Forget about revenue, think about profit!

Rubric: Uncategorized

Financial indicators of the world leaders, apart from the fat that they simply ARE indicatorsJ, very vividly illustrate the fact that – generally – everybody chooses one out of two options:

  • ego expressed in size (the volume of business);
  • ego expressed in the amount of money in the partners’ pockets.

Numbers from  The American Lawyer are very eloquent:

by revenue 2014
by PEP (profit per partner) 2014
Baker & McKenzie: $2,540,000,000 Wachtell Lipton: $4,755,000
DLA Piper: $2,481,000,000 Quinn Emanuel: $4,485,000
Latham & Watkins: $2,285,000,000 Cahill Gordon: $3,780,000
Skadden Arps: $2,235,000,000 Sullivan & Cromwell: $3,675,000
Clifford Chance: $2,125,500,000 Paul Weiss: $3,620,000
Kirkland & Ellis: $2,016,000,000 Cravath: $3,290,000
Linklaters: $1,936,000,000 Kirkland & Ellis: $3,280,000
Allen & Overy: $1,930,500,000 Simpson Thacher&Bartlett: $3,165,000
Freshfields: $1,927,000,000 Gibson Dunn: $2,945,000
Norton Rose Fulbright: $1,904,000,000 Slaughter and May: $2,945,000

Obviously, one can’t spot corresponding match between the right and left columns.

There is very few correlation between income of the leaders and the number of lawyers involved, which provides the base for conclusions about effective/non-effective utilization of personnel (at least within the range of firms in similar price segment price range of firms).

by revenue 2014
by headcount 2014
Baker & McKenzie: $2,540,000,000 Baker & McKenzie  4,245
DLA Piper: $2,481,000,000 DLA Piper  3,962
Latham & Watkins: $2,285,000,000 Dacheng  3,681
Skadden Arps: $2,235,000,000 Norton Rose Fulbright  3,547
Clifford Chance: $2,125,500,000 Yingke  2,689
Kirkland & Ellis: $2,016,000,000 King & Wood Mallesons  2,596
Linklaters: $1,936,000,000 Dentons  2,503
Allen & Overy: $1,930,500,000 Clifford Chance  2,480
Freshfields: $1,927,000,000 Jones Day  2,464
Norton Rose Fulbright: $1,904,000,000 CMS Legal Services  2,343

The market conditions in our part of the globe, where financial transparency of business is less likely to be compared to the reality described above, there is still a habit to comply with the number of quantity of lawyers.

Everyone chooses for oneself – either the  quantitative indicators which are easy to manipulate, or own satisfaction from own business, which is more difficult to manipulate.