ALMResearchBlog

Data Content 09

I've just returned from a conference called Data Content 09 run by Infocommerce Group.  To oversimplify, the gist of the two day conference is how companies can use data to create new products, improve current products, collect additional data or license existing data for others to use.

Being in the research and marketing business - content is king.  I know you've heard that before, so have I.  What made me actually pay attention this time is the new ways companies are using different forms of data to enhance their businesses.  User generated content, was a big topic.  Customer reviews and self-submitted profiles continue to grow - and as one participant pointed out - as they grow, the volume of information that gets collected makes them more valuable, and actually drives more user generated content.  Mobile was another big topic.  It's amazing how many iphone apps exist, and even more amazing how many people pay for them and use them.  The question of the day was not "should we develop an iphone app?  it was "what iphone app should we develop?"

How does content relate to your law firm competitive intelligence and business development? 

Well think about your CRM system;  Are you using it to it's fullest?  Capturing as much information as possible on each contact and centralizing that data so that others in the firm with the same contact can append their info? Making them all search-able by practice area, geography, company, industry etc?

How about billing and collections?  Do you know what your realization rates are?  By practice?  Or office?  That information is available in the market to benchmark and compare.  (Full disclosure:  yes, that is a survey that we sell.)

Compensation is another area. And as the market continues to be difficult, many firms are looking at aggressive compensation plans based on performance metrics other than just hours billed. 

Bottom line is that there are plenty of places to look within a law firm, or company, to find information that will either help you run more efficiently, or will create new opportunities for business.

New Release: The Global 100

The American Lawyer has just published the 2007 Global 100 rankings and once again top three firms on the planet, based on annual gross revenue, are Clifford Chance, Linklaters, and Skadden Arps. But after that, there's been a bit of shuffling of the deck since last year's list. This year, Baker & McKenzie is in 4th place (last year, the firm was 6th), with a gross revenue that is different than what was presented in the annual Am Law 100. This is due to Baker & McKenzie's rather inconvenient fiscal year end, June 30th--two months after the publication of the Am Law 100 report. (Most American law firms' fiscal year coincides with the calendar year; most British, Canadian, and Australian firms' fiscal year ends at the end of the first quarter of the year.)

This year, the Global 100 chart was compiled in conjunction with our new sister publication, Legal Week this year. Note that there are actually three "Global 100" charts: the key chart ranks by gross revenue, and a second chart ranks by size (number of lawyers). A third chart ranks firms by their profits per equity partner; only firms on the first two charts are considered for these rankings. In all, there are 113 firms that made one or both of the first two charts.

The Global 100 in searchable spreadsheet format is now available through the ALM Research Store, and it includes all the data points covered in the three charts. The data from the Global 100 charts is now archived in the ALM Research Online database for subscriber searches.

In-House Law Departments: Salaries, Spending

According to Altman Weil’s  2007 Law Department Compensation Benchmarking Survey, total compensation for in-house lawyers in management jumped 8% to 14% this year, and 4.5% to 23% for non-management lawyers. A report of the survey appeared in the National Law Journal. For chief legal officers, salaries rose 5.8% to a median $300,000 in 2007, while bonus dollars spiked 43% to $157,400. Division general counsel collected a 10.2% salary increase for a median of $232,000, plus a median $104,600 bonus. The survey includes data from 343 law departments with 8,148 lawyers and 72 one-lawyer departments.

Another recent NLJ article (In-house costs outpace outside counsel spending) reported on Hildebrandt International’s 2007 Law Department Survey and said that corporate legal spending increased 6% over the past year, with increases in internal spending (8%) outpacing external expenditures (3%). Total cash compensation for in-house attorneys, including salaries and bonus, climbed 10% last year, compared with 7.5% during the previous year, according to Hildebrandt’s study, which included 202 companies employing an average of 4.2 lawyers. They also surveyed companies' U.S. and international operations, and found that the median company has global revenue of $10 billion, spends nearly $30 million on legal matters and staff and has a U.S. law department with almost 30 layers and 60 staffers. The median company also shells out 58% of its U.S. legal spending on outside counsel and 40% on inside legal costs. Chief Legal Officer's total cash compensation rose $50,000 to nearly $900,000, with the median total at $800,000. General counsel's average cash compensation spiked 19% to $700,000.

Firm Financials: Baker & McKenzie

The Am Law 200 has barely been assimilated into our archives, and now Baker & McKenzie, which has a different fiscal year cycle than most of the other top firms, has announced that its gross revenue for the 2006-2007 fiscal year has risen by 20% and its profits per equity partner have broken $1 million. Still, though it’s the largest firm in the world based on number of lawyers, Baker will continue to trail AmLaw number-one firm, Skadden Arps, which registered $1.829 billion in revenue for fiscal year 2006.

But all the U.S. firms will have to take a back seat to U.K.’s “magic circle” firms in the upcoming 2007 Global 100 (October issue of The American Lawyer). Using today’s conversion rates, Clifford Chance is destined to take the top spot, with about $2.366 billion in revenue, and Linklaters is not far behind, with $2.222 billion, followed Freshfields with approximately $1.954 billion.

For those who want to get a jump on how the Global list will play out, financials for The Am Law 200 are available through the ALM Research Store. Our sister publication in London, Legal Week, has their Top 50 available in PDF format. 

Law Firm Financials: U.S. and U.K. Firm Reports

Though it will be four months before the 2007 Global 100 list is published (The American Lawyer’s October issue), it doesn’t take rocket science to see how things are beginning to stack up. Global rankings are based on revenues of the most recent fiscal year. For U.S. firms, the story’s already been told in The Am Law 200. For U.K. firms, the results have been gradually leaking out in various reports.

A report from American Lawyer focused on the financials of mid-market Brit firms, versus those of two magic circle firms, mentioning CMS Cameron McKenna, Simmons & Simmons, Taylor Wessing, Clifford Chance, and Freshfields Bruckhaus Deringer. London’s LegalWeek.com has been delivering almost-daily reports, recently covering the year-end financials for DLA Piper, Freshfields, Camerons, Stephenson Harwood, Taylor Wessing, and Dundas & Wilson.

Revenues: Pennsylvania Firms

The Am Law 200 was released earlier this month, and is now available in spreadsheet format via ALM Research Online. Interestingly enough, much attention was focused on Philadelphia firms this month. One of The American Lawyer's key articles accompanying the list was Fox Rothschild's growth spurt breaks all the rules, in which Amy Kolz reported that the firm "seeks to be one-stop shop for the middle market, providing clients with a range of legal services at a reasonable price." "Fox has added seven new practice areas -- including gaming, franchising, biotech and premises security -- to bring its total to 40," Kolz wrote. But meanwhile, Philly's The Legal Intelligencer reported that the number of Pennsylvania firms among the Am Law Second Hundred had dwindled this year - but that was because many had moved into the ranks for the Am Law 100, including Buchanan Ingersoll & Rooney and Ballard Spahr Andrews & Ingersoll.

The Am Law Second Hundred: Mind the Gap

The overall message that The American Lawyer sent out with its publication of The Am Law 200 (June 2007 issue) is that the gap between the Am Law 100 and the Second Hundred is growing wider. This year’s coverage includes an interesting take on how the 200 law firms would look as investment vehicles. The result includes a chart ranking firms based on a growth and profit index. The top five “blue chip” firms are Wachtell, Cravath, Sullivan & Cromwell, Simpson Thacher, and Paul Weiss.

As a reminder, all the data from The Am Law 200 is now available to subscribers of ALM Research Online in the database, and a spreadsheet with all the data is available for sale. Click here to purchase and download a copy.

Financials: U.K. Firms

London-based LegalWeek.com continues to report on the year-end financials for the large British firms, whose fiscal year ended with the first quarter of 2007. Freshfields has broken the £1m profits per equity partner (PEP) figure for the first time, while gross revenue (“turnover”) at the magic circle firm stands just short of £1bn (US$ 1,974,423,511). According to LW, provisional figures from the show profits per equity partner are up 25% from the previous year, with each of the firm’s partners pocketing on average £1,036,000 (US$2,045,318).

Addleshaw Goddard broke the £500,000 average profits per equity partner barrier for the first time, with a 14.8% in the last fiscal year. This year’s figure was £542,000 (US$1,069,991), while gross revenue at the national firm was up 13.1% to a new mark of £176.7m (US$348,832,973). At Osborne Clarke profits per partner surged by a fifth (20%) to reach £511,000 (US$1,008,811). Fee income at the 111-partner firm rose 12% from the previous to hit £82.8m (US$163,462,995). The figures mark the latest strong financial results released by national firms so far this year, LW reports. Last week Newcastle’s Dickinson Dees announced a 14% rise in partner profits to hit £366,000 (US$722,553), while gross revenue rose 17% to reach £56m (US$110,546,136).

AmLaw 200 Now Available

The American Lawyer’s June issue has the charts and stories about the full Am Law 200, and ALM Research has all the data from all the charts in one handy searchable spreadsheet— gross revenue, revenue per lawyer, profits per partner, NOI, profitability index, value per lawyer, contact info & more. It’s available free to subscribers and for a fee for non-subscribers. If you order now, you can get a 20% discount off the usual $475 price. To order, click here and use this discount code: AM2007. If you have any questions or would like more information, please contact ALM Research at (888)770-5647 or by email, almresearch@alm.com.

Firm Financials: UK Firms’ Revenue Up

According to a new report by LegalWeek.com, London biglaw firm Norton Rose has posted its financials for FY 2006-2007, which show that gross revenue was up by 11% over the previous year (to £210m, or US$414.7 million), and average profits per equity partner were up 15% (to £512,000, or just over $1 million). Most British firms are on a fiscal year that ends March 30th, or with the first quarter.

As LW notes, the results come with a number of London firms enjoying record years -- Clifford Chance and Nabarro were both on course to see profits improve by around 20%. SJ Berwin and Ashurst are set to see total billings increase by more than 20%. Berwin Leighton Paisner saw gross revenue climb by 16%. Lovells estimates that total fee income will increase by about 7%, with PEP improving by around 2%. Herbert Smith, on the other hand, is expecting profits to dip slightly from last year’s figure of £839,000, although turnover is set to increase by 12%-13% to around £333m.