May 10, 2010 6:00 AM

The Am Law 100 2010: Catching Up with the Class of 1985

Posted by Ed Shanahan

The American Lawyer debuted its firm finance reporting 25 years ago, examining the nation's 51 highest-grossing firms in its July/August 1985 issue. (It was billed as The Am Law 50, but there was a four-way tie at the bottom of the list.) Since then, the phrases "revenue per lawyer" and "profits per partner" have been added to lawyers' lexicons; "Am Law profitability index," not so much. Here's a look at how 1985's Am Law 50 (click here to download a PDF of the ranking) stacks up against the top 50 firms on this year's Am Law 100 (this year's ranking by Gross Revenue is available here.)

STABILITY AT THE TOP (MOSTLY)
The top 50 has staying power: Thirty-five of 1985's Am Law 50 firms are still among The Am Law 100's top 50 firms. Eight others remain on The Am Law 100, and three are in the Second Hundred. Four merged (two with each other), and two--Finley Kumble and Mudge Rose--collapsed.

NOW WE'RE TALKING REAL MONEY
Gross Revenue for this year's Am Law 50 was $45.9 billion, 13 times that of 1985's $3.4 billion.

AN RPL BOOM
Average revenue per lawyer has grown to $843,099 for this year's top 50, from $265,098 for 1985's. Wachtell, Lipton, Rosen & Katz has the highest revenue per lawyer on each year's list, although the number two firm has changed; it was Cravath, Swaine & Moore in 1985 and Sullivan & Cromwell this year.

 THE PAYCHECKS HAVE GROWN
All but seven of this year's top 50 firms have profits per partner of $1 million or higher; in 1985, none did. the average profits per partner for this year's top 50 is $1.5 million, a fivefold increase from $309,314 in 1985 (that's $623,057 in today's dollars).
 
NEW YORK AND THE NATION
More than half of the firms on 1985's list--27--were based in New York. Six were in Chicago, and three each were in Cleveland, Houston, and Los Angeles. Of this year's top 50, five are international firms, 20 are national firms, and 12 are based in New York.

IT TAKES A MIDSIZE VILLAGE
Head count has quadrupled, to 54,478 for this year's Am Law 50 from 13,196 in 1985. But the number of equity partners hasn't even tripled--11,982 for this year's top 50, compared to 4,789 in 1985. (The survey didn't begin tracking nonequity partners until 1985.)

BRING IN THE ASSOCIATES
Call it the age of the salaried class: Average leverage at Am Law 50 firms has jumped from 1.76 in 1985 to 3.54 for this year's top 50.

FINDING VALUE
Value per lawyer wasn't among the metrics on the debut Am Law 50--that came much later--but if it had, the average VPL for 1985's top 50 would have been $104,842, compared to $378,743 for this year's group.

WHAT HASN'T CHANGED
Average profit margin for 1985's Am Law 50 was 40 percent, about the same as 39 percent for this year's top 50.

Click here for all the rankings and feature stories in this year's Am Law 100.

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