UIDE TO LEADING LAW FIRMS THE AM LAW 100/200 THE GLOBAL 100 THE A-LIST CORPORATEuide SCORECARD UIDE ZEUGHAUSER GROUP’S 2009 POCKET GUIDE TO THE AMERICAN LAWYER RANKINGS The Zeughauser Group Dear Clients and Other Friends: We are pleased to provide you with our ZGuide to Leading Law Firms, including the 2009 Am Law 200 and 2008 Global 100 rankings—our seventh edition of the ZGuide. In 2008 the economy continued the softening that began in the second half of 2007. Activity at most law firms took a nosedive in the fourth quarter and, as a result, 2008 was the first year in 17 years in which the Am Law 100 declined in both revenue per lawyer and profits per equity partner. Some pundits have declared the end of the golden era for law firms and the death of the traditional law firm model. While we agree that there will be significant changes in the profession, we believe that the fundamentals on which the traditional law firm model are based—including the promise of a rewarding career, with training and partnership for those lawyers who demonstrate the traits of ownership and find career satisfaction in helping clients achieve their goals—will continue to be valid. Firms with the discipline to adapt to changes in our increasingly competitive and interdependent global marketplace, but that retain their focus on these fundamental values, will lead the industry out of the recession and enjoy still greater strength. Those that don’t will weaken. • ZGuide • Last year we predicted that the recession and liquidity crisis would make 2008 the most challenging year for many large law firms in over a decade, but we expressed confidence that all firms would enjoy opportunities to invest in growth strategies during the downturn. In this regard, we were privileged in 2008 to work with many of the world’s leading law firms on growth, marketing, and client-development strategies, and to enjoy the ongoing participation of over 50 of the Am Law 100 and 200 firms in our Chair and CMO Roundtables. We believe 2009 will be more challenging still, but also will present greater opportunities for growth. We again look forward to helping our clients marshal their resources in their drive for market leadership. We wish our clients and other friends in the industry renewed determination, clear vision, great success, and prosperity throughout 2009 and into 2010, times that will challenge us all to be our best. Sincerely, Ron Beard Jerome L. Coben Mozhgan Mizban Norm Rubenstein Jack Walker Mary K Young Peter Zeughauser Kent Zimmermann Lonnie Zwerin © Incisive Media US Properties, LLC and Zeughauser Group, LLC Chart information reprinted with permission from the April, May, June 2009 and October 2008 issues of The American Lawyer (The Am Law 100, The Am Law 200, Corporate Scorecard, The A-List, and The Global 100). © 2009 Incisive Media US Properties, LLC • ZGuide • Table of Contents Methodology The Am Law 200, A-List . 2 The Am Law 200 Ranked by Profits Per Equity Partner . 4 The Am Law 200 Ranked by Value Per Lawyer. 24 The 2009 Am Law 100 Forward Looking Strategies: Tough Medicine and Elixirs for Success . 34 Methodology The Global 100. 42 The Global 100 Ranked by Profits Per Equity Partner . 44 Assessing the Performance of Client Service Teams. 54 Methodology The Corporate Scorecard. 58 The Corporate Scorecard . 60 Mergers and Acquisitions. 60 Private Equity. 62 IPOs. 63 Equities by U.S. Corporations. 63 Investment-Grade Debt . 64 High-Yield Debt. 64 Asset-Backed Securities . 65 Mortgage-Backed Securities . 66 Municipal Bonds . 66 Project Finance . 68 REIT Equities . 69 REIT Debt . 70 Bankruptcies. 70 Emergences . 72 Law Firm Index . 75 ZGuide • 1 The Am Law 200 Methodology The Am Law 200 is reported by staff members at Incisive Media’s publications throughout the United States, including The American Lawyer, The Connecticut Law Tribune, Daily Business Review (Miami), Fulton County Daily Report (Atlanta), The Legal Intelligencer (Philadelphia), Legal Times (Washington, DC), The New Jersey Law Journal, New York Law Journal, The Recorder (San Francisco), and Texas Lawyer. Most law firms provide their financials voluntarily for this report, but all data, whether it comes officially from the firm or not, is investigated by reporters. Definitions Gross Revenue is fee income from legal work only. It does not include disbursements or income from nonlegal ancillary businesses. In all cases, the revenue and profit figures listed are for the firm’s most recently completed fiscal year. Most Am Law firms are on a calendar fiscal year. Net is compensation paid to equity 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. To ensure that profits per partner and leverage data are consistent, partners without equity shares in the firm’s profits (or who do not have more than a partial equity share in the firm’s profits) are not counted as partners. Similarly, retired partners and of counsel are not counted as partners, nor are payments made to them counted in net operating income. Lawyer numbers are for full-time equivalent lawyers for firms whose fiscal year ends after August 31, 2008, and are provided as of that date. If the firm’s fiscal year ended between March 31 and August 31, 2008, the firm was asked to give the end of the firm’s fiscal year. 2 • ZGuide This is intended to exclude first-year associates, who typically start in the fall but take several months to produce revenue. Calculations • Gross Revenue is rounded to the nearest $500,000. Methodology • Profits Per Partner, Revenue Per Lawyer, and Average Com- pensation for All Partners are rounded to the nearest $5,000. • Revenue Per Lawyer (RPL) is calculated by dividing gross rev- enue by the number of lawyers. • Profits Per Partner (PPP) is calculated by dividing net operating income by the number of equity partners. • Compensation Average, All Partners is the net operat- ing income plus compensation to nonequity partners, divided by the number of equity and nonequity partners. • Value Per Lawyer (VPL) is calculated by dividing the Com- pensation Average, All Partners by the total number of lawyers. That number is then divided by $10 million to see how many lawyers it takes to generate that amount. Location of Firms Some firms are identified as “international” or “national,” rather than identifying them by city, according to the percentage of the firm’s attorneys who work in various regions of the country and the percentage that work outside the United States. Those breakouts are obtained from the most recent National Law Journal NLJ 250 survey. If 40 percent or more of the firm’s lawyers were located outside the U.S., the firm is identified as “international.” If no more than 45 percent of the firm’s attorneys were located in any one region of the country, the firm is identified as “national.” The A-List The A-List, comprised of just 20 firms, is determined by rankings in four surveys—The American Lawyer’s Revenue Per Lawyer (from The Am Law 200); Pro Bono; and Midlevel Associate Survey rankings; and The Minority Law Journal'’s Diversity Scorecard rankings. Rankings in each survey are converted into points, using an inversion calculation where a firm ranked Number One receives 200 points, and a firm ranked Number 200 receives just one point. To determine each firm’s score, points are doubled for both Revenue Per Lawyer and Pro Bono rankings and then added to the scores for the Midlevel Associate Survey and Diversity Scorecard rankings. Additional information about the A-List is available on americanlawyer.com and in the July issue of The American Lawyer.u ZGuide • The Am Law 200 The Largest Firms in the U.S., Ranked By Profits Per Partner Compensation Firm Profits Per Revenue Per Average, Lawyers, Partners, Location PPP Rank 2009 Rank PPP 2008 Rank PPP Equity Partner Gross Revenue Rank 200 Law Am Lawyer Rank RPL All Partners Wachtell, Lipton, Rosen & Katz 1 1 $,010,000 $50,000,000 55 $2,55,000 1 $,010,000 216 Lawyers, 81 Equity Partners, 0 Nonequity Partners, New York Quinn Emanuel Urquhart Oliver & Hedges 2 5 $,5,000 $2,000,000 66 $1,105,000 11 $2,690,000 00 Lawyers, 78 Equity Partners, 26 Nonequity Partners, Los Angeles Boies, Schiller & Flexner $,065,000 $295,000,000 92 $1,180,000 6 $1,60,000 250 Lawyers, 2 Equity Partners, 68 Nonequity Partners, National Sullivan & Cromwell I $2,90,000 $985,000,000 15 $1,80,000 2 $2,90,000 665 Lawyers, 170 Equity Partners, 0 Nonequity Partners, New York 5 8 Paul, Weiss, Rifkind, Wharton & Garrison I $2,655,000 $692,000,000 7 $1,070,000 1 $2,655,000 67 Lawyers, 11 Equity Partners, 0 Nonequity Partners, New York Cravath, Swaine & Moore 6 2 $2,520,000 $52,500,000 52 $1,210,000 $2,520,000 0 Lawyers, 90 Equity Partners, 0 Nonequity Partners, New York Simpson Thacher & Bartlett 7 6 $2,75,000 $90,000,000 25 $1,10,000 10 $2,75,000 801 Lawyers, 17 Equity Partners, 0 Nonequity Partners, New York 8 11 Kirkland & Ellis I $2,70,000 $1,00,000,000 7 $1,050,000 15 $1,0,000 1, Lawyers, 25 Equity Partners, 10 Nonequity Partners, National 9 19 Cleary Gottlieb Steen & Hamilton I $2,00,000 $965,000,000 18 $970,000 2 $2,00,000 99 Lawyers, 191 Equity Partners, 0 Nonequity Partners, International Schulte Roth & Zabel 10 12 $2,290,000 $20,000,000 68 $970,000 2 $2,290,000 Lawyers, 82 Equity Partners, 0 Nonequity Partners, New York 11 20 Weil, Gotshal & Manges I $2,270,000 $1,21,000,000 9 $1,05,000 16 $1,770,000