ALMResearchBlog

What Does ‘Non-Equity’ Really Mean?

Jim Cotterman posted this thought-provoking item question on the Altman Weil Blog, and went to explicate the meaning of “equity” and “non-equity.” He noted that 85% of firms with 100+ lawyers use the non-equity structure, and that those “partners” (his use of the quote marks) are “slightly more likely to be treated as W-2 employees for tax purposes, and the range of opinions on the subject ranges from cynicism (the firm is just trying to get their PPEP up) to advocating (an alternative for seasoned lawyers who want to stay, but don’t want to become business owners).

In the annual Am Law 100/200, the following definitions are used in order to distinguish between the two types of partners: “Equity Partners are those who file a Schedule K-1 tax form and receive no more than half their compensation on a fixed-income basis. Nonequity Partners are those who receive more than half their compensation on a fixed basis.”
 

Partner Compensation: A “Fascinating Article”

While they trade news and gossip about the latest associate salary raises on Abovethelaw.com, the usually snarky contributors to the web site stopped to comment about what they called a “fascinating article” by Andrew Longstreth, reporter for The American Lawyer. The article, Firms Hunting for Stars Re-Examine Partner Compensation, was published earlier this month, and examines Am Law 200 firms’ pay scales for partners (the ratio between the highest and lowest paid) and how that effects their lateral partner recruiting. The article can be accessed in its entirety by clicking on the article title.

Leading Lawyers: DC’s Best Business Litigators

ALM Media’s newspaper in Washington, DC, Legal Times, several times a year publishes a list of Leading Lawyers in a particular practice area. The most current is the Leading Business Litigators list and includes lawyers from 10 firms (in alphabetical order – there are no rankings): Arnold & Porter; Cohen, Milstein, Hausfeld & Toll;  Covington & Burling; Finnegan, Henderson, Farabow, Garrett & Dunner; Jenner & Block; Jones Day; Kirkland & Ellis; Latham & Watkins; Steptoe & Johnson; and Zuckerman Spaeder. 

To learn more about Legal Times’ Leading Lawyers series and to nominate, click here. Legal Times plans two more reports this year: communications specialists (nominations due May 11) and international trade lawyers (nominations due July 20).

The Unique Psychological World of Lawyers

No, it’s not another lawyer joke. Findlaw posted this piece, called The Unique Psychological World of Lawyers on their site, which examines lawyer profiles, as indicated by the Myers Briggs Type Indicator  and other similar tests. Results were analyzed Martin Seligman, a professor at the University of Pennsylvania and the founder of the school of Positive Psychology, which focuses on attributes and behaviors that produce success and happiness, has identified optimism as a critical attribute for both. 

Seligman found consistent correlations for in only one career type --  lawyering.  And the attribute?  Pessimism.  Pessimism was so highly correlated with success in lawyers that the higher the pessimism in law students, the higher their grades. Dr. Seligman points out that while pessimism is evidently a positive attribute for the practice of law, it can have profound effects on the individuals high in that quality, affecting their resilience and personal and professional relationships, for example. Other attributes that lawyers test very high in are urgency (sense of immediacy or impatience) and autonomy (prizing independence).  Attributes lawyers test particularly low in are resilience (processing feedback and recovering from defeat) and sociability (interacting with others and initiating intimate connections).

Laterals: Wachtell’s Rare Hire

According to this piece on Law.com by Andrew Longstreth, reporter at The American Lawyer, Wachtell, Lipton, Rosen & Katz recently did something that is a real rarity at the firm – hired a lateral partner. According to the story, after losing two executive compensation partners in recent months, the firm quietly hired Michael Segal, the former co-head of executive compensation and benefits at Paul, Weiss, Rifkind, Wharton & Garrison.

Much more information about 2007 Lateral Partner moves and 2006 Lateral Partner moves is available through ALM Research Online, free to subscribers. Premium subscribers have access to all years’ worth of data (2000 – 2007). The most current information is available for a fee to non-subscribers. Information included in the searchable spreadsheet includes the partner's name, practice area, firm (or organization) they left, firm (or organization) they went to, and the date of the move.

2007 Am Law 100: Available Now

The Am Law 100 is out. Published by The American Lawyer and reported by ALM Media reporters around the U.S., the annual list ranks the highest-grossing firms in the U.S. and is the legal industry equivalent of the Fortune 500.

The Top 6 are unchanged from last year: Skadden, Arps,; Latham & Watkins; Baker & McKenzie; Jones Day; Sidley Austin; White & Case, in that order. After that, there’s a lot of shuffling, with previous Am Law 100 firms moving up or down a few ranks.

New to the list this year are some former Am Law 200 firms: Wiley Rein (ranked 64 this year, 140 last year); Quinn Emanuel (78^th, up from 109); Buchanan Ingersoll (86^th, up from 109, a tie); and Ballard Spahr (100^th, up from 102).

Three firms that they replaced were in the bottom 5 ranks on the 2006 list (Andrews Kurth, ranked 95^th; Cozen O’Connor, 99^th; and Hughes Hubbard, 100^th). A fourth, Thelen Reid & Priest (ranked 75^th in 2006) merged last year with Brown, Raysman (ranked 166^th in 2006).

The Am Law 100 is available through  ALM Research Online in a searchable spreadsheet format. The spreadsheet includes all the key data points from the lists: gross revenue, profits per equity partner, compensation average for all partners, revenue per lawyer, value per lawyer, profitability index, and rankings for each. It’s available free to all subscribers, and for a fee to non-subscribers. Data from previous years  –1986 through the present – is also available free to premium subscribers.

Financials: Ballard Spahr

Philadelphia-based Ballard Spahr Andrews & Ingersoll grew its gross revenue by 13.8 percent in 2006 despite the opening of three offices, according to a recent report in The Legal Intelligencer. The firm opened offices in Las Vegas, Phoenix and Bethesda, Md. within six weeks of each other between mid-July and early September 2006. Its gross revenue grew from $213.5 million in 2005 to $243 million in 2006. RPL grew by 6.6 percent, to $560,000 in 2006; PPP increased by 13.2 percent, to $515,000 last year, and the average compensation for all partners jumped by 11.6 percent to $480,000. While Am Law 200 charts have indicated that Ballard Spahr has two partnership tiers, the firm disagrees, saying there is no difference between its fixed-income partners versus its equity partners in terms of voting rights, and no additional hurdles to becoming an equity partner once income-partner status has been reached.

Law Firm Financials: Blank Rome

According to this recent report from The Legal Intelligencer, Philadelphia-based Blank Rome has reported “measured” growth for 2006. The firm’s gross revenue had the most significant jump at 6.7 percent, from $266 million in 2005 to $284 million in 2006. Revenue per lawyer rose about 3.5 percent, from $570,000 in 2005 to $590,000 in 2006, and the profits per equity partner (PPP) grew by nearly 2 percent, from $570,000 to $580,000 in 2006. Average compensation for all partners rose a little more than half a percent, from $482,000 to $485,000.

2006 NLJ Billing Survey Now Available

The National Law Journal's survey of billing rates of the largest U.S. law firms was published recently in ALM's national newspaper. According to the report, billing rates for law firm attorneys show a steady increase from last year for both partners and associates. This year, 139 firms responded to the survey, which was sent to 300 firms. The firms provided low and high rates for partners and associates. Of these firms, 104 provided low and high rates last year also, with 88 of those reporting an increase in the partner high rate; eight decreased it, and eight kept it the same.

    

A searchable spreadsheet of the 2006 NLJ Billing Survey is available through ALM Research Online in the “Lists & Rankings” section. The spreadsheet includes high and low partner principal billing rates, high and low associate billing rates, firmwide billing averages and medians principal billing rates, associate and partner billing averages and medians, and firm billing alternatives. The Billing Survey is free to subscribers, and costs $275 for non-subscribers.

Law Firm Financials: Scottish Firm McGrigor’s Profits Soar

According to a recent report from LegalWeek.com, London-based McGrigors has unveiled robust growth for its 2005-6 financial year, with partner profits and fee income both showing double-digit growth. Average profits per equity partner at the big four Scots firm rose 16% from last year’s figure of £240,000 to hit a new mark of £279,000 (US$ 550,249). Total profits surged by 18% to reach £13m (US$ 25,635,533). Meanwhile, gross revenue broke the £50m barrier for the first time after the firm posted a 15% climb in revenue to reach a total of £52.1 million (US$ 102,766,431).

    

Though impressive, the Scottish firm’s revenues do not appear to be positioning the firm to make the annual Global 100 list published by The American Lawyer and The Lawyer. Number 100 on the most recent list was Troutman Sanders, which had revenues of $206.5 million in its most recent fiscal year. The Global 100 list is available from ALM Research in searchable spreadsheet format format and includes revenue, profits per equity partner, number of lawyers and partners, and key marketing contacts for all firms that made the Global 100 list by revenue, number of lawyers, and/or profits per equity partner. The spreadsheet costs $275 for non-subscribers, and is free to subscribers.