The Law Firm of 2025: Richer, Larger, More Global

The projections make it clear that U.S. corporate law firms of the future will be wealthier, larger, and more international than they were in the past…. Six firms … will gross more than $10 billion: Kirkland & Ellis; Mayer Brown; Baker & McKenzie; Jones Day; Skadden; and Latham. By 2025 Latham, at $23 billion, will have dramatically outpaced Skadden, its nearest competitor at $15.9 billion.

The PPP [profits-per-partner] projections for 2025 have Wachtell partners bringing home almost $15.7 million (before adjusting for inflation). Cravath, Swaine & Moore’s PPP will be $9.6 million; Skadden’s $6 million; and Baker & McKenzie’s $2.5 million. The highest 2025 projected profits per partner are at Cadwalader, Wickersham & Taft, where the model suggests partners will net nearly $20 million apiece in 2025….

White & Case is projected to be the biggest of the 47 firms in the analysis, with 13,824 lawyers; Baker & McKenzie will follow closely behind with 13,512. More than three-quarters of the lawyers at both firms will be based outside the United States. Jones Day will have 11,623 lawyers and Latham 11,066, of whom almost 40 percent will be international….

And as the roster of firms atop the PPP and RPL projections indicates, the gap between firms will grow ever larger. The rich will continue to get richer and the poor relatively poorer…. Big firms will become bigger relative to smaller firms; and firms with a strong international presence will stand in greater contrast to those firms that have a minimal or no international presence.

These projections present numerous challenges and opportunities for firms in The Am Law 200. For firms to maintain the growth rates they established in the last 20 years-the rates that resulted in these optimistic predictions-they will have to grapple with a number of critical questions:

Will the market for high-end corporate legal services continue to expand? The projections assume that demand will continue to grow at historic rates. For that to happen, however, law firms will have to penetrate or create new markets, whether in other countries or new practice areas. …

How will the firms of the future manage the complexities of their ever-increasing size and geographical scope? The firm of the past had a few hundred lawyers. Several firms today have more than 1,000-but in 20 years, a 1,000-lawyer firm will be midsize. And firms will be much more geographically dispersed. Managing complexity will require that firm leaders continually develop and market their firm’s expertise, while at the same time nurturing talent.

What will be the organizational identity of firms with an increasing percentage of lawyers outside the U.S.? A number of firms will cross the threshold and become global operations, no longer just U.S. firms with an international presence. Will such firms suffer identity crises? Will they be able to create a global identity that unites their partners worldwide?

Will firms that have avoided international expansion be able to continue to grow? Projections suggest that in 2025 Wachtell will still be wholly domestic and Cravath will have only about 6 percent of its lawyers outside the U.S. If the market forces them to move to a more global model, they may suffer significant financial and cultural costs, especially if they have to move quickly. Domestic firms with less marketable reputations may be hurt even more if they have to play global catch-up….