New Data Shows BigLaw's True Profitability

Law360 (October 18, 2019, 5:12 PM EDT) -- The American Lawyer has been publishing the operating income and revenue of the largest U.S. law firms since the mid-'80s. Indeed for AmLaw 100 firms for calendar year 2018, operating income was $39.4 billion and revenue was $98.7 billion, leading to an operating margin ratio of about 40%. The 40% is typically considered the profitability of the AmLaw 100 and for BigLaw — but is that the true level?

We analyzed this point as part of a detailed exercise of valuing the AmLaw 100 law firms.[1] To ascertain the appropriate profit margin, two specific adjustments were needed for this 40%. First,...

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