Summary: Major US law firms have continued to see increasing profits per partner over the last several years, even in a bad economy. Learn why in this article.
How does this happen in a struggling economy? One reason is that billing rates have continued to increase at a healthy pace, while the demand for litigation, bankruptcy transactions, and other practices has stayed strong. Firms have also benefited from their own tough economic management. In fact, it is often easier to make and implement tough decisions when people are concerned about the economy and the success of their firm than in the good times.
Thirty years ago the top U.S. firms earned between $300,000 and $400,000 a year per partner. After adjusting for inflation, that is now over $800,000.
But in fact, many firms now earn more than $1 million per partner. Besides rate increases, this kind of economic growth far exceeding the pace of inflation was brought on by productivity increases, leverage, and expense management, among other things.