Law Department Management Blog
The 2007 gross revenue of Latham & Watkins was just over $2 billion. As reported in the Wall St. J., Feb. 11, 2008 at B2, its profit per partner reached $2.27 million. Skadden Arps might also breach the $2 billion mark. At $2 billion in revenue, a law firm would not be on the Fortune 500 list, where company number 500 is a bit above $3 billion in revenue, but not that far off.
Consider that the majority of law departments in the United States have five or fewer lawyers (See my post of Feb. 9, 2008: 60% smaller than 5 lawyers.). That group of departments probably spends less than $3 million each year on outside counsel, since a typical level is about $600,000 per lawyer spent on outside counsel. Suppose at most one-third of that spend goes to the firm with the most fees, that firm – if it were a twice-billionaire firm – would get from that client .05 percent of its revenue (See my post of Dec. 4, 2006: nothing speaks louder than money.).
What miniscule client can push around a massive law firm that is so big and so profitable?