The Global 100

The Global 100 appears to have found its groove. After the turbulence of the financial crisis, which in 2009 caused the world's 100 highest-grossing law firms to collectively suffer their first-ever fall in aggregate fee income, the group has now settled into a pattern of slow, steady growth. Aside from a slight spike in 2011, when total Global 100 revenue increased 6.8%, top-line growth has for the past five years hovered at around 4%.

This year is no different, with total Global 100 revenue rising 4.5% to $92.7 billion, a sum just shy of the gross domestic product of Ecuador, the world's 63rd-richest country, according to World Bank data. Although a far cry from the double-digit gains routinely achieved by firms before the financial crisis, at current growth rates, Global 100 revenues will still top $100 billion within the next two years.

And these aren't figures skewed by consolidation or the introduction of some new form of megafirm: Eighty-four of the top 100 firms increased their revenue last year. Nor was the growth simply a reflection of firms adding more lawyers. In fact, the total number of attorneys employed by Global 100 firms saw a rare contraction last year, dipping 0.8% to just below 112,000 ' the first drop in overall group head count since 2010 and only the fourth since The American Lawyer (an ALM affiliate of this newsletter) began compiling global financials in 1998. In total, 42 Global 100 firms reduced their head count last year.

The combination of rising revenues and a slight reduction in lawyer numbers led to an impressive growth in revenue per lawyer (RPL) across the Global 100. The group's average RPL had remained broadly flat at around $785,000 in each of the previous three years, but last year jumped 5.1% to a record $830,000 ' the highest-ever Global 100 RPL and the highest annual growth rate since the recession. Total profits, meanwhile, increased 6.9% to $35.6 billion, another record.

Change at the Top

The Global 100 has a new No. 1 this year: For the first time, Latham & Watkins is the world's largest law firm by revenue. Latham had previously ranked no higher than third, but overtook perennial Global 100 leaders Baker & McKenzie and DLA Piper after its gross revenue surged 14% to $2.6 billion, the second-highest top-line figure of any firm in Global 100 history. (Clifford Chance had the highest gross revenue, $2.661 billion, on our 2008 list.)

The battle for the top spot had become somewhat of a duel between Baker & McKenzie and DLA Piper, with the pair repeatedly trading places in recent years. In 2013, DLA Piper overtook Baker & McKenzie, only to see the positions reversed the following year. In this year's survey, the tables have turned once again, with Baker & McKenzie usurped by its global rival after suffering a 4.3% drop in gross revenue to $2.43 billion. DLA Piper's gross revenue remained flat last year, at $2.48 billion. Baker & McKenzie's profits fell even more steeply than revenue, with average profits per equity partner tumbling 11.6% to a three-year low of $1.14 million, the fourth-largest fall among the Global 100.

Baker & McKenzie global chair Eduardo Leite attributes the results to the “exceptional appreciation” of the U.S. dollar. (The firm collects revenues in more than 35 different currencies and then converts to U.S. dollars for reporting purposes.) He says that the firm's gross revenue rose 2.2% on a “like-for-like” basis and that total productivity of the firm's more than 11,000-person staff increased 5% to an all-time high during its most recent fiscal year.

Meanwhile, Baker & McKenzie's profits were additionally affected by what Leite called “major investments,” such as the launch of a new global services center in Belfast, Northern Ireland, and the opening of new offices in Brisbane, Australia and Jeddah, Saudi Arabia, pushing its network to 77 offices in 47 countries, as well as the development of an integrated global technology platform with German multinational software corporation SAP SE. The transfer of the firm's operations to this new finance system also resulted in a one-time delay in billing and collecting. Leite estimated that as much as three-quarters of a month's billing was delayed into the current fiscal year, the “vast majority” of which Baker & McKenzie anticipates will be realized in next year's accounts.

Baker & McKenzie is set to lose its title as the world's largest law firm by attorney head count, too. Dentons has already dramatically improved its Global 100 ranking in recent years, having completed several transformative combinations. In the 2013 survey, SNR Denton (itself the product of a 2010 merger between Sonnenschein Nath & Rosenthal and London's Denton Wilde Sapte) placed 48th, with gross revenue of $710.5 million. The following year, thanks to a three-way deal with Canadian firm Fraser Milner Casgrain and France's Salans, which was completed in 2013, Dentons jumped 30 places to 18, with gross revenue of $1.262 billion.

But its latest deal, with 3,700-lawyer Chinese firm Dacheng, is of an entirely different scale. (At press time, the tie-up was pending, with completion planned for the end of 2015.) With an estimated 6,000 lawyers, some 1,700 more than Baker & McKenzie, the combined practice will dwarf the rest of the Global 100 by head count. Adding Dacheng's estimated $365 million revenue to Dentons' $1.275 billion top line would have seen the new firm rank 14th on this year's gross revenue chart, between Sidley Austin and White & Case. (Dacheng isn't even the largest Chinese firm in the Global 100; Beijing firm Yingke has more than 4,100 lawyers, making it the world's second-largest law firm by that measure. There are now eight Chinese firms in the Global 100 head count rankings, collectively employing more than 13,000 lawyers.)

For Latham, its results were a fitting sendoff for longtime chair Robert Dell, who departed at the beginning of 2015 after 20 years in charge. In addition to its strong top-line growth, the firm's revenue per lawyer jumped 12% to nearly $1.25 million, and its profits per partner soared 16.5% to $2.9 million. Net income rose nearly 21% to $1.325 billion: Latham added $228 million in net income last year, which is more than the entire equity pool of K&L Gates, the world's 27th-largest law firm by revenue. Adjusting for inflation, Latham's total net income is now nearly seven times higher than it was when Dell started as chair in 1994.

William Voge, who succeeded Dell as global chair, describes 2014 as “a dream year” for Latham. Every practice group recorded growth in both hours and revenues, he says, with M&A, private equity, capital markets, intellectual property and securities and antitrust litigation “white hot.”

Five on Fire

Latham was one of just five firms to achieve annual growth of at least 10% in gross revenue, RPL and PPP last year, alongside Jenner & Block; Wachtell, Lipton, Rosen & Katz; and UK-based firms Pinsent Masons and Simmons & Simmons.

Wachtell was among the elite practices to benefit from a buoyant U.S. M&A market in 2014, with an influx of European buyers, record high deal valuations and a deal count nearing 2007's peak. The total value of U.S. M&A surged 56.6% to a record $1.4 trillion in 2014, nearing 2007's peak, according to data provider Mergermarket. Wachtell's average PPP remains the highest of any Global 100 firm, rising 15.7%, to $5.5 million. (Only one other Global 100 firm tops $4 million: Business litigation specialist Quinn Emanuel Urquhart & Sullivan posted a PPP of $4.93 million last year, an increase of 9.8 %.)

Pinsent Masons, a midmarket firm with particular strength in projects, energy and construction, was actually among the five worst performers by PPP in last year's survey, with a drop of 13.1%, to $630,000, but rebounded strongly after recent investments started to generate returns. The firm's 18.3% rise in revenue, to $597.5 million, was the second-highest increase among the Global 100, beaten only by Silicon Valley tech specialist Cooley, which boosted its top line by 19% to $802 million, and climbed eight places on the gross revenue charts, to No. 45. (Cooley also achieved double-digit growth in PPP, which rose 10.9% to $1.735 million.)

Pinsent Masons managing partner John Cleland says his firm is starting to “reap the rewards” of its 2012 merger with Scottish firm McGrigors, its opening of offices in Paris, Munich and Istanbul, and a series of lateral hires in Asia and the Middle East. Pinsent Masons earlier this year launched in Australia with the opening of two infrastructure-focused offices, in Melbourne and Sydney.

Jenner & Block had fallen out of the Global 100 last year, but returns to the rankings as the highest-placed new entrant, thanks to much improved financial results. The 400-lawyer firm's gross revenue increased 14.1%, to $408 million, enough for it to place 91st in this year's survey. Jenner's average PPP rose even more steeply, 30% to $1.615 million, while its revenue per lawyer increased 23% to $1.015 million. The gains were in part due to its work for General Motors Corp., investigating the automaker's ignition-switch problem, which was led by Jenner chairman Anton Valukas. GM is a long-standing client of the firm, which handled GM's Chapter 11 bankruptcy in 2009 and its initial public offering the following year. Jenner & Block recently opened an office in London to meet the increasing international needs of its clients.

Comings and Goings

Jenner is joined by four firms breaking into the Global 100 for the first time: Williams & Connolly, Taylor Wessing, Jackson Lewis and Pepper Hamilton. Philadelphia-based Pepper Hamilton's entry was driven by its IP and white-collar practices. The firm's IP department recorded a 24% increase in revenue last year, thanks in part to recoveries landed in 2014 for work started before last year, while its white-collar litigation and investigations team achieved growth of almost 18% after a series of high-profile representations of Johnson & Johnson, Astellas Pharma US, Inc. and Supreme Foodservice GmbH in separate federal investigations. Overall, the firm's revenue increased by almost 3%, to $384.5 million, while its RPL rose 2.7%, to $755,000.

European firm Taylor Wessing's performance, meanwhile, was largely fueled by its UK offices. The firm, which was formed in 2002 through the merger of London-based Taylor Joynson Garrett and German firm Wessing & Berenberg-Gossler, recorded an 8.2% increase in UK revenues, to '121 million ($199 million). But its results were diluted by its European practice, which comprises the majority of its lawyers, due to a weakening of the euro. The firm, which is best known for its strength in IP and technology, recently launched new offices in Palo Alto, CA, and New York, and entered into an exclusive association in Korea with Seoul-based DR & AJU.

Those five firms gain entry to the Global 100 at the expense of Cahill Gordon & Reindel; Drinker Biddle & Reath; Australian firms Allens and Clayton Utz; and Canada's McCarthy T'trault.

Although Allens, Clayton Utz, Drinker Biddle and McCarthy T'trault had been long-standing fixtures in the Global 100; Cahill's presence in the rankings was much more fleeting. The New York-based firm only joined the Global 100 last year, falling back out at the first opportunity despite a strong showing by its core leveraged-finance practice, which scored roles on five of the largest buyouts of 2014, including The Blackstone Group's $5.4 billion acquisition of Gates Global Inc. and Vista Equity Partners' $4.3 billion purchase of Tibco Software Inc. Cahill's gross revenue was down 1.7% in 2014, to $380 million, while its net income fell 4.5%, to $224 million.

Cahill executive committee chair William Hartnett says the firm is “never satisfied” when it fails to meet its expectations for growth, adding that there were “no excuses” for the firm's results in 2014. “Just a matter of we did not turn enough [work-in-progress] into revenue,” he says. The firm is still a powerhouse, though: Even though its PPP fell 4.4% in 2014, Cahill's partners are still taking home, on average, more than $3.6 million, which would have put it in fifth place on the Global 100's profits per partner rankings.

Conclusion

This article also appeared in The American Lawyer, ALM's premier publication and a sibling of this newsletter. For additional features and charts, see The American Lawyer's full report on the 2015 Global 100 at http://bit.ly/1LiV5op.

The Global 100 appears to have found its groove. After the turbulence of the financial crisis, which in 2009 caused the world's 100 highest-grossing law firms to collectively suffer their first-ever fall in aggregate fee income, the group has now settled into a pattern of slow, steady growth. Aside from a slight spike in 2011, when total Global 100 revenue increased 6.8%, top-line growth has for the past five years hovered at around 4%.

This year is no different, with total Global 100 revenue rising 4.5% to $92.7 billion, a sum just shy of the gross domestic product of Ecuador, the world's 63rd-richest country, according to World Bank data. Although a far cry from the double-digit gains routinely achieved by firms before the financial crisis, at current growth rates, Global 100 revenues will still top $100 billion within the next two years.

And these aren't figures skewed by consolidation or the introduction of some new form of megafirm: Eighty-four of the top 100 firms increased their revenue last year. Nor was the growth simply a reflection of firms adding more lawyers. In fact, the total number of attorneys employed by Global 100 firms saw a rare contraction last year, dipping 0.8% to just below 112,000 ' the first drop in overall group head count since 2010 and only the fourth since The American Lawyer (an ALM affiliate of this newsletter) began compiling global financials in 1998. In total, 42 Global 100 firms reduced their head count last year.

The combination of rising revenues and a slight reduction in lawyer numbers led to an impressive growth in revenue per lawyer (RPL) across the Global 100. The group's average RPL had remained broadly flat at around $785,000 in each of the previous three years, but last year jumped 5.1% to a record $830,000 ' the highest-ever Global 100 RPL and the highest annual growth rate since the recession. Total profits, meanwhile, increased 6.9% to $35.6 billion, another record.

Change at the Top

The Global 100 has a new No. 1 this year: For the first time, Latham & Watkins is the world's largest law firm by revenue. Latham had previously ranked no higher than third, but overtook perennial Global 100 leaders Baker & McKenzie and DLA Piper after its gross revenue surged 14% to $2.6 billion, the second-highest top-line figure of any firm in Global 100 history. (Clifford Chance had the highest gross revenue, $2.661 billion, on our 2008 list.)

The battle for the top spot had become somewhat of a duel between Baker & McKenzie and DLA Piper, with the pair repeatedly trading places in recent years. In 2013, DLA Piper overtook Baker & McKenzie, only to see the positions reversed the following year. In this year's survey, the tables have turned once again, with Baker & McKenzie usurped by its global rival after suffering a 4.3% drop in gross revenue to $2.43 billion. DLA Piper's gross revenue remained flat last year, at $2.48 billion. Baker & McKenzie's profits fell even more steeply than revenue, with average profits per equity partner tumbling 11.6% to a three-year low of $1.14 million, the fourth-largest fall among the Global 100.

Baker & McKenzie global chair Eduardo Leite attributes the results to the “exceptional appreciation” of the U.S. dollar. (The firm collects revenues in more than 35 different currencies and then converts to U.S. dollars for reporting purposes.) He says that the firm's gross revenue rose 2.2% on a “like-for-like” basis and that total productivity of the firm's more than 11,000-person staff increased 5% to an all-time high during its most recent fiscal year.

Meanwhile, Baker & McKenzie's profits were additionally affected by what Leite called “major investments,” such as the launch of a new global services center in Belfast, Northern Ireland, and the opening of new offices in Brisbane, Australia and Jeddah, Saudi Arabia, pushing its network to 77 offices in 47 countries, as well as the development of an integrated global technology platform with German multinational software corporation SAP SE. The transfer of the firm's operations to this new finance system also resulted in a one-time delay in billing and collecting. Leite estimated that as much as three-quarters of a month's billing was delayed into the current fiscal year, the “vast majority” of which Baker & McKenzie anticipates will be realized in next year's accounts.

Baker & McKenzie is set to lose its title as the world's largest law firm by attorney head count, too. Dentons has already dramatically improved its Global 100 ranking in recent years, having completed several transformative combinations. In the 2013 survey, SNR Denton (itself the product of a 2010 merger between Sonnenschein Nath & Rosenthal and London's Denton Wilde Sapte) placed 48th, with gross revenue of $710.5 million. The following year, thanks to a three-way deal with Canadian firm Fraser Milner Casgrain and France's Salans, which was completed in 2013, Dentons jumped 30 places to 18, with gross revenue of $1.262 billion.

But its latest deal, with 3,700-lawyer Chinese firm Dacheng, is of an entirely different scale. (At press time, the tie-up was pending, with completion planned for the end of 2015.) With an estimated 6,000 lawyers, some 1,700 more than Baker & McKenzie, the combined practice will dwarf the rest of the Global 100 by head count. Adding Dacheng's estimated $365 million revenue to Dentons' $1.275 billion top line would have seen the new firm rank 14th on this year's gross revenue chart, between Sidley Austin and White & Case. (Dacheng isn't even the largest Chinese firm in the Global 100; Beijing firm Yingke has more than 4,100 lawyers, making it the world's second-largest law firm by that measure. There are now eight Chinese firms in the Global 100 head count rankings, collectively employing more than 13,000 lawyers.)

For Latham, its results were a fitting sendoff for longtime chair Robert Dell, who departed at the beginning of 2015 after 20 years in charge. In addition to its strong top-line growth, the firm's revenue per lawyer jumped 12% to nearly $1.25 million, and its profits per partner soared 16.5% to $2.9 million. Net income rose nearly 21% to $1.325 billion: Latham added $228 million in net income last year, which is more than the entire equity pool of K&L Gates, the world's 27th-largest law firm by revenue. Adjusting for inflation, Latham's total net income is now nearly seven times higher than it was when Dell started as chair in 1994.

William Voge, who succeeded Dell as global chair, describes 2014 as “a dream year” for Latham. Every practice group recorded growth in both hours and revenues, he says, with M&A, private equity, capital markets, intellectual property and securities and antitrust litigation “white hot.”

Five on Fire

Latham was one of just five firms to achieve annual growth of at least 10% in gross revenue, RPL and PPP last year, alongside Jenner & Block; Wachtell, Lipton, Rosen & Katz; and UK-based firms Pinsent Masons and Simmons & Simmons.

Wachtell was among the elite practices to benefit from a buoyant U.S. M&A market in 2014, with an influx of European buyers, record high deal valuations and a deal count nearing 2007's peak. The total value of U.S. M&A surged 56.6% to a record $1.4 trillion in 2014, nearing 2007's peak, according to data provider Mergermarket. Wachtell's average PPP remains the highest of any Global 100 firm, rising 15.7%, to $5.5 million. (Only one other Global 100 firm tops $4 million: Business litigation specialist Quinn Emanuel Urquhart & Sullivan posted a PPP of $4.93 million last year, an increase of 9.8 %.)

Pinsent Masons, a midmarket firm with particular strength in projects, energy and construction, was actually among the five worst performers by PPP in last year's survey, with a drop of 13.1%, to $630,000, but rebounded strongly after recent investments started to generate returns. The firm's 18.3% rise in revenue, to $597.5 million, was the second-highest increase among the Global 100, beaten only by Silicon Valley tech specialist Cooley, which boosted its top line by 19% to $802 million, and climbed eight places on the gross revenue charts, to No. 45. (Cooley also achieved double-digit growth in PPP, which rose 10.9% to $1.735 million.)

Pinsent Masons managing partner John Cleland says his firm is starting to “reap the rewards” of its 2012 merger with Scottish firm McGrigors, its opening of offices in Paris, Munich and Istanbul, and a series of lateral hires in Asia and the Middle East. Pinsent Masons earlier this year launched in Australia with the opening of two infrastructure-focused offices, in Melbourne and Sydney.

Jenner & Block had fallen out of the Global 100 last year, but returns to the rankings as the highest-placed new entrant, thanks to much improved financial results. The 400-lawyer firm's gross revenue increased 14.1%, to $408 million, enough for it to place 91st in this year's survey. Jenner's average PPP rose even more steeply, 30% to $1.615 million, while its revenue per lawyer increased 23% to $1.015 million. The gains were in part due to its work for General Motors Corp., investigating the automaker's ignition-switch problem, which was led by Jenner chairman Anton Valukas. GM is a long-standing client of the firm, which handled GM's Chapter 11 bankruptcy in 2009 and its initial public offering the following year. Jenner & Block recently opened an office in London to meet the increasing international needs of its clients.

Comings and Goings

Jenner is joined by four firms breaking into the Global 100 for the first time: Williams & Connolly, Taylor Wessing, Jackson Lewis and Pepper Hamilton. Philadelphia-based Pepper Hamilton's entry was driven by its IP and white-collar practices. The firm's IP department recorded a 24% increase in revenue last year, thanks in part to recoveries landed in 2014 for work started before last year, while its white-collar litigation and investigations team achieved growth of almost 18% after a series of high-profile representations of Johnson & Johnson, Astellas Pharma US, Inc. and Supreme Foodservice GmbH in separate federal investigations. Overall, the firm's revenue increased by almost 3%, to $384.5 million, while its RPL rose 2.7%, to $755,000.

European firm Taylor Wessing's performance, meanwhile, was largely fueled by its UK offices. The firm, which was formed in 2002 through the merger of London-based Taylor Joynson Garrett and German firm Wessing & Berenberg-Gossler, recorded an 8.2% increase in UK revenues, to '121 million ($199 million). But its results were diluted by its European practice, which comprises the majority of its lawyers, due to a weakening of the euro. The firm, which is best known for its strength in IP and technology, recently launched new offices in Palo Alto, CA, and New York, and entered into an exclusive association in Korea with Seoul-based DR & AJU.

Those five firms gain entry to the Global 100 at the expense of Cahill Gordon & Reindel; Drinker Biddle & Reath; Australian firms Allens and Clayton Utz; and Canada's McCarthy T'trault.

Although Allens, Clayton Utz, Drinker Biddle and McCarthy T'trault had been long-standing fixtures in the Global 100; Cahill's presence in the rankings was much more fleeting. The New York-based firm only joined the Global 100 last year, falling back out at the first opportunity despite a strong showing by its core leveraged-finance practice, which scored roles on five of the largest buyouts of 2014, including The Blackstone Group's $5.4 billion acquisition of Gates Global Inc. and Vista Equity Partners' $4.3 billion purchase of Tibco Software Inc. Cahill's gross revenue was down 1.7% in 2014, to $380 million, while its net income fell 4.5%, to $224 million.

Cahill executive committee chair William Hartnett says the firm is “never satisfied” when it fails to meet its expectations for growth, adding that there were “no excuses” for the firm's results in 2014. “Just a matter of we did not turn enough [work-in-progress] into revenue,” he says. The firm is still a powerhouse, though: Even though its PPP fell 4.4% in 2014, Cahill's partners are still taking home, on average, more than $3.6 million, which would have put it in fifth place on the Global 100's profits per partner rankings.

Conclusion

This article also appeared in The American Lawyer, ALM's premier publication and a sibling of this newsletter. For additional features and charts, see The American Lawyer's full report on the 2015 Global 100 at http://bit.ly/1LiV5op.