The Score

March 2, 2010 7:08 PM

THE AM LAW 100: Slower Revenue Growth, More Stratification at Jackson Lewis

Posted by Zach Lowe

In 2008, gross revenue at Jackson Lewis jumped 20 percent, revenue per lawyer held steady, and profits per partner inched up by 2 percent even as the firm went on a yearlong hiring spree that never really stopped. It was a standout performance during a down year for the U.S. economy, one mirrored by those of Littler Mendelson and other major labor and employment firms with management side practices. As the economy tanked, companies needed outside counsel to help them navigate through mass layoffs, lawsuits from angry employees (and ex-employees) and a maze of other downturn-related issues.

Patrick Vaccaro, Jackson Lewis managing partner, told us back then that he was confident that business would remain strong for the firm as the economy righted itself. And the firm did indeed continue to grow in 2009, only at a slower pace.

Gross revenue increased about 10 percent last year, to about $256.5 million, and profits per partner rose by 3.3 percent, to about $534,000, according to firm financials released exclusively to The Am Law Daily. Revenue per lawyer, meanwhile, dipped by about 3 percent, from $491,658 in 2008 to just short of $477,000 in 2009.

The combination of a rise in partner profits and a decrease in revenue per lawyer suggests a widening gulf between the firm's lower-level partners and its senior lawyers. The ratio of compensation earned by the firm's highest-paid partner compared to what the lowest-paid partner took in jumped from about 4.5-1 in 2008 to almost 6-1 in 2009. Vaccaro says he's aware of the numbers, and that Jackson Lewis designs its compensation system to minimize such stratification. 

"From day one here, senior partners have never taken the level of compensation they could have gotten at another firm," Vaccaro says. "We don't want to get a reputation where senior level people make too much of the profits and junior level people are left hanging there. Nobody here makes $3 million or $4 million." Senior partners begin the annual peer-reviewed compensation process with a higher floor salary, but the firm works hard to minimize the income gap, Vaccaro says.

A small increase in such stratification is a relatively small worry. In 2009, Jackson Lewis brought in record revenue, billed a record number of hours, and added a record number of new clients, Vaccaro says. "We did more than pretty well," he adds. The firm has no debt, and continues to pile up lateral hires; full-time head count is nearing 600, up from about 395 toward the end of 2007, according to Vaccaro and the firm's financials. Jackson Lewis recently snagged four DLA Piper partners to open the firm's forty-fifth office, this one in Baltimore. It's the latest of about a dozen offices the firm has opened in the past two years. 

Vaccaro says he expects the pace of new office openings to slow. While the firm is likely open one or two new offices per year over the next few years, he says, the focus now will shift to beefing up existing offices with more laterals.

"We're hiring new people almost literally every day," Vaccaro says, adding that he has no hard cap in mind in terms of head count: "Our maximum number will be determined by the quality of the people and whether we have the business." (The firm lost only one lateral partner in 2009, according to The American Lawyer's lateral database.)

Jackson's 2009 results mirror those of Littler, The Am Law 200's other labor and employment giant, according to The Recorder, an Am Law Daily sibling publication. Revenue at Littler grew by about 5 percent last year, a slower rate of growth than in 2008, The Recorder reports.

This report is part of The Am Law Daily's ongoing Web coverage of 2009 financial results of The Am Law 100/200. Results are preliminary. Final rankings and full results for The Am Law 100 will be published in The American Lawyer's May 2010 issue and on The Am Law Second Hundred will be published in the June issue.

The final published results of last year's Am Law 100 rankings are available here; the Second Hundred results are available here.

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