The Global 100 Are in the Midst of a Growth Spurt

"In the U.S., the market was stunning," says Jomati Consultants principal Tony Williams, the former managing partner at Clifford Chance. "Even when you look at non-U.S. and non-China figures, it was mid-single digits overall. That's perfectly respectable."

Globally, most key practice areas were subject to brisk demand. The merger and acquisitions environment was active, albeit stronger in some markets than others. Disputes work, particularly international litigation and arbitration, kept practitioners busy. And an anticipated dip in investigations did not materialize, with sanctions, the Foreign Corrupt Practices Act and money laundering matters dotting the headlines.

Even the mild market correction at the end of 2018 had a muted impact.

"That did affect firms with a March or April year-end a bit more. But for U.S. firms, that's mostly done by the end of November," Williams says of how firms account for their results.

Other factors, beyond growing demand, also helped boost the numbers. Take mergers, for example. There were two significant mergers last year between U.S.-based firms and two significant trans-Atlantic mergers: Nelson Mullins Riley & Scarborough's combination with Broad and Cassel and Hunton & Williams' merger with Andrews Kurth Kenyon on the domestic side, and the creation of Womble Bond Dickinson and Bryan Cave Leighton Paisner internationally. Nelson Mullins and Womble Bond's moves pushed two smaller firms off this year's Global 100, and Hunton Andrews Kurth and Bryan Cave posted significantly higher revenues than their predecessors, which made the list last year. These changes helped account for a notable part of the overall revenue growth among this year's group.

Growth in China also played a role in making the 2018 numbers look particularly healthy.

Two large Chinese firms vaulted onto the Global 100 for the first time last year, and their presence, combined with significant China growth at Dentons, helped suppress the aggregate figure for revenue per lawyer, which actually declined 3.2% in 2017. That same metric rose by 2.7% in 2018. And it did so in part because of impressive growth at those two firms in particular. The Zhong Lun Law Firm, with 1,680 lawyers, almost doubled revenue per lawyer, from $264,000 to $508,000. Yingke, whose $82,000 RPL is much lower, still grew by nearly 37%. Along with China's AllBright Law Offices, a newcomer to the Global 100, those firms were in the top six in total revenue growth, with Yingke rising at an incredible 40%, AllBright growing 24.6% and Zhong Lun growing 18.7%.

Apart from AllBright and the aforementioned Womble and Nelson Mullins, Philadelphia-based Cozen O'Connor was the other brand new name on this year's list. Two other Philadelphia-based firms, Blank Rome and Drinker Biddle & Reath, slipped off the Global 100, as did Chicago-based Jenner & Block and Australia's Allens, which burst onto the scene to rank 81st last year before bouncing out after just one year.

That left just one Australian firm, Ashurst, in the Global 100. Firms with more of their lawyers in the U.S. than any other jurisdiction held 77 of the spots, followed by the U.K., with 12. China's five firms include its three fast growers, as well as international players Dentons and King & Wood Mallesons, which The American Lawyer categorizes as Chinese firms. Canada placed four firms on this year's list, and South Korea is represented by Kim & Chang.

The very top of the Global 100, ranked by revenue, demonstrated remarkable stability in the past year. The largest eight firms were unchanged, and the only movement in the top 10 was in the ninth position, where Linklaters returned after a year out, displacing Hogan Lovells, which fell to 11th.

The biggest growth wasn't all found in China. While the country was home to three of the 10 fastest-growing firms on the list, the U.S. was home to six, led by Nelson Mullins' 27.5% jump and Foley & Lardner's 21.9% growth. The indomitable Kirkland & Ellis and Covington & Burling both exceeded 18% revenue growth, and Lewis Brisbois Bisgaard & Smith climbed 17.2%.

Meanwhile, only two firms on the list, Morrison & Foerster and Baker Botts, showed declining revenue — both of which were already reported in this year's Am Law 100.

If there's any cause for concern out of this year's figures, it's the fact that revenue per lawyer grew at a lower rate than the other key indicators — average profits per equity partner grew 4.6% to reach more than $1.7 million, for example. Meanwhile, wage and bonus costs are surging in a number of markets, not just the United States.

"There's some concern going forward that much of the increase in revenue was in increased head count rather than massively increased productivity," Williams says. "With costs up, you wouldn't need to have much of a dip to have an impact on the bottom line."

With whispers of a dreaded recession growing louder in recent months, thanks to political upheaval and uncertainty in London and Hong Kong, along with the burgeoning trade war between the U.S. and China, that's a good reminder for law firm leaders across the world. Get the house in order while the good times continue. It'll be easier to think carefully about what needs to be done now, rather than when the place is on fire.

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Dan Packel covers law firms' global strategy and economics for ALM. Based in Philadelphia, he writes a weekly briefing for Law.com, "The Law Firm Disrupted," exploring change and innovation in the legal services market. Contact him at [email protected] and on Twitter at @packeld. This article also appeared in The American Lawyer, an ALM sibling of Accounting and Financial Planning for Law Firms.