The 2004 AmLaw 200

The AmLaw 200 (technically, the AmLaw 101—200) is now out and the most important generalization to be offered is that this group is not susceptible to generalizations.

On a macro level, the news is good for these firms:  Revenue was up year-over-year by 7%, revenue per lawyer by 9%, and profits per partner by 11%.  On the other hand, to underscore a theme sounded often in these pages, "the reality is that the Second Hundred is still the poor cousin of The Am Law 100-firms 1-100 in our ranking-and getting poorer by comparison."  Average PPP of the group is $566,000, only 59% as high as the first 100 ($959,000).   And the gap is widening:  Increasing by 21.7% in the last three years, from $323,000 in 2001 to $393,000 for 2004.

A fair summary of the tenor of the The American Lawyer's coverage of this year's AmLaw 200 is as follows (emphasis supplied):

"While legal Brahmans dominate The Am Law 100's profits per partner rankings, in the Second Hundred it's not always the firms with the most sophisticated work and the fanciest pedigrees that haul in the big bucks. Nor does the avenue to riches for Second Hundred firms necessarily start and end on Wall Street, though the most profitable Second Hundred firms tend to be clustered in New York, Los Angeles, and Washington, D.C. In short, there is no typical million-dollar Second Hundred firm. The categorization encompasses elite and pedestrian practitioners, old guards and arrivistes."

Business models certainly include the contingency-fee shops, with radical volatility in earnings from year to year, but at the opposite end of the spectrum try a newcomer to the AmLaw 200 with PPP healthily in excess of $1-million.  Who?  An immigration boutique with an unheard-of 3:1 paralegal:lawyer ratio. Can you say "leverage?" Couple that with fixed fees per project, 90% of the clientele being corporations wanting to bring in high-end employees as opposed to individuals seeking entry, and welcome New York's Fragomen, Del Rey, Bernsen & Loewy.  Their model is, no surprise, built on volume, as they're now handling about 100,000 immigrants per year.

Immigration law a backwater?  That's so yesterday; Fragomen-Del Rey could be a case study for Clayton Christiansen's next "Innovator's Dilemma" book.

Fragomen-Del Rey may be a new name to you (it certainly was to me), but consider how "reinvention" is available even to the oldest of the old-line:

"The two old-line firms on the Second Hundred's most-profitable list—Hughes Hubbard and Patterson Belknap—were dismissed as dinosaurs less than a decade ago. But both firms have made successful turnarounds in recent years, without destroying their long-standing reputations for collegiality. Patterson Belknap has retained an all-equity-partner structure, while Hughes Hubbard has just six nonequity partners among its 76 partners."

(Almost) all-equity partnerships; what a concept!  Another idea that many would reflexively call "so yesterday."

So I propose a generalization about the AmLaw 200:  They may be seedbeds of innovation.  Calling all contrarians:  Find your home in the AmLaw Second 100.