerations that can help partners avoid pitfalls.

The American Lawyer released its annual AmLaw 200 survey last month, analyzing financial performance in 2022. The results were consistent with that seen in the AmLaw 100 a month before, namely the lower the AmLaw ranking, the better the performance in 2022. In fact, the Second Hundred outperformed the AmLaw 100 in revenue growth, revenue per lawyer, and profits per equity partner last year.

The American Lawyer published its annual AmLaw 100 report last week. Despite significant challenges in the broader economy, the AmLaw 100 as a whole saw revenue gains of 2.7% in 2022, over an already high bar set in 2021. However, the gains were concentrated in a smaller number of firms (41 of the 100 posted gains; 59 did not). This stands in stark contrast to 2021, where all 100 firms saw revenue growth.

Patrick Krill and the U. of Minnesota Dept. of Psychiatry recently published a paper identifying predictors of suicidal ideation among lawyers “Krill Paper” (Stressed, Lonely, and Overcommitted: Predictors of Lawyer Suicide Risk, Patrick Krill et al., Healthcare 2023, 11(4), 536). Stress is by far the biggest predictor; lawyers with high levels of perceived stress are 22 times more likely to experience suicidal thoughts than those with low levels of perceived stress (Krill Paper).

According to Thomson Reuters’ Law Firm Financial Index Report released Monday, overall demand in Q4 2022 fell 3.9% compared to Q4 2021 (LFFI Q4 2022 Executive Report, Thomson Reuters, 2/14/23, aggregating data from over 160 law firms). All of the monitored practices showed decline, with M&A continuing to lead at -16.6%.

Profits per equity partner will decline for the first time since 2009, according to a new report by Thomson Reuters and the Center on Ethics & the Legal Profession at Georgetown University Law Center. The decline will be modest, however, and PEP “should still be comfortably high when compared to pre-pandemic levels”.

Midsize firms experienced demand growth (measured in hours worked) in Q3 of this year, relative to Q3 2021, according to Thomson Reuter’s Law Firm Financial Index (LFFI), aggregating data from over 160 law firms. The AmLaw 100 registered a decline of over 2.0%, while the Second Hundred experienced a smaller decline. Monthly hours billed by equity partner, non-equity partner, and associate groups respectively registered the lowest Q3 marks in recent years

Hybrid appears to be the prevailing return to office policy. And that observation is supported by a recent national survey