The 8 Pointer Law Firms – Why They’ve Been Successful Over The Past Decade
October 4, 2022
PPP (profits per partner) data from the US shows how outstandingly successful some firms have been over the past decade, in particular the top 8 pointers Law Firms shown above. Those firms include (in order of performance): Baker & McKenzie; Kirkland & Ellis; Cravath Swaine & Moore; Davis Polk & Wardwell; Simpson Thacher & Bartlett; Skadden Arps Slate Meagher & Flom; Latham & Watkins; Weil Gotshal & Manges and Chadbourne & Parke.
1) Size in terms of revenue generated
Seventeen firms generated more than $1 billion in revenue over the past decade. A combined total of 108 other firms generated between $500 million and $1 billion in revenue over the same period, but even if a firm generates less than half as much, it still reflects a great deal of success. Here are eight from this group that has managed to grow steadily over the past decade and rank among the country’s highest-earning firms:
Eighth on the list is Alston & Bird, which saw its revenues grow by 129 percent since 2005 to nearly $650 million. It can be credited for much of this increase to its acquisition last year of Dallas litigation boutique Shannon & Wardecka at an unprecedented price.
2) Focus on Corporate Mergers & Acquisitions
Mergers and acquisitions often have a complicated legal process, so it’s important to find experienced attorneys to help you with this process. Often when an acquisition is not smooth, it can end up having costly effects on the company. For example, if a company neglects the necessary due diligence before entering into the contract, that can have huge repercussions for both parties as well as their customers and stakeholders.
What sets certain law firms apart from others is their skills in handling other corporate transactions such as mergers and acquisitions. These eighties-pointer law firms in Chicago focus mainly on mergers and acquisitions, giving them substantial experience in this area that few other firms will possess.
3) Minimal Litigation and Controversy
Minimal Litigation and Controversy are an important part of the legal world. One’s ability to avoid these negative outcomes can often mean the difference between a thriving and an unsuccessful practice. These law firms have managed to consistently avoid litigation, even when it may be tempting or necessary, to maximize their chances for success.
4) Practical, Unspectacular Approach
While it might seem to be easy to make a list of 100 successful firms, there are plenty of other reasons why these firms deserve their success. One simple explanation is that they took the unspectacular approach by maximizing the things they could control,
such as learning to love running small teams. Learning Law Firms how to work well with what you have and doing better with what you’re given is certainly not a flashy answer for being in the top 1%, but can potentially be one of the most important factors. It’s also critical for any Law Firm that wishes to maximize its potential going forward.
5) Strong Cash Position with No Large Debt Loads
O’Melveny & Myers was founded in 1923 and has since grown to become one of the largest law firms in the world, specializing in transactions and international trade Law Firms.
Headquartered in Los Angeles, California, O’Melveny has 750 attorneys with offices in 15 cities across the globe. In November 2016, Simpson Thacher & Bartlett LLP merged with London’s Macfarlanes to form a global 650-attorney firm that spans 100 countries. An industry powerhouse is formed by combining two firms with strong footholds across various regions and practice groups.
6) Proven Management Team that Has Stayed Put
A good management team is imperative for a company’s success. Many elements make up a successful management team, but one key component is stability.
If the core leadership has been around for at least 10 years, it shows that the firm has adapted to change well and embraces new ideas. A Proven Management Team That Has Stayed Put for at Least 10 Years Helps Explain Its Financial Strength
This shows how well these firms have managed their resources and investment portfolio in bad economic periods or when taking on high-risk projects that could affect profits. Being steadfast and managing the risk properly explains why these firms have outperformed over the past decade while providing an excellent example of what other companies should do to remain strong as they grow with time.
7) Modest Investment in IT Systems/System Upgrades
The budget for IT investments is one of the easiest to allocate resources in a PPP Law Firm. It’s important to invest in hardware and software that meets the needs of your firm today, but it’s also essential to have ongoing management of your current technology as you grow. One of the best places to allocate funds for growing a practice area or opening a new branch office is IT spending.
Upgrade systems and other hardware when needed and increase your investment in IT systems when you need to add more lawyers or paralegals on staff. Consider investing in enterprise license agreements, if necessary, which offer flexible pricing models with shorter return-on-investment periods than their perpetual counterparts.
8) Manage Profits by Investing Borrowed Capital Generously in Client Work
As profitable firms grow and reinvest, they often shift from more commoditized work to in-depth client work. We have seen this pattern at Young Conaway where our top three clients now represent 70% of our revenue. Increasing profitability and investment can create opportunities for firms to innovate in the face of disruption, whether in the form of new technology or nimbler competition.
When capital is borrowed generously, the firm has options and flexibility to navigate disruption from within a stronger financial position.
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