BigLaw Financial Outlook

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BigLaw Financial Outlook

Postby TLSModBot » Fri Jan 29, 2016 10:18 am

Alternate thread title: BAHAHAHAHAHAHAHHA

Reading:
Altman-Weil 2015 Partners Survey
Georgetown's 2016 Report on the State of the Legal Market
Citi/Hildebrandt 2016 Client Advisory

Just a thread for posting how we're all doomed.

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Re: BigLaw Financial Outlook

Postby TLSModBot » Fri Jan 29, 2016 10:18 am

"I get it, man, it's all these other idiots who are the problem!"

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BigZuck

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Re: BigLaw Financial Outlook

Postby BigZuck » Fri Jan 29, 2016 10:20 am

tl;dr

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Re: BigLaw Financial Outlook

Postby BigZuck » Fri Jan 29, 2016 10:20 am

Also, tag

And bump

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Re: BigLaw Financial Outlook

Postby TLSModBot » Fri Jan 29, 2016 10:23 am

EVERYTHING IS OK NO NEED TO WORRY HERE AT ALL

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Danger Zone

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Re: BigLaw Financial Outlook

Postby Danger Zone » Fri Jan 29, 2016 10:25 am

BigZuck wrote:Also, tag

And bump
Last edited by Danger Zone on Sat Jan 27, 2018 3:34 pm, edited 1 time in total.

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Re: BigLaw Financial Outlook

Postby TLSModBot » Fri Jan 29, 2016 10:26 am

Also FYI even though most AmLaw 200 firms have seen overall gross revenue growth since before the recession (not even counting those who achieved "gains" through mergers because lol), about half have had overall shrinking profit margins.

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Re: BigLaw Financial Outlook

Postby TLSModBot » Fri Jan 29, 2016 11:21 am

Who wants to go in with me on a law firm dead pool? I claim either Dickstein Shapiro or Cadwalader.

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landshoes

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Re: BigLaw Financial Outlook

Postby landshoes » Fri Jan 29, 2016 11:22 am

those are the ones you want? K&L Gates, man.

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xael

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Re: BigLaw Financial Outlook

Postby xael » Fri Jan 29, 2016 11:44 am

I call WSGR for the "massive layoff" category in the pool

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Re: BigLaw Financial Outlook

Postby smaug » Fri Jan 29, 2016 11:46 am

Capitol_Idea wrote:Who wants to go in with me on a law firm dead pool? I claim either Dickstein Shapiro or Cadwalader.

As much as the idea of a law firm dead pool entertains me, it's probably in awful taste. Also, hard to talk about some things publicly.

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Re: BigLaw Financial Outlook

Postby Danger Zone » Fri Jan 29, 2016 12:04 pm

smaug wrote:
Capitol_Idea wrote:Who wants to go in with me on a law firm dead pool? I claim either Dickstein Shapiro or Cadwalader.

As much as the idea of a law firm dead pool entertains me, it's probably in awful taste. Also, hard to talk about some things publicly.

Yeah, I had posited a guess, but retracted because of this.
Last edited by Danger Zone on Sat Jan 27, 2018 3:34 pm, edited 1 time in total.

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Re: BigLaw Financial Outlook

Postby TLSModBot » Fri Jan 29, 2016 12:49 pm

It is in poor taste I suppose. But as a public service announcement for those not yet in firms (or law school), general info about law firm financials will be useful - I'll just stick to that.

Also good lord do firms play with their numbers to sugar coat things.

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Re: BigLaw Financial Outlook

Postby Aeon » Fri Jan 29, 2016 12:55 pm

The fragility of law firms is concerning. Because they are partnerships with pass-through taxation, they don't retain much more cash than they need to pay their expenses: partners hate paying taxes on money they don't actually receive. When the cashflow dries up, the partners either have to pay those expenses out of pocket or scale back. And partners really hate having to pay out of pocket...


Capitol_Idea wrote:But as a public service announcement for those not yet in firms (or law school), general info about law firm financials will be useful - I'll just stick to that.

Also good lord do firms play with their numbers to sugar coat things.


This. Law firm financials are incredibly opaque, and they don't share them in any significant way with non-partners. Which leaves us with PPP and work volume as proxies, I guess.

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Re: BigLaw Financial Outlook

Postby TLSModBot » Fri Jan 29, 2016 1:03 pm

Aeon wrote:The fragility of law firms is concerning. Because they are partnerships with pass-through taxation, they don't retain much more cash than they need to pay their expenses: partners hate paying taxes on money they don't actually receive. When the cashflow dries up, the partners either have to pay those expenses out of pocket or scale back. And partners really hate having to pay out of pocket...


Capitol_Idea wrote:But as a public service announcement for those not yet in firms (or law school), general info about law firm financials will be useful - I'll just stick to that.

Also good lord do firms play with their numbers to sugar coat things.


This. Law firm financials are incredibly opaque, and they don't share them in any significant way with non-partners. Which leaves us with PPP and work volume as proxies, I guess.

We get net operating income, gross revenue, etc. through AmLaw which helps but isn't amazing. PPP is less than useless because it can be (and is) rigged by firms.

Even if we had audited financial statements in detail, some things like future work volume from existing clients and collection rates on receivables make real prediction still difficult.

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Re: BigLaw Financial Outlook

Postby TLSModBot » Fri Jan 29, 2016 1:05 pm

Anyone have strong opinions one way or the other on using Revenue Per Lawyer as a gauge for comparing law firms relative financial strength (outside of the fact that it's merely revenue and not profits - Profits per lawyer would be great but AmLaw only just started tracking this and I'm too lazy right now to calculate manually for every year)?

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Re: BigLaw Financial Outlook

Postby smaug » Fri Jan 29, 2016 1:05 pm

You should make your own profitability index and publish the data. Law Firm Transparency.

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Re: BigLaw Financial Outlook

Postby Aeon » Fri Jan 29, 2016 1:15 pm

Looks like AmLaw has expanded the list of metrics they publish. It's been a while since I've looked at their data.

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Re: BigLaw Financial Outlook

Postby TLSModBot » Fri Jan 29, 2016 1:20 pm

smaug wrote:You should make your own profitability index and publish the data. Law Firm Transparency.
I don't know enough about finance in general or why AmLaw structured theirs the way they do but there has to be a better way of figuring out profitability that excludes PPP.

The American Lawyer wrote:PROFITABILITY INDEX includes leverage, which is the ratio of all lawyers (minus equity partners) to equity partners, and profit margin, which is the ratio of net operating income to gross revenue multiplied by 100. It can also be obtained by dividing profits per partner by revenue per lawyer.

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Re: BigLaw Financial Outlook

Postby TLSModBot » Fri Jan 29, 2016 1:22 pm

Unfortunately like the USNWP law school rankings, AmLaw's PPP tracking has gained a de facto importance in everything because partners rely on it for lateraling purposes (and, I suspect, internal financial decision-making). And the sheer inertia of it all makes ignoring it worse than including it, I think.

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Re: BigLaw Financial Outlook

Postby TLSModBot » Fri Jan 29, 2016 2:10 pm

From the Citi report. Future demand is getting even harder to predict from past volume. This could be due either to law firms getting better at stealing each other's lunch or to shifting/decreasing net client demand. Probably a mix of both trending heavier on the latter.

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Re: BigLaw Financial Outlook

Postby MCFC » Thu Feb 11, 2016 8:35 pm

Huh.
Capitol_Idea wrote:Who wants to go in with me on a law firm dead pool? I claim either Dickstein Shapiro or Cadwalader.

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Re: BigLaw Financial Outlook

Postby TLSModBot » Thu Feb 11, 2016 8:37 pm

Yeah that was in slightly bad taste.

But seriously I hope Dickstein gets their merger cuz otherwise it's not looking great.

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Re: BigLaw Financial Outlook

Postby MCFC » Thu Feb 11, 2016 8:38 pm

Capitol_Idea wrote:Yeah that was in slightly bad taste.

But seriously I hope Dickstein gets their merger cuz otherwise it's not looking great.

http://www.philly.com/philly/business/2 ... apiro.html

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Re: BigLaw Financial Outlook

Postby Desert Fox » Thu Feb 11, 2016 8:48 pm

smaug wrote:
Capitol_Idea wrote:Who wants to go in with me on a law firm dead pool? I claim either Dickstein Shapiro or Cadwalader.

As much as the idea of a law firm dead pool entertains me, it's probably in awful taste. Also, hard to talk about some things publicly.


Poor taste? A bunch of rich ass white UMC and rich folks might have to find another job ohes noes. Lets do this.
Last edited by Desert Fox on Sat Jan 27, 2018 3:07 am, edited 1 time in total.



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