It’s that time of year when all sorts of rankings are coming out. This time, it’s the Global 100 by Incisive Legal Intelligence (AmLaw).
Since previous analyses of layoffs against the AmLaw 100 (with Venn diagram!), the Vault 100, and the Summer-Associate Satisfaction Rankings were extremely popular, we’ve gone ahead and mashed up the layoff numbers against this latest ranking of the world’s top firms by total revenue.
The results after the jump.
The Global 100 methodology is as follows:
Revenue figures for American firms were obtained from The Am Law 100. European firm revenues were obtained from Legal Week in London. Australian and Canadian firms were surveyed. Currency conversion rates are annual averages for 2008. Lawyer numbers are average full-time-equivalent numbers for the most recent fiscal year. Revenue figures are rounded to the nearest $500,000. For more details, click here to see our Methodology.
The layoff numbers are extracted from the Law Shucks Layoff Tracker, so please also check the methodology if you have questions about what we do and don’t include. As usual, we are well aware that there are many layoffs that go unreported. WE BLAME YOU FOR THAT! Just kidding. But if you don’t give us something to track down and report, we simply can’t count it. We aggregate DLA Piper’s US and Non-US layoffs, so we had to combine the Global 100 values for revenue and total lawyers – we didn’t give them an ordinal ranking in order to preserve the “official” rankings.
On to the analysis.
When we use the gross revenue rankings, it’s clear that the largest firms were among the most-aggressive in laying people off. Of the top 11 firms by total revenue, eight are ranked in the top 15, and seven are in the top ten. Only Jones Day has not had any reported layoffs (although stealth rumors abound). Skadden’s layoffs are pretty much entirely as a result of its reduction of its staff-attorney program. The Freshfields layoffs are from a reduction in its real-estate practice in September, 2008 and the closure of its Bratislava office in March, 2009. Other than those three firms, the cuts were heavy.
The Top 11 firms of the Global 100 combined to lay off 3,468 people (1,566 lawyers and 1,902 staff) – that’s fully a quarter (25.14%) of the total layoffs (13,794) reported to date.
Turning those rankings around, we’ve put together the Top 10 Firms by Total Layoffs and their rankings in the Global 100. With the exception of Fish & Richardson, these firms all had more than 1,000 lawyers to start with. Lots of lawyers leads to lots of gross revenue – Fish & Richardson, Holland & Knight, and Orrick are the only firms in the Top 10 layoff rankings that don’t also make the Top 10 Global 100 Gross Revenue rankings.
The Top 10 firms by Total Layoffs have laid off 4,118 people (1,779 lawyers and 2,339 staff) – 29.85% of the total layoffs to date.
The results are pretty similar when we look at the Top 10 Firms by Attorneys Laid Off. Here, Cadwalader (who are the spiritual father of the Layoff Tracker for their prescient layoffs early on) and Dechert replace Holland & Knight and Fish & Richardson.
As we’ve said before, though, for the most part those firms are mammoth, so large layoffs by count may be relatively low on a percentage basis (Fish & Richardson, again being an outlier).
The more-telling number for a firm’s health, at least vis a vis layoffs, is revenue per lawyer (RPL). If you have one number to use to determine whether your firm is likely to have further layoffs, this is it. Of the top 10 firms by RPL, four have had no reported layoffs at all, four have laid off lawyers, and four have laid off staff (two have laid off both lawyers and staff).
RPL is actually a better indicator than profits per equity partner (PPP). Linklaters (350) and Kirkland & Ellis (155) both shed significant numbers of personnel but managed to translate that into high profitability. (We gave the two columns a different highlight so they’re not confused with number of lawyers and RPL, which are the corresponding columns in the other tables)
Linklaters is the outlier here. All of the other firms have fewer than 1,000 lawyers, and with Kirkland & Ellis, only two of the most-profitable firms laid off more than 100 people.
So, did the grow and expand model that was so successful over the past decade save the firms by giving them a broader base, or did they get too big for their own good?
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