Tag Archives: RPL

2023 Am Law 100 Rankings: A Comprehensive Breakdown

For top Biglaw firms, 2021 was an incredible year: gross revenue rose nearly 15%, while profits per equity partner grew almost 20%. Those growth rates were obviously unsustainable, so there is no great surprise that the financial metrics reported in the just-released 2023 edition of the Am Law 100 indicate a return to earth. 2022 was a roughly flat—for many firms, somewhat down—year. But considering the lofty heights reached in 2021, that actually isn’t so bad.

Collectively, in 2022, the AmLaw 100 attained:

  • Total revenue: $130.8 billion, up by 2.7%. 
  • Average revenue per lawyer: $1.16 million, down by 1.9%.
  • Profits per equity partner: $2.56 million, down by 3.7%.

For context, let’s compare the 2022 growth rates to the remarkably strong growth of 2021 and 2020, as well as the more typical rates of 2019:

Positive revenue growth paired with declining RPL implies that increases in headcount played a material role. Indeed, total AmLaw 100 headcount rose 4.7% (approximately 5,000 additional lawyers), with equity partnerships expanding by 1% (+207 equity partners) and the nonequity partner pool growing by 6.4% (+1,175 nonequity partners). This is consistent with our observations of the 2022 lateral market: even as deal work took a hit, 2022 was a reasonably strong year for lateral hiring.

Let’s now take a closer look at the three most important metrics — gross revenue, revenue per lawyer, and profits per partner — and the top 10 firms in each category.

Gross Revenue

Here are the top 10 firms in the 2023 Am Law 100 rankings, ranked by their gross revenue in 2022. You can access the full list here.

Kirkland & Ellis once again led the pack, widening its lead over Latham & Watkins, which maintained its second-place position despite a decline in revenue. There was little change to the top group, with Gibson Dunn entering the top 10 and Hogan Lovells dropping down to the 12th slot.

Most of the top 10 firms achieved revenue gains, but this was not representative of the broader Am Law 100. Although overall Am Law 100 revenue increased in 2022, 59 of the 100 firms suffered a revenue decline. This was a marked reversal from 2021, when every Am Law 100 firm increased revenue year-over-year.

Revenue Per Lawyer

Here are the top 10 firms in the 2023 Am Law 100 rankings based on revenue per lawyer. You can access the full list here.

It was not a great year for revenue per lawyer among the Am Law elite, highlighted by the 12% declines for Davis Polk and Simpson Thacher. Wachtell, Sullivan & Cromwell, Cravath, and Kirkland maintained their positions at the top of the table despite RPL decreases. Proskauer was the only new entrant into the top 10, with Quinn Emanuel falling to the 13th slot due to a 13% RPL decline—a notable hit in a relatively strong year for litigation.

Profits Per Equity Partner

And finally, the ranking we’ve all been waiting for: the top 10 firms by profits per equity partner. You can access the full list here.

The big news is that Kirkland has overtaken perennial champion Wachtell as leader of the PPEP ranking. Wachtell made history in 2021 as the first firm to exceed the $8 million PPEP mark. But a 13% drop in 2022—in the face of Kirkland’s 2% increase—has dislodged Wachtell from the top spot.

Wachtell’s percentage decline is not the highest among the top 10: that title goes to Davis Polk, which suffered a whopping 21% drop in PPEP. In the process, Davis Polk fell from the third slot to the fifth. New entrants into the top 10 were Skadden and Gibson Dunn. They displaced Cravath, which fell to 13th thanks to a 19% PPEP decline, and Cahill, which fell out of the Am Law 100 entirely.

In 2022, 9 Am Law 100 firms achieved profits per equity partner above $5 million (compared to 14 in 2021 and 6 in 2020). It wasn’t the year some firms might have hoped for, but even so, being an Am Law 100 equity partner in 2022 was still substantially more lucrative than prior to the pandemic.

Gain further insights and analysis on the 2023 Am Law 100 rankings by tuning in to our latest episode of Movers, Shakers & Rainmakers. This engaging Lateral Link podcast offers a deeper understanding of the legal industry landscape.

Biglaw Partners: Are You Capturing a Fair Share of Your Revenue?

If you are a Biglaw partner, you may have heard this compensation rule of thumb: you should be taking home a third of the revenue you generate for the firm. The 33% rule has the advantage of being simple, and it makes for a reasonable starting point. But to really know whether you are capturing a fair share of the value you create, it’s important to consider some other factors.

Your hours vs. your team’s hours

The first distinction you’ll want to make is between the hours you bill and those billed by the people working for you, such as associates and service partners. The 33% rule is supposed to apply to all revenue for which you are responsible. But we can make things more precise by breaking that revenue into two segments.

As a general rule, you should make about 40% of revenue from hours you billed personally. As for the hours billed by members of your team, it depends how profitable those lawyers are for the firm. Associates at some firms are substantially more profitable than others. The more profitable your associates, and the more leverage your book has, the greater the share of your team’s revenue you can expect to take home.

RPL and leverage are the key metrics

To understand what share of team revenue should accrue to you, consider how your firm stacks up on two key metrics: revenue per lawyer (RPL) and leverage.

RPL is critical because it is so poorly correlated with associate salaries. You could imagine a different compensation model in which firms paid associates a standard share of the revenue they generated, either individually or on average across the firm. But as we know, that isn’t how this industry works. Instead, all top-tier firms pay associates more or less the same salaries based on class year. As a result, partners at firms with relatively high RPL get to divide a much larger profit pool than partners at “top” firms with low RPL.

Within the Am Law 100, the spread between high and low RPL is striking. Firms at the low end have RPL of around $500,000. For example, Lewis Brisbois is the lowest of the Am Law 100, at $448,000. Firms at the high end have RPL around 4X that of the low-end firms. Sullivan & Cromwell, for example, clocks in above $2.2 million. (Wachtell is in a league of its own, with RPL in excess of $3.8 million.) Granted, a Sullivan & Cromwell associate earns higher total compensation than a Lewis Brisbois lawyer in the same class year, but that multiple is nowhere near 4X.

Now, RPL isn’t everything. We also have to consider leverage. If a partner’s book can feed a relatively large number of associates, the proportion of the team’s revenue that should accrue to the rainmaking partner will be higher. And to be fair to Lewis Brisbois, their partnership is doing well on that dimension, with leverage of 9.99 (third-highest among the Am Law 100).

Let’s take a look at leverage for the top 10 firms by RPL:

FirmRPL ($ millions)Leverage
Sullivan & Cromwell2.2153.8
Ropes & Gray1.9504.1
Davis Polk1.9235.4
Simpson Thacher1.9134.7
Quinn Emanuel1.8394.2
Paul Weiss1.8365.0

We see that Kirkland and Davis Polk are outperforming on leverage, which is good news for their equity partners. And in fact this flows through to the profits per equity partner (PEP) ranking: although Sullivan & Cromwell outranks Kirkland and Davis Polk on RPL, it is behind those firms in profits per equity partner. (Wachtell is first in both categories.)

FirmPEP ($ millions)
Davis Polk7.010
Sullivan & Cromwell6.366

Ambitious associates who are aiming for partnership should be aware of the importance of leverage in modeling their future expected compensation. To take another example, Gibson Dunn is immediately ahead of Paul Hastings and Weil Gotshal on the RPL ranking. But Gibson’s leverage is on the low end: 3.4. Because Paul Hastings and Weil have better leverage, they comfortably beat Gibson in PEP.

FirmRPL ($ millions)LeveragePEP ($ millions)
Gibson Dunn1.6133.44.400
Paul Hastings1.6064.54.703
Weil Gotshal1.5735.55.181

How does your practice compare to the firm average?

Your firm’s overall RPL and leverage are important considerations, but unless the partnership has a pure lockstep compensation model, the performance of your practice relative to the firm average is also critical. A good starting point for thinking about this dimension is to compare the firm’s profit margin to the share of your revenue that you are taking home. For example, let’s say your firm’s profit margin is 45%. Are you being paid 45% of the revenue you are generating?

If not, consider how your practice may differ from others in the firm. Does it have lower leverage than the firm average? Are you personally billing fewer hours than your peers in the partnership? If the answer to both of these questions is no, then your compensation should reflect the firm profit margin. If it doesn’t, you are likely underpaid, and you may want to consider your options.