Industry Resources

The 100 Pointer Law Firms: PPP Growth Outperformers Over the Past Decade

If you’re a high-performing associate with aspirations to make partner, you have many choices in the current booming lateral market. If and when you do ascend to the partnership, you would certainly rather do so at a firm with a strong profitability growth trajectory. Law firm success tends to beget success, and if you’re going to work as hard as Biglaw requires, you might as well do so at a firm that is firing on all cylinders.

To help provide a quantitative indicator of firms’ relative momentum, Lateral Link analyzed growth in profits per partner (PPP) over the decade from 2011-2020, drawing on data published in the Am Law 200. This exercise is instructive both for identifying firms that have outperformed in profitability growth and also for identifying firms that might have been expected to outperform, but didn’t.

The outperformers

Let’s start with the positives. Sixteen firms in our data set more than doubled their PPP over the decade from 2011 to 2020. We’re designating these firms “100 Pointers” — their profitability trajectories have been the envy of the industry.

FirmPPP multiple (2020 vs 2011)PPP in 2020 ($m)
Davis Polk2.76x6.35
Fenwick & West2.46x2.85
Nixon Peabody2.31x1.63
Choate Hall & Stewart2.31x3.24
Fried, Frank2.29x3.62
Nelson Mullins2.21x1.32
Ropes & Gray2.20x3.37
Debevoise & Plimpton2.19x4.55
Vinson & Elkins2.17x2.94
Kilpatrick Townsend2.15x1.36
Robins Kaplan2.05x1.59
White & Case2.05x3.02
Kirkland & Ellis2.03x6.19

Some of these 100 Pointers will come as no surprise. For example, the outperformance in recent years of the Davis Polk and Kirkland — the only two firms on the list with PPP over $6 million — has been well documented. But even among those two we find an interesting nuance: although Kirkland had materially higher PPP than Davis Polk in 2011 ($3.05m vs. $2.3m), Davis Polk’s remarkable outperformance — close to tripling PPP over the decade — saw it overtake Kirkland by 2020. (David Polk also outperformed Kirkland in Revenue per Lawyer growth during this period: 1.52x vs. 1.46x.)

The strong performances of Fenwick and Cooley also make sense, in the context of a market that has offered rich targets for firms that focus on technology clients. On the other hand, fewer readers might have expected Nixon Peabody to have outperformed so impressively. It is interesting to see that despite the general market narrative of the richest Biglaw firms getting richer, it’s not just the highest PPP firms that have made strong relative gains.

The laggards

Just as some less renowned firms made the 100 Pointers list, some high-prestige firms turn out to be relative laggards. In a decade in which transactional work grew at a torrid pace, the strongest predictor of a firm’s PPP growth underperformance seems to be its reliance on litigation. Some of the weakest performers in the data set include Boies Schiller, Jones Day, and Curtis, Mallet. Each of these firms had a lower PPP in 2020 than in 2011. DC litigation specialist Williams & Connolly achieved slight PPP growth (2020 PPP was 1.19x 2011 PPP), but its RPL declined (0.89x). The largest pure litigation firm, Quinn Emmanuel, also delivered only modest PPP growth (1.12x), though its RPL growth was more respectable (1.42x).

Among the firms with more diversified offerings, it’s interesting to see some firms that have a reputation for growth turn in relatively mediocre performances in this analysis. For example, Gibson, Dunn grew its PPP over the decade by 1.67x, the same multiple achieved by Blank Rome and Stoel Rives. That’s a solid performance relative to a firm like Jones Day, but considering Gibson’s narrative of having grown into a true national powerhouse, it is striking to see the gap between its PPP growth and that of the 100 Pointer firms.

Implications: know your market value

If you are a current or future partner, the difference between being at a firm with strong PPP growth versus being stuck at a firm that is flat or declining is highly significant, to the tune of several million dollars over the course of your career. Simply put, if you are a partner at a firm on the upswing, you will attain outsized rewards. If you are at a flat firm, you will likely not realize the rewards of building your practice, as you will mainly find yourself feeding others. And if you are at a declining firm and you stick around too long, you will have left a huge sum on the table, which you will never recoup. Given that you are likely to work equally hard in all three scenarios, it’s not difficult to see which one is preferable.

Bottom line: it pays to understand how your firm is doing relative to your other options in this active lateral market. The time it takes to get ahead of the trends and learn your market value is time well invested. If you find that your current situation undervalues you, now is an opportune moment to make a move to a firm that is on a more promising trajectory.