The American Lawyer’s annual Am Law 200 report provides a comprehensive and data-heavy analysis of the financial health of the largest 200 law firms in the United States. This article delves into the key findings of the 2024 report, highlighting the shifting dynamics within the legal industry.

The Rise of the Second Hundred

In 2024, the Second Hundred law firms (ranked 101-200 in the Am Law 200 rankings) have shown a remarkable resurgence. Despite losing the lead over the Am Law 100 in revenue and profit growth in the previous year, they have managed to outpace all other segments in demand growth so far in 2024.

Their litigation practices have gained significant strength, and clients have found them in a sort of “Goldilocks Zone” for reach, billing rates, and expertise. This refers to a balance where the firms are not too big to be expensive and not too small to lack the necessary expertise and reach.

The Largest Firms Still Seeing Big Gains

Despite the rise of the Second Hundred, the largest firms continue to see big gains, fueled by some of the strongest growth in billing rates on record. However, the center of gravity in Q1 of 2024 has moved more towards the middle, with demand up 3.2% in the Second Hundred segment, compared to 2.1% amongst midsize firms, 1.7% amongst Nos. 51-100, and down 0.8% amongst the largest 50 firms.

The Goldilocks Zone

Bill Josten, Strategic Content Manager for Thomson Reuters, noted that as billing rates reach new highs, Second Hundred firms are still generally cheaper than their larger counterparts. He pointed to a report from earlier this year that found clients were increasingly saying they valued things like scale from their firms. On multiple fronts, then, Second Hundred firms may be in a Goldilocks Zone.

Clients are “looking for a broad range of expertise,” Josten said, and Second Hundred firms “may have an advantage in depth of bench due to their scale and size. They’re typically bigger, with a broader pool of expertise, and global reach [versus midsize firms].”

The Focus on Litigation and Financial Metrics

Litigation demand was up 3.8% overall in Q1, and its growth is arguably the defining trait of law firms in regard to demand so far this year. Litigation demand was up 5.2% for Second Hundred firms relative to Q1 2023; 4.7% for midsize firms, 2.2% for the Second 50, and 0.2% for the top 50.

Second Hundred firms saw a collective 5.9% jump in revenue in 2023, hitting $25B in total, an increase of nearly $1.4B from 2022. For comparison, the Am Law 100 saw 6.8% revenue growth year over year, adding about $8.9B to their total haul from the previous year.

While the revenue growth rates between the Am Law 100 and Second Hundred weren’t that far off, revenue per lawyer (RPL) and profitability metrics were significantly different. The Second Hundred’s collective RPL ticked up 0.5% to $779,021 in 2023, while the Am Law 100 saw an RPL increase of 4.9%.

Top Performers in the Second Hundred

While the collective numbers provide an overall picture, it’s important to highlight the individual Second Hundred firms that had a banner year.

Revenue Leaders

In terms of revenue, Baker, Donelson, Bearman, Caldwell & Berkowitz leads the Second Hundred rankings, with a revenue of $461.13M, marking an 11.7% increase from 2022. The firm moved up three spots from No. 104 last year to take the top spot.

The remaining top five Second Hundred firms by revenue are:

• Shook Hardy & Bacon at No. 102 ($459.5M, 1.1% growth year over year)

• Wilson Elser Moskowitz Edelman & Dicker at No. 103 ($452.2M, 14.3% growth)

• Kramer Levin Naftalis & Frankel at No. 104 ($435.2M, 3.3% growth)

• Bradley Arant Boult Cummings at No. 105 ($424.7M, 8.3% growth)

Interestingly, Shook Hardy is the only firm in that top five that was a member of the Am Law 100 (No. 98) last year.

Revenue Growth Leaders

In terms of revenue growth, Robins Kaplan leads the pack. Thanks to a contingency fee from representing merchants in a large antitrust settlement, Robins Kaplan saw its revenue shoot up 75% year over year to hit $288.7M, moving from No. 176 to No. 131. This 45-place jump is the largest for any firm.

Other leaders in revenue growth among the firms that are not new to the Second Hundred include:

• Smith, Gambrell & Russell (18.5% growth, hitting $216M)

• Spencer Fane (16.5%, $266.8M)

• Adams and Reese (15.9%, $159.7M)

• Benesch (14.5%, $271.2M)

Several of these law firms have grown in headcount and revenue in recent years by merging with smaller firms.

Revenue Per Lawyer Leaders

Four firms in the Second Hundred cracked the top 20 firms overall (inclusive of the Am Law 100) in terms of RPL. Topping that list is Irell & Manella, which, even though it saw a 2.2% decline in RPL, was the highest-ranking Second Hundred firm at No. 3 ($2.23M).

The remaining three firms from the Second Hundred on that list are:

• Munger, Tolles & Olson (-0.6% to $1.72M)

• Choate Hall & Stewart (up 3.4% to $1.66M)

• Kobre Kim (up 1.7% to $1.66M)

Profits Per Equity Partner (PEP) Leaders

In terms of PEP, none of the Second Hundred cracked the top 20 overall. Ranking those in the Second Hundred only, Cahill Gordon & Reindel was on top, with $4.35M, hitting that mark with 7.8% growth year over year.

The top five in PEP growth in the Second Hundred are:

• Robins Kaplan (up 93.6% to $2.41M)

• Offit Kurman (up 43.6% to $682,000)

• Hinshaw & Culbertson (up 34.6% to $630,000)

• Procopio, Cory, Hargreaves & Savitch (up 24% to $801,000)

• Holland & Hart (up 22% to $882,000)

While several Second Hundred firms saw declines in PEP, these firms were notable outliers, demonstrating impressive growth.

The 2024 Am Law 200 report paints a picture of a legal industry in flux, with the Second Hundred firms making significant strides. While the largest firms continue to see substantial gains, the center of gravity appears to be shifting towards the middle. As the legal landscape continues to evolve, it will be interesting to see how these trends develop in the coming years.