The contrast between the Global 100 reports in 2012 and 2022 is startling: in 2012 the global elite was feeling the pinch with transactional markets stagnant in the wake of the global financial crisis a few years before. For the 63 firms that appeared in both years’ reports – unchanged by significant merger activity between those dates – 2012 was marked by single-digit rises in revenue, profits and lawyer numbers at the top 100 firms. With inflation running at around 3% in the UK and US then, performance in real terms was even more muted than the top-line figures suggested – it was essentially a flat year for many, set against the backdrop of shock and awe that came from Dewey & LeBoeuf filing for bankruptcy in May 2012 that gave many law firm leaders pause. Just five firms had gross revenues of $2bn or more, while only the top 23 firms in the table turned over more than $1bn. Five-year growth for Global 100 firms following the boom of 2007, was pedestrian – at best.
In 2022, we find firms thriving in frothy markets post-Covid, albeit with a slightly nervous eye on what may lie ahead (see ‘Playing a blinder’, page 28). Average revenue growth is more than double the rate seen by the Global 100 in 2012, while nearly two-thirds of the top 100 now have revenues over $1bn.
The five firms leading the pack for revenue growth over the past ten years (see table, opposite) probably comes as little surprise: the blistering ascent of Cooley, Kirkland & Ellis, Ropes & Gray, Goodwin and Latham & Watkins has been well documented. The fact that not one of these firms is New York based, all have attacked the London market with aplomb, and all have either strong private equity, funds or restructuring practices sums up the direction of travel and explains why this handful of thrusting players average over 200% revenue growth over the past decade.
That all five are also in the top ten for PEP growth over the same period (with Cooley joint-top with Davis Polk with just shy of 200% growth) shows that these firms have been focused on profitability, not just top-line growth, which has made them attractive prospects for lateral recruitment and therefore continued the cycle of profitable growth in lucrative practice areas.
The tables opposite list the top 40 strongest-performing Global 100 firms. Outside of this, and towards the bottom of those 63 firms in both reports, the suffering of the UK elite relative to the US has been a continual narrative over the past ten years, largely because of the currency effect. If the late 1990s and early 2000s were defined by the rapid ascent of the Magic Circle on the global stage, buoyed by a £1=$2 exchange rate of 2007; the decade that followed the global financial crisis was characterised by a pound that could never recover to those levels again. Back in our 2012 report, £1=$1.56128 compared to £1=$1.3764 this year. And this is only going to get worse, with the pound dipping to around $1.19 at press time.
There are 31 US law firms that at least doubled their revenues (and more than tripled in two cases) over the past decade.
The prominent London-based international firms only managed revenue growth of around 30-40% over the past decade, but it is better news for the firms outside the supposed UK elite: Simmons & Simmons has managed 56% growth in dollar terms since 2012 and is the only UK-based firm to appear in the revenue growth table. The same is true for PEP: while the gains have been stronger in percentage terms than for revenues, the UK firms still occupy the bottom end of that group of UK firms, with Clifford Chance faring best with 56% PEP growth between 2012 and 2022.
However, while the currency effect has had a material impact on UK firms’ revenues in US dollars, Freshfields and Linklaters are among the slowest-growing law firms in revenue and PEP terms in the Global 100 over the last decade. Even in home currency, turnover is up by 49% and 48% respectively – below average by the standards of many leading US firms. In contrast, there are 31 US law firms that we have data for reaching back a decade that at least doubled their revenues (and more than tripled in two cases).
Instead of closing, the profitability gap between top-tier US and UK firms has substantially widened – the average PEP between those firms has gone from $1.91m to $2.73m in ten years – an increase of just 43% – meaning all have been forced to dispense with rigid locksteps to come up with more flexible remuneration packages to reward star individuals. Yet they simply cannot compete with packages at elite US firms, which have continued to hurtle skywards. Ten years ago, six firms had PEP in excess of $3m – Kirkland, Sullivan & Cromwell, Paul Weiss, Cravath, Quinn Emmanuel and Wachtell. This year there are 37; ten firms have PEP between $4m and $5m; while a further eight have PEP between $5m and $6m. Two New Yorkers, Sullivan & Cromwell and Paul Weiss, have average partner earnings between $6m and $7m; while Davis Polk and Kirkland are second and third in PEP terms, with partner profits in excess of $7m, leaving Wachtell leading the pack with an average PEP of $8.4m. All the while, more aggressive packages for star M&A and disputes partners mean that the biggest names now command annual packages of more than $10m.
The awkward reality for UK firms facing what has been a lost decade in global law’s top echelons is that while upwardly mobile US institutions are impossible to entice into a merger, it is harder to recruit the best names and compete given the punching power of a widening band of elite and wealthy US players. LB
TOP 40: REVENUE GROWTH 2012-2022
| Firm | 2012 | 2022 | Change |
|---|---|---|---|
| Cooley | $564.5m | $1,986.8m | 252% |
| Kirkland & Ellis | $1,750m | $6,042m | 245% |
| Ropes & Gray | $903.1m | $2,674m | 196% |
| Goodwin | $695.5m | $1,973.4m | 184% |
| Latham & Watkins | $2,152m | $5,488.8m | 155% |
| Sheppard Mullin | $400.1m | $1,005.1m | 151% |
| Covington | $611m | $1,501.1m | 146% |
| Wilson Sonsini | $549m | $1,336m | 143% |
| Paul Weiss | $780m | $1,850.4m | 137% |
| King & Spalding | $781.4m | $1,828.1m | 134% |
| Simpson Thacher | $963.5m | $2,224.2m | 131% |
| Quinn Emanuel | $723.4m | $1,655.3m | 129% |
| Wilkie Farr | $548m | $1,220m | 123% |
| Morgan Lewis | $1,160.5m | $2,577.7m | 122% |
| Davis Polk | $910m | $1,970m | 116% |
| White & Case | $1,331m | $2,869.8m | 116% |
| Gibson Dunn | $1,165.8m | $2,480.4m | 113% |
| Perkins Coie | $547.5m | $1,155.6m | 111% |
| Milbank | $652m | $1,359m | 108% |
| McDermott Will & Emery | $825.3m | $1,665.2m | 102% |
| Wachtell | $552m | $1,111.7m | 101% |
| Fried Frank | $474.2m | $951.3m | 101% |
| Dechert | $671.1m | $1,341.5m | 100% |
| Sidley | $1,415.4m | $2,795.4m | 97% |
| Debevoise & Plimpton | $675.7m | $1,329.3m | 97% |
| Baker & Hostetler | $440m | $836m | 90% |
| Paul Hastings | $884m | $1,572.3m | 78% |
| Cravath | $568m | $1,001m | 76% |
| Proskauer | $686m | $1,168.4m | 70% |
| McGuireWoods | $567.5m | $953.5m | 68% |
| Foley & Lardner | $630m | $1,024.8m | 63% |
| Seyfarth Shaw | $484m | $786.6m | 63% |
| Mayer Brown | $1,134m | $1,840m | 62% |
| Greenberg Traurig | $1,243.3m | $2,003.8m | 61% |
| Alston & Bird | $644.5m | $1,023.9m | 59% |
| Sullivan & Cromwell | $1,113m | $1,765.4m | 59% |
| Akin Gump | $769.9m | $1,220m | 58% |
| Hogan Lovells | $1,665m | $2,606m | 57% |
| Simmons & Simmons | $401.6m | $628m | 56% |
| Orrick | $846m | $1,316.3m | 56% |
TOP 40: PEP GROWTH 2012-2022
| Firm | 2012 | 2022 | Change |
|---|---|---|---|
| Davis Polk | $2,351k | $7,010k | 198% |
| Cooley | $1,368k | $4,072k | 198% |
| Ropes & Gray | $1,535k | $4,333k | 182% |
| Fried Frank | $1,582k | $4,252k | 169% |
| Vinson & Elkins | $1,354k | $3,508k | 159% |
| Latham & Watkins | $2,261k | $5,705k | 152% |
| Debevoise & Plimpton | $1,993k | $5,011k | 151% |
| Goodwin | $1,500k | $3,690k | 146% |
| White & Case | $1,444k | $3,509k | 143% |
| Kirkland & Ellis | $3,050k | $7,388k | 142% |
| Paul Hastings | $1,963k | $4,703k | 140% |
| Sidley | $1,607k | $3,719k | 131% |
| McGuireWoods | $900k | $2,053k | 128% |
| McDermott Will & Emery | $1,500k | $3,415k | 128% |
| King & Spalding | $1,937k | $4,374k | 126% |
| Simpson Thacher | $2,657k | $5,979k | 125% |
| Weil | $2,343k | $5,181k | 121% |
| Winston & Strawn | $1,382k | $3,021k | 119% |
| Gibson Dunn | $2,081k | $4,440k | 113% |
| Hogan Lovells | $1,166k | $2,483k | 113% |
| Baker & Hostetler | $845k | $1,780k | 111% |
| Pillsbury | $1,000k | $2,105k | 111% |
| Mayer Brown | $1,182k | $2,465k | 108% |
| Orrick | $1,480k | $3,066k | 107% |
| Proskauer | $1,704k | $3,510k | 106% |
| Skadden | $2,481k | $5,088k | 105% |
| Alston & Bird | $1,500k | $3,075k | 105% |
| WilmerHale | $1,381k | $2,802k | 103% |
| Foley & Lardner | $895k | $1,812k | 103% |
| Dechert | $2,105k | $4,239k | 101% |
| Sullivan & Cromwell | $3,183k | $6,366k | 100% |
| Milbank | $2,570k | $5,033k | 96% |
| Paul Weiss | $3,158k | $6,162k | 95% |
| Cravath | $3,006k | $5,803k | 93% |
| Shearman & Sterling | $1,561k | $3,011k | 93% |
| Covington | $1,200k | $2,300k | 92% |
| Wachtell | $4,460k | $8,400k | 88% |
| Wilson Sonsini | $17,67lk | $3,318k | 88% |
| Cadwalader | $2,373k | $4,382k | 85% |
| Akin Gump | $1,688k | $3,098k | 84% |