The American Lawyer, Research Staff
METHODOLOGY
The information contained in our law firm reports and legal industry briefs is derived from current and archived surveys, lists, and features information published in ALM national magazines and newspapers. These publications include The American Lawyer, The National Law Journal, Corporate Counsel Magazine, IP Law & Business, and Am Law Tech.
Below is a chart identifying the sources for each section of the law firm report, followed by brief descriptions of the methodology used to research and report the information.
INFORMATION CATEGORY / SOURCEFirm Financials
Gross Revenues / Am Law 200, The American Lawyer
Revenues Per Lawyer / Am Law 200, The American Lawyer
Net Operating Income / Am Law 200, The American Lawyer
Profits Per partner / Am Law 200, The American Lawyer
Compensation Average Partner / Am Law 200, The American Lawyer
First-Year Associate Salary / The NLJ 250, The National Law Journal
Billing Rates / NLJ Billing Survey, The National Law Journal
Firm Size
Total Number of Attorneys / The NLJ 250, The National Law JournalBreakdown by Partners/Associate / The NLJ 250, The National Law Journal
Breakdown by Branch Office / The NLJ 250, The National Law Journal
Diversity
/ Diversity Scorecard, Minority Law JournalPartner Moves
Lateral Partner Survey /The American Lawyer, Research Staff
Pro Bono
/ Am Law 200, The American LawyerKey Cases and Clients
General Corporate / Who Defends Corporate America, NLJ,Who Represents Corporate America, Corporate Counsel
Research Staff
Intellectual Property / Who Protects IP America, IP Law & Business
M&As / Corporate Scorecard, The American Lawyer
Bankruptcies / Corporate Scorecard, The American Lawyer
League Tables / Corporate Scorecard, The American Lawyer
Technology Purchases and Satisfaction
/ Tech Scorecard, Am Law Tech (The American Lawyer)Tech Buys, Am Law Tech (The American Lawyer), vendor reports
DEFINITIONS
Section 1, General Information
Law Firm Profile: The profile is a brief and general overview of an individual firm prepared specifically for the law firm reports.
Location of Firm: A firm’s main office is identified as the firm’s headquarters. Some firms are identified as “international” or “national,” rather than identifying them by the city of their main office(s). This determination is made by calculating percentages of the firm’s attorneys who work in various regions of the country and the percentage that work outside the United States. If 40 percent or more of the firm’s lawyers are located outside the U.S., the firm is identified as international. If no more than 45 percent of the firm’s attorneys are located in any one region of the U.S., the firm is identified as national. Attorney numbers are obtained from the most recent National Law Journal (NLJ) 250 survey (published in November of each year).
Contact Information: The address and telephone number listed are those of the firm’s headquarters.
Section 2, Financial Information
General Note about Rankings and Methodology
The determination of whether a firm is included in The Am Law 200 is based on the firm’s gross revenues as defined below. A majority of Am Law 200 firms provide their numbers “officially” — that is, with the acquiescence of the firm’s partnership or management committee. Sometimes that cooperation comes at the outset of the data collection process. Other times it comes after we make dozens of phone calls and obtain the exact numbers or a close approximation. But all data — whether it comes officially from the firm or not — is rigorously investigated by The American Lawyer’s team of reporters. The result is that every number in the rankings is an informed estimate. And because some firms refuse to cooperate at all with The American Lawyer’s data collection process, it is acknowledged that some data comes from trusted but anonymous sources, though The American Lawyer does not disclose the source for any firm’s financial information.
An NLJ 250 ranking is based on firm size as described below.
A Global 100 ranking is based on gross revenue as defined below in "International Firms and Global Rankings."
API (Am Law Profitability Index): The API (or Am Law Profitability Index) is the ratio of profits per partner (PPP) to revenue per lawyer (RPL). It is calculated by dividing the profit margin (ratio of net income to gross revenue) by 100 and multiplying that figure by the leverage (ratio of all lawyers to equity partners).
Attorney Compensation
Associate Salary Information: Associate starting salary information is taken from the NLJ 250, which is published in November of each year. “Starting salary” lists the base salary for a first-year associate. For those firms that would not disclose salary data, editors relied on reputable alternative sources, if available. “WND” indicates that the firm would not disclose the data and no alternative source was available.
Compensation Average, All Partners (CAP): Compensation is averaged for all equity and non-equity partners to arrive at the CAP figure, which is calculated by dividing the sum of the net operating income and the total compensation for non-equity partners by the total number of partners, both equity and non-equity, rounded to the nearest $5,000. Rankings by CAP are from The American Lawyer’s Am Law 200 survey.
Profits Per Partner (PPP): See section below on profit calculations. The figures for profits per partner are averages for all equity partners at a firm. PPP is determined by dividing the firm’s net profit by the number of equity partners, rounded to the nearest $5,000. The number of equity partners indicated for each firm is as of August 31st for firms whose fiscal year ended between September 1st and February 28th of a given year (most Am Law 100 and Am Law 200 firms are on a calendar year fiscal cycle). Rankings for PPP are from The American Lawyer's Am Law 200 survey. Global rankings are from The American Lawyer’s Global 100 survey.
Revenue Per Lawyer (RPL): The figures provided in the revenue per lawyer section are averages for all attorneys in the firm. RPL is determined by dividing the firm’s gross revenue by the number of lawyers, rounded to the nearest $5,000. The number of lawyers indicated for each firm is as of August 31st for firms whose fiscal year ended between September 1 and February 28th of a given year (most Am Law 100 and Am Law 200 firms are on a calendar year fiscal cycle). This is intended to exclude first-year associates, who typically start in the fall but take several months to produce revenue. For other firms, lawyer numbers are as of the fiscal year end. Rankings based on Revenues per Lawyer are from The American Lawyer’s Am Law 200 annual survey. Global rankings are from The American Lawyer’s Global 100 survey.
Billing Rates: As part of the annual survey of firms that yields the information for the NLJ 250 rankings, firms are also asked to provide hourly billing rate information for partners and associates firm wide, and the range of those rates, from high to low. Many of the responding firms also provide information about alternative billing methods.
Equity and Non-equity Partners: For purposes of determining Am Law rankings and figures, equity partners are those partners who receive a Schedule K-1 tax form and receive no more than half of their compensation on a fixed-income basis. Non-equity partners are those who are not full participants in the firm’s profits, though they may have voting rights in firm matters. While it is recognized that many firms have evolved a variety of partnership levels that may not fit these categories precisely, for the Am Law 200 survey partners are defined as equity or non-equity in order to portray a firm’s profits with a reasonable degree of verisimilitude.
Fiscal Year: The Am Law 100 and 200 surveys are published in July and August of each year and the revenue and profit figures listed are for the firm’s most recently completed fiscal year. Most Am Law 200 firms are on a calendar fiscal year. In most instances, results are based on the accounting method used by the firm.
Gross Revenues: Fee income is counted, but income from ancillary businesses, equity investments, or client charges for disbursements is excluded. Figures for gross revenue are rounded to the nearest $500,000. Revenue figures include paralegal billings. Rankings based on revenue are from The American Lawyer’s Am Law 200 annual survey. Global rankings are from The American Lawyer’s Global 100 survey.
Profit Calculations: Only equity partners are included in the “profits per partner” calculation. Thus, no profit sharing with non-equity partners is included in the net operating income figure published. That sort of profit sharing is treated as an expense, as is depreciation. However, capital contributions that are withheld from distributions are treated as income in calculating profits per partner. Many firms put their first-year equity partners or lateral equity partners on fixed incomes for a short time. When this is merely a transitional arrangement, and these partners are otherwise treated as equity partners, we treat them as such. Rankings based on profits per partner are from The American Lawyer’s Am Law 200 annual survey. Global rankings are from The American Lawyer’s Global 100 survey.
International Firms and Global Rankings
Global Rankings Generally: Global rankings are taken from The American Lawyer’s Global 100 survey, which compares the largest law firms on the basis of gross revenue, number of lawyers, and profits per equity partner. These rankings are compiled in conjunction with London’s The Lawyer. Because foreign law firms differ in structure from American law firms, direct comparison is difficult.
Gross Revenues. For U.S. firms, revenue figures are obtained from The Am Law 100, published in the July issue of The American Lawyer. For British firms, revenue figures are obtained from The Lawyer. For Australian firms, revenue figures are obtained from BRW.com.au. Canadian firm revenues are estimated. Conversion rates are taken from generally accepted financial tables published in the time period of the data collection.
Number of Attorneys. Firm are ranked by the average number of full-time equivalent lawyers at the firm in its most recently completed fiscal year. Lawyer numbers for British, Canadian, and Australian firms include recently graduated law students who are not yet fully licensed but who function and charge time like junior associates. Lawyer numbers and branch office totals reflect only those within a single partnership and do not include affiliations, networks, or those in separate partnerships, even if they operate under a single name.
Profits Per Partner. Firms are ranked by average profits per equity partner for the most recent past fiscal year. Only firms that are included on the Global 100 Most Revenue and/or Most Lawyers lists are considered for the Most Profits Per Partner list. Profits per partner figures are from The Am Law 100, published in the July issue of The American Lawyer. Figures for British firms are from The Lawyer. Profits and revenue figures were converted using average conversion rates for the fiscal year.
Location of Firms: Firms are identified as international if 40 percent or more of their lawyers are working outside the home country. Firms identified as national have no more than 45 percent of lawyers located in any one region of the home country.
Section 3, Firm Size
Number of Attorneys: Firm size and related rankings are taken from the annual NLJ 250 survey. Firms are ranked by the total number of full-time equivalent (FTE) attorneys, as of September 30th, rather than just full-time attorneys, which gives a more accurate picture of the size of a firm. In some cases, due to rounding, this calculation yields slightly higher or lower numbers than the figures submitted by the law firms. In case of a tie, firms are ranked by partners plus associates, excluding “other attorneys.” If the tie persists, it is broken based on the number of partners at each firm.
Number of Attorneys reflects permanent, FTE attorneys. The number of “Partners” is the total number of partners; non-equity partners (NE) are listed separately.
Only the total number of non-partner, non-associate attorneys is listed in the “Other” category. This generally includes FTE counsel, of counsel, senior counsel and staff attorneys.
Number of Attorneys by Location: The Branch Offices section lists the total number of attorneys in each city where the firm has offices. A listing of “0” attorneys in this section indicates that no full-time attorneys work in that office.
Diversity: Information and rankings relating to diversity are taken from The American Lawyer’s annual Diversity Scorecard, using demographic information gathered in the annual NLJ 250 survey of firms. All data is self-reported by the firms, who were asked to provide figures as of September 30th of each year. "Minority Percentage" is the percentage of each firm's total attorneys who are Asian, Black, Hispanic, or Native American. Each firm has been assigned a Diversity Rank based on its percentage. Please note that the year identified with the diversity statistics is the year in which the census is conducted, and not the year in which Diversity Scorecard is published. The census survey is conducted each summer/fall by The National Law Journal. Diversity Scorecard is published by The American Lawyer the following winter/spring and is based on the NLJ's census figures.
Section 4, Lateral Partners
Lateral Partners: The American Lawyer’s Annual Lateral Partner Survey covers partner moves in and out of The Am Law 200 firms between October 1st and September 30th of the years indicated. Included are firm-to-firm moves if a lawyer was a partner in both his or her old and new positions, and if a partner leaves for a legal job in business or government, or joins as a partner from business or government. Mergers are included except when the combined firm changed its name. In addition, the staff of the research group culls lateral partner moves, and some additional materials (e.g. internal promotions to partner, lateral moves from associate at former firm to partner at new firm) are included. These additional materials are noted. These moves are sourced in the database to permit referral to the original article or press release.
Section 5, Pro Bono
Pro Bono Work: Pro bono work is defined as legal services donated to organizations or individuals who could not otherwise afford them. Non-legal work for charities and work done by lawyers in non-U.S. offices are not included. We also ask firms to exclude paralegal time, bar association activities, community service, and time spent serving on boards or raising funds for charitable institutions. This definition is similar to the one used by the Pro Bono Institute (PBI) for its law firm challenge, although, unlike the PBI, we do not count pro bono work by summer associates and paralegals.
Pro bono scores are determined by weighting and then by combining two factors. Two-thirds of the score comes from the average number of pro bono hours per lawyer, while the remaining third is the percentage of lawyers with more than 20 hours. The rankings are based on these scores.
Section 6, Key Cases and Clients
The information appearing in the “Key Cases and Clients” section of each law firm report is compiled from numerous “Who Counsels” surveys published in various American Lawyer Media magazines and newspapers. This information is obtained directly from the corporations. Surveys are sent out annually to the Fortune 500 companies querying them about their primary outside counsel for specific areas, including some non-U.S. work, of litigation, corporate transactions, labor and employment, corporate governance and intellectual property. Information about Bankruptcy Representation is taken from the Corporate Scorecard, published annually in The American Lawyer. The staff of the research group also gathers corporate representation materials from the editorial resources of ALM, both national and regional. These can be differentiated from the corporate representation materials provided by general counsel by the sourcing notes that accompany them in both the spreadsheets and the Law Firm Reports.
Section 7, Corporate Scorecard
Corporate Scorecard information is supplied by companies that specialize in the compilation of specific types of data. There are, however, limitations on that data. For instance, a significant number of securities offerings are completed under the Securities and Exchange Commission's Rule 144A, with no public registration. And though private offerings do leave a paper trail that data companies use to capture industry information, those short, quick forms rarely divulge counsel for such transactions.