More evidence that the US is where the money is: the finalised financial results are out for the top 100 US firms, and they reflect poorly on the UK.
Overall the combined gross revenue for the top 100 US firms reached $50.7bn (£28.9bn) in 2005, up 10 per cent on the previous year. This compares with just £9.71bn earned collectively by the UK top 100 in 2004-05.
The UK firms compare just as poorly on partner profits, as average profit per equity partner (PEP) within the top 100 US firms has broken the $1m (£571,400) barrier for the first time.
According to The American Lawyer‘s AM Law 100 survey, average PEP across the top 100 US firms was $1.12m (£640,000) for 2005, up 17 per cent. The UK top 100 reported an average PEP of £236,630 in 2004-05.
US independent Wachtell Lipton Rosen & Katz, which has shunned the international model favoured by many UK firms, topped the US tables for PEP, reporting an average of $3.79m (£2.17m).
Slaughter and May, which comes top of the UK tables based on PEP, and which also shies away from international expansion, would have to more than double its average PEP for 2004-05 of £1.05m in order to compete.
While this is indicative of the size of the US legal market, Nicholas Woolf, director of recruitment consultants Norman Broadbent, said it was also driven by US firms’ high partner billable hours, an emphasis on partners collecting fees and their low numbers of non-fee-earners.
“US firms are a lot less bureaucratic and financially their partners are better off for it,” said Woolf. “But the spotlight is also much more on the individual and what each partner brings to the firm.”
This demand for high individual productivity has not prevented several headline-grabbing laterals between UK and US firms in recent weeks. Most notably, former Linklaters partners Graham White and Raymond McKeeve moved to Kirkland & Ellis for a combined package reported to be £5m.
In fact, Chicago-based Kirkland was the only out-of-town firm to break the New York firms’ dominance of the top 10 US list in terms of partner profits, ranking eighth with an average PEP of $2.12m (£1.2m).
New York-headquartered Skadden Arps Slate Meagher & Flom ranked first overall within the US based on gross revenue, reporting a revenue of $1.61bn (£920m). But Los Angeles-based Latham & Watkins made the most notable gain, replacing Baker & McKenzie in the number two spot. Latham grew gross global revenue by an impressive 17.1 per cent to $1.41bn (£806m).
Weil Gotshal & Manges and White & Case broke the $1bn (£571m) gross revenue mark for the first time to join Bakers, Jones Day, Latham, Sidley Austin and Skadden in the exclusive group. Weil and White & Case brought in revenues of $1.05bn (£600m) and $1.017bn (£581m) respectively.