Every year, to much fanfare, The American Lawyer releases a list of the largest law firms in the world, also known as the AmLaw 100.
The AmLaw 100 ranks law firms by a number of different metrics including total firm revenue, total number of lawyers, and equity partners. This year’s top line winner, with nearly $5 billion in annual revenue, was Kirkland and Ellis. If Kirkland’s $5 billion in revenue seems incomprehensible to solo lawyers and small firms out there, then those firms will be even more blown away by the winner of the metric upon which most big law lawyers fixate: profits per partner, or PPP. That would be Wachtell, Lipton, Rosen & Katz with a whopping $7,500,000 PPP.
The legal sector, or at least the large firm portion of the legal sector, has never been shy about flashing these gaudy numbers. In fact, just as these same firms converge around and compete to offer the highest - or, at least, ensure that they don’t offer the lowest - first-year associate salary, firms clearly jockey to land a place or a higher place on the AmLaw 100 list.
It’s pretty hard to measure the value of placing on this list in any way other than inflating the egos of the lawyers employed at these firms. Sure, maybe the firm sees a small bump in revenue or some recruiting benefit. But even taking those modest benefits into account, PPP is hardly a representative metric for legal. First, the vast majority of legal professionals work not for one of the AmLaw 100 (or, even AmLaw 200) but for one of the hundreds of thousands of small firms across the country. Beyond that, ours is a self-designated “noble profession” that prides itself on public service, preserving the rule of law, and pro bono efforts. This fixation on PPP is obviously and terribly misplaced.
We at Gravity Legal propose a new PPP for the legal profession:
People Law: One striking thing about the AmLaw 100: all of the law firms listed serve big business almost exclusively, with the exception of some work for high-net-worth individuals and corporate executives. Yet, so much of what props up the ethos of being a lawyer - from law school to the ABA to the rules of professional conduct - is about access, justice, and sustaining the rule of law. Everyone deserves representation, (even big tobacco or Exxon) but those clients are far from the majority of law firm clients.
The first “P” in the new PPP is “People Law.” Which firms are serving regular people? Which firms are working to figure out how to do that at scale? We should be elevating these firms.
Let’s start the new PPP by ranking firms by the percentage of their revenue that comes from "people law" - serving regular people.
Parity in Pay: Back in 2015, Gravity Payments CEO Dan Price raised the minimum salary of every employee to $70,000. And he never looked back. We’re not so bold to assert that $70K is the going rate for every job in every locale and for every firm. The cost of living varies, many firms hire part-time employees or contractors, and most firms have to get to a certain size before they can afford to pay even the owner $70,000/year. It’s complicated. But there’s nothing complicated about the disparity between any number less than $70,000/year and $7.5 million/year. Real firms pay their employees well and fairly.
For the second “P” let’s rank firms by the ratio of the average salary of non-partners to the average take-home pay of partners.
Parity in Position and Promotion: And while we’re on pay, let’s be sure to hit parity in position and promotion. In legal, as across the economy, partners, associates, and legal staff who come from diverse backgrounds make less and get promoted less than their white male counterparts. A brief look at the partner ranks of some of the traditional AmLaw 100 profit-per-partner leaders provides plenty of evidence of the law's diversity promotion problem. This needs to change and law firm partners are ideally situated to address the issue.
As a proposal for our final "P" how about a ranking of firms by the percentage of partners who come from a diverse background?
Not only is the current PPP measure completely unrepresentative of today’s lawyer population, it also doesn’t represent the values of the vast majority of the legal profession. Sure, most lawyers want to make a good living but they also want to treat their employees well and live the values held by the vast majority in the profession including, perhaps most prominently, equality and helping people.
Legal professionals: it’s time for a new PPP. Let’s put an end to the tyranny of profits-per-partner and start focusing on the P’s - people law, parity in pay, and parity in promotion and position - that matter.
“GotCredit” by Profits Key is licensed under CC BY 2.0.