A previous post counted how many times the seven highest-grossing law firms in the world had been referenced on this blog (See my post of Dec. 16, 2007.). Those firms are, in order, Clifford Chance, LinkLaters, Freshfields, Skadden Arps, DLA Piper, Allen & Overy, and Latham & Watkins.
Earning most of their fees from corporations, these magnificent seven firms grossed $13.3 billion dollars in 2007 and have enjoyed an average compound annual growth rate of nearly 13 percent every year since 2002! The average profit margin of these firms in 2007 is 41 percent.
Observation 1: The cost-cutting gyrations of law departments would seem to have had no discernible effect on these cash-register practices – the money just keeps pouring in.
Observation 2: A law department that thinks its million dollars or so of spending has some ability to dislodge a global firm from its accustomed billing practices will likely be disabused of that notion.
Observation 3: Conflicts of interest run rampant in global law firms, so they finesse them or contract to protect themselves.
Observation 4: At this ultra-high end, it’s more of a sellers’ market than a buyers’ market.
Observation 5: The collective knowledge of any of these huge firms about law-department cost control, if it could be tapped and harnessed, makes the general counsel at any single client look like an amateur.