ALMResearchBlog

More on Business Development

Tom Kane has another good post, More on Business Development in a Recession, on his Legal Marketing Blog, which focuses on “adjusting the four “P’s” (Product, Place, Promotion, Price) of marketing as one way to develop business in these troubled times.”

Speaking of which, our third Business Development Practices Survey Report is now available in the ALM Research Store. For those not familiar with this survey, ALM Research has been tracking the role of business development in law firms since 2005—budgets, staffing, compensation for business development managers, strategies used, and the overall organizational structure of the business development effort. While it is still housed within the marketing department in most firms, the largest of firms (those at the top of the Am Law 100, the Global 100, and the NLJ 250) now see business development as a separate function from the firm’s marketing efforts. Read more about it here.

Our Web Site: New Design, New Features

It is my pleasure to announce to you the launch of the newly designed ALM Research Online website. The substance of the site, including our reports, search functions, and continuously updated law firm data, will be the same or even better than when you last visited. The design however, has been changed with a mind towards a fresher, cleaner look and a more user friendly experience. Some new functionality has been added including the ability to download past years’ surveys directly from the site. You'll no longer need to call and request them--unless you'd just like to chat.

I'd also like to encourage you to take advantage of some of the enhancements added within the last six months, including:

• Associate salary spreadsheet updated frequently.
• Staffing Notes spreadsheet to trace branch office openings and closings and significant staffing shifts.
• Corporate representation and lateral partner data continue to be collected from an ever-expanding universe of sources.

The new homepage includes a direct link to Law.com Quest--our newly launched search engine, which targets only legal content. And coming soon: the Legal Week 50-from our new partners across the pond at Legal Week. This relationship will continue to give our database a more global perspective moving forward.

I'll be scheduling webinars to go through the new site, so stay tuned. Feel free to email me: clowry@alm.com.

Practice Focus: Bankruptcy Expected to Be Hot

Robert Half Legal’s annual survey of the upcoming year’s hot practice areas was released recently. Lawyers from large firms and legal departments at the top corporations are predicting that bankruptcy will be a very hot practice area in 2008, along with litigation, and ethics and corporate governance.

This jives with our findings in ALM Research’s recently completed report of our survey of Law Firm Business Development Practices, in which the top five practice areas predicted to bring in the most revenue in the coming year were litigation, intellectual property, real estate, bankruptcy/reorganization, and business law. Industries that the majority of respondents predicted would bring in the most revenue in 2008 were finance/insurance/real estate; energy; technology; biotechnology; and health care.

Law Firm Revenues: Many More Firms Announce FY 2007 Results

We’ve been tracking the reports, as they are published, of how Am Law 200 and Global 100 firms fared financially in 2007. And now we can hardly keep up!  In the last week, we’ve heard that the first year since their merger was a good one for New York-based Dewey & LeBoeuf, with a report that the firm was the latest to break the $1 billion mark for gross revenue. Average partner profits were similarly impressive, according to Legal Week, at $1.57 million for the year.

London’s Denton Wilde Sapte’s gross revenue for last year was around $310 million, and profits were up 34% --or 50%, depending upon which Legal Week report you read. No report yet on revenue (turnover) yet. The Brits, however, typically have a fiscal year-end that coincides with the end of the calendar first quarter.

In reports on the Pennsylvania market, Saul Ewing’s revenue increased by 1.6%, to $124 million, but both PPP and RPL were down, according to Legal Intelligencer; Ballard Spahr had a more successful year, with revenue up 15%, according to LI, to $280 million; the firm also saw modest increases in PPP and RPL. In yet another report, LI said that Buchanan Ingersoll’s revenue was up 4%, and profits per equity partner up even more, 9%.

And then came this report from the Wall St. Journal Law Blog about how the “lackluster economy is taking its toll on big firms, and not just at those which had beefed up on mortgage-related work.” The report included figures on revenue and profits for 40 different U.S. firms—too many to name individually here.

Previous blog posts about 2007 firm financials can be accessed here, here, here, here, here and here.

Can Someone Please Explain Why Female Lawyers Charge Less?

by Margaret Daisley

No joke. The most unexpected and inexplicable finding in our recent survey of billing rates and alternative billing practices at small and midsize firms and solo practices was this: female lawyers bill at lower rates than male lawyers. I wish someone would help me pursue the obvious question: Why?

(Officially, the survey is called ALM Research Survey Report of Billing Rates & Practices. To access the report for a description or purchase, just click on the title above. Or email ALM Research. Or call: 888-770-5647.)

We found that, almost without exception, female lawyers across the U.S. (there were over 1,000 in our study) bill at lower rates than male lawyers, regardless of years in practice, practice area or client industry, size of firm, or geography. In addition, we found that females were much less inclined to offer alternatives to the billable hour, such as fixed or flat fees, contingency or retainer arrangements, hybrid or blended fees, discounted hourly billing, success- or performance-based fees.

So why do female lawyers charge less than their male counterparts? Are they even aware of the fact that they are charging less? Why are they seemingly less open to alternatives to the billable hour?

I’ve been keeping an eye out for articles and blog posts, hoping to see something on the subject (see list below). But I’ve found that most frequently, the focus of articles about billing practices are either a call for—or pronouncement about—the demise of the billable hour, a report of a case in which outrageous fees were charged, or an isolated firm’s alternative billing practices.

If you have an explanation about this gender imbalance when it comes to billing rates, or if you’ve seen any other studies or articles that can help to explain it, please send your comments this way, or email me directly. In the meantime, here’s a short of list of recent writings about billing:

Pricing: An Elephant in the Professional Services Room? (Expertise Marketing) 

The Scourge of the Billable Hour (Slate)

The Billable Hour: Are Its Days Numbered? (American Lawyer)

Firm Accused of Billing “Unconscionable” Fee (NY Lawyer)

Can Legal Fees Ever Be Per Se Unconscionable? (Legal Blog Watch)

Hourly Billing is Inherently Unethical (Alan’s Blog)

Shepherding in a New Era in Legal Billing? (Wall St Journal Law blog)

Can You Really Ditch Timesheets If You’re Not Billing Hourly? (Legal Ease Blog) 

More Lawyers Join the Shift Away from the Billable Hour (Legal Ease Blog)

Wal-Mart’s Moratorium on Hike in Billable Hour Rates (Blog of Legal Times)

Boston Firm Bans Billable Hour (Legal Blog Watch)

Small Firms Use Flat Fees to Gain Edge (National Law Journal)

Midsize Law Firms Go for Big Changes (National Law Journal)

Pricing Legal Services (Ward Bower, Altman Weil)

Is Your Law School a Firm Favorite?

We hadn't thought of putting it quite that way, but that's the question Joe Hodnicki asked on the Law Librarian Blog , when mentioning a recent addition to the ALM Research Store, the 2007 Law School Hiring Survey. The report is based on data collected in the 2007 NLJ 250 survey, and shows which firms recruited from which law schools, and how many were recruited. Also included are the numbers of associates promoted to partners, and which law schools those new partners had attended. Click on this link to see a sample of this spreadsheet product, which is available free to subscribers and for $250 to non-subscribers.

Law Firm Financials: More News About How FY 2007 Played Out

A picture of how the annual Am Law 200 list will play out is gradually beginning to emerge.   Legal Week reported this week that Dechert has unveiled double-digit increases in revenue ($836.3 million) and profits per equity partner ($2.35 million). Paul Weiss also saw healthy increases in 2007, according to the report, with revenue up almost 10% to $651 million, and profits per equity partner up 4% to $2.6 million. McDermott Will & Emery posted a 14% revenue increase to reach $978 million, and an 8% rise in profits per equity partner, which reached $1.52 million.

This Legal Week report says that Weil Gotshal & Manges has broken the $2 million barrier for partner profits in 2007, as Manhattan rival Milbank Tweed Hadley & McCloy becomes the latest U.S. firm to post double-digit increases in both revenue and profit. Profits per equity partner at Weil Gotshal improved by 11% to reach $2.11 million, while revenue increased by 12% to $1.175 billion. Milbank, meanwhile, recorded an 18.8% surge in global fee income, LW reported, to finish the year with  $642.5 million, while profits per equity partner rose by a similar amount, up 16.4% to $2.53 million.

In another Legal Week report, Baker Botts is said to have also posted strong financials for 2007, with an increase in revenues of almost 15% ($502.7 million), and an impressive 18.6% increase in profits per equity partner. And in yet another LW report, King & Spalding was reported to have increased both revenue and partner profits by 6%, with $615.3 million in revenue and $1.31 million in profits per equity partner for the year 2007.

And, below the radar of The Am Law 200 are all the other firms on the planet. This report in the Legal Intelligencer focuses on how midsize firms in Pennsylvania fared last year. LI said that many of these firms saw increases in revenue, staffing and clientele that either met or exceeded their expectations. Firms included in the report are: Dilworth Paxson, Hartman Underhill & Brubaker, Kaplin Stewart Meloff Reiter & Stein, McNees Wallace & Nurick, Meyer, Unkovic & Scott, Tucker Arensberg, and Woodcock Washburn.

Thomson Releases Capital Markets League Tables

Thomson has released its 2007 League Tables for worldwide capital markets (debt, equity, M&A, syndicated loans, project finance, municipals, private equity). As noted in Legal Week, Allen & Overy has held on to the “pole position” in the international debt capital markets rankings, making it number one for the third year in a row. Linklaters and Clifford Chance captured second and third place.  Sidley Austin continued to dominate the debt issuer side, according to the report.

The equities market rankings were led by Cadwalader, with White & Case taking second place. In the issuer’s rankings, Cadwalader again led the pack, followed by Irish firm Matheson Ormsby Prentice in second place, and Orrick in third.

The legal M&A rankings,  available on Thomson’s Web site, show that the worldwide top rankings were capture by Skadden, Allen & Overy, and Sulivan & Cromwell.

Firm Financials: Latham Could Surpass Skadden as Top-Grossing Firm

That was the situation posed by The Recorder in reporting Latham & Watkins’s year-end financials recently. The San Francisco-based newspaper said that Latham posted 2007 revenues of just over $2 billion, which was a “whopping” 23% over their previous year’s results. Could the Los Angeles-based firm move into number one place in this year’s Am Law 100? The Recorder says yes—IF Skadden posts anything short of a solid financial year. To stay on top, Skadden, which has not yet reported revenues, will need to show an increase of at least 8% from 2006 – “very likely, given its recent history, but not guaranteed,” the report said. Latham also reported $2.2 million profits per partner, which was “a similarly massive year-over-year increase.”

Other firm financials mentioned in The Recorder’s February 8th report included Gibson, Dunn & Crutcher, (grew revenue 12%, to $908 million); O'Melveny & Myers, (3% growth in RPL; PPP flat, at $1.64 million); Sheppard, Mullin, Richter & Hampton (RPL climbed 12%, to $800,000; PPP up 19% to $1.2 million); Irell & Manella (double-digit gains in revenue and RPL, to $227 million and $1.2 million, respectively; PPP up to $1.9 million); Munger, Tolles & Olson (double-digit increase in revenues and RPL, to $227 million and $1.2 million; PPP climbed to $1.3 million); Luce, Forward, Hamilton & Scripps (grew revenue 6% to $110.5 million; RPL nearly flat at $610,000; PPP up nearly 7%, to $605,0000); Manatt, Phelps & Phillips (revenues climbed 14% to $242 million; modest RPL growth of 5%; PPP up 14% to $1.25 million); Quinn Emanuel Urquhart Oliver & Hedges (a “stunning” 29% increase in revenues to $384.5 million; $3.01 million in PPP; RPL growth more modest, with a 7% increase to $1.09 million).

Practice Area: Bankruptcy League Tables for Q4 2007

The Deal’s Bankruptcy Insider recently released its year-end 2007 statistics and quarterly league tables. The Insider notes that “the year-end market data shows activity is accelerating in debtor-in-possession lending and exit financing” and “exit financing hit a new high at the end of 2007 with 57 deals adding up to $34.1 billion, compared with 46 deals totaling $27.1 billion one year prior.” Their league tables “have other interesting tidbits such as the hourly fees of the top-billing debtor counsels -- at a glance you'll clearly see that there's an upside to a down market.” Top law firms on the league tables include White & Case, Duane Morris, Greenberg Traurig, Latham & Watkins, and Weil Gotshal & Manges.