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July 10, 2007

LEGALRITAVILLE POTPOURRI

Due to The American Lawyer’s methodology of ranking the U.S. law firms by gross revenues, LawBall’s meandering journey through Legalritaville became even more so as 2 of the divisions (as shown on the U.S. Census Bureau map)  - the Mountain and the East South Central – contained just 2 AmLaw 200 firms each.  For convenience sake – my writing and your reading obviously more than travel on the U.S. Interstates – I decided to tour both divisions together.  In this segment of the tour, the “South rose again,” as Birmingham-based Bradley Arant Rose & White ranked 1st when looking at both the key LawBall metric categories and all LawBall metric categories.

The 2 divisions include the 8 Mountain division states of Arizona, Colorado, Idaho, New Mexico, Montana, Utah, Nevada, and Wyoming and the 4 East South Central division states of Alabama, Kentucky, Mississippi, and Tennessee.  The 2 divisions include only 4 firms from the 2007 AmLaw 200 (2006 operating information) – 1 each based in Birmingham, Phoenix, Denver, and Memphis.

The AmLaw 200 firms in the Mountain and the East South Central divisions’ 12 states are:

  • Alabama (1):  Bradley Arant Rose & White.
  • Arizona (1):  Snell & Wilmer.
  • Colorado (1):  Holland & Hart.
  • Tennessee (1):  Baker, Donelson, Bearman, Caldwell & Berkowitz.

Once again, I’ve put my observations before the analytic tables and have placed the tables at the end of this posting.  The tables include one that contains the 2006 financial operating performance metrics for each of the firms in the Mountain and East South Central divisions and a second that shows the firms’ relative ranking (1 – 4) within each performance metric.  By clicking on the tables you can open a larger version.  I’ve also attached the tables as a *.pdf document in the right-hand margin under the category “Posting Attachments” as “Legal Industry Mountain East South Central Divisions Metrics 2006.”

Several observations:

  • When compared to the aggregate performance of the AmLaw 200, the aggregate relative financial operating performance of the 2 divisions did not exceed that of the aggregate AmLaw 200 in any single key metric category.
    • Both Bradley Arant Rose & White (53.48%) and Holland & Hart (42.91%), though, achieved margins that exceeded the aggregate AmLaw 200’s margin of 37.65%.
    • No firm in the division exceeded either the aggregate AmLaw 200’s asset turnover (revenue per lawyer) of $720,808 or the aggregate AmLaw 200’s return on equity (ROE or profit per partner) of $1,012,375.
    • Only Bradley Arant ($284,722) achieved a return on assets (ROA or profit per lawyer) that exceeded the $271,403 ROA achieved by the aggregate AmLaw 200.
    • Only Snell & Wilmer (5.7917) exceeded the 3.7302 financial leverage achieved by the aggregate AmLaw 200.
  • When summing up the Mountain and East South Central divisions’ firm rankings in each of the key metric categories, Birmingham’s Bradley Arant finished 1st with 9 points, ahead of 2nd ranked Snell & Wilmer (12 points) of Phoenix by 3 points.  Bradley Arant garnered 1st place rankings in asset turnover (“offense”), margin (“defense”), and ROA; a 4th place ranking in leverage (“special teams”); and a 2nd place ranking in ROE.  Snell & Wilmer scored a 4th place ranking in margin; a 2nd place ranking in asset turnover, which resulted in a 4th place ranking in ROA; a 1st in leverage; and, a 1st in ROE.  As was the case in the West North Central division, Bradley Arant’s offensive (asset turnover) and defensive (margin) performances led to a large enough advantage in ROA performance (remember, ROA = asset turnover x margin) that the aggregate 7-point ratings advantage in those 3 key metric categories was too much for Snell & Wilmer’s 3-point leverage (special teams) and 1-point ROE ratings advantages to overcome.  Holland & Hart finished with 14 points, and Baker, Donelson, Bearman, Caldwell & Berkowitz finished with 15 points.  (Those totals are not included in the tables for space reasons but are included for all of the firms in the *.pdf attachment).
  • When summing up the firms’ rankings in all of the metric categories, Bradley Arant again finished 1st (16 points).  Holland & Hart and Snell & Wilmer exchanged places, as Holland & Hart finished 2nd with 20 points and Snell & Wilmer finished 3rd with 21 points.  Baker, Donelson again finished 4th with 23 points.

Trophy_with_blue_ribbon The *.pdf attachment also has easy to view individual tables that reflect the firms’ individual rankings in margin, asset turnover, ROA, financial leverage, and ROE versus the consolidated Mountain and East South Central divisions in the aggregate and the AmLaw 200 in the aggregate.

Today’s posting is the last one for about a week, as I take some time off to attend a friend’s wedding and to enjoy some of Florida’s glorious beaches.   When I return, the Legalritaville tour will pick up with the Middle Atlantic division – the final division - that includes the states of New Jersey, New York, and Pennsylvania.  Then, instead of a movie that shows the tour’s highlights after its last stop in the Middle Atlantic, the highlights will be captured instead in a subsequent posting that includes a 2006 Financial Operations Ranking of the complete AmLaw 200.  A tantalizing thought, isn’t it?

Here’re the tables, while I go pack my SPF 70 sunblock and Tommy Bahama shirts:

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