By S. Richard Gard Jr.
Publishers talk about the plop factor, produced when you drop a magazine from shoulder height and judge its heft from the sound you hear as it hits the floor. This year’s Missouri Lawyers Weekly MOney 20 magazine takes its heft from the “plop, plop, fizz, fizz” factor.
Our fourth annual financial analysis of Missouri law firms examines the morning after – the achy head and sour stomach that set in as deal flow ebbs, protracted litigation retracts, layoffs expand and compensation contracts.
As we close the books on 2008, here’s the question: Do these numbers tell that story?
Well, no and yes.
No, to the extent the legal industry is a lagging indicator. On transactional matters, clients tend to bring in the lawyers farther on down the timeline. On the litigation side, work can stay in the pipeline for years.
So it is, by 2008 numbers, that our MOney 20 firms look little worse for the wear. Combined annual gross revenues for Missouri’s 20 top-grossing firms grew 7.6 percent to $2.26 billion. Combined annual profits grew 7.4 percent to $962 million.
Study the data more closely, however, and you can discern the dawn of the downturn. Missouri firms didn’t join the layoffs trend, at least not in earnest, until the second half of 2008. Yet, by the year’s end, MOney 20 firms had already shed a net 80 Missouri lawyers since 2007, 2.4 percent of their in-state professional workforce, based on full-time equivalents.
Last year’s rankings were all about double- versus single-digit revenue growth. This year any digit would do, even an egg-shaped one. Six MOney 20 firms grew revenues by no more than 2 percent. One grew not at all. Three saw revenues shrink.
Another sign of the sobering economic realities may be the growing regard for the MOney 20 project itself. Of all our undertakings, few are more painstaking – or more controversial. Over the years, many small firm and solo practitioners have told us how much they resent such intense focus on big-firm profits. Trust us, a lot of big-firm managing partners second that emotion.
Yet, surprisingly, in a just-completed reader survey, in which 81 percent of respondents work well outside big firm circles, the favorables for MOney 20 outnumbered the unfavorables by almost two-to-one.
Sure, the legal industry is a lagging indicator of the general economy, but it becomes increasingly apparent that the financial challenges facing Missouri’s best-heeled firms hold portents for all practitioners and all of us who make up the Missouri legal economy.
If that’s the case, relief may be in sight, even if, for now, it’s in the form of two bicarbonate tablets plopped from shoulder height into an awaiting glass of water.
Click here to order the 2008 MOney 20 issue
2008 MOney 20 articles: