The law industry is a huge one, with an estimated $100 billion in annual gross revenue. Firms like Baker & Mackenzie, Skadden, Arps, Slate, Meagher & Flom LLP, and DLA Piper each hover around $2 billion in annual revenue, and the top 57 fi rms all have revenues exceeding $500 million annually.
So when The Wall Street Journal reported this week that a majority of the firms in the AmLaw 50 are misrepresenting their financial performance, according to sources referring to a report issued by the Citi Private Bank Law Firm Group, a Citi group unit, it is big numbers and big news.
More than 22 percent of the firms are overstating net income by 20 percent or more.
The article also reveals a spat between Citi and the American Lawyer magazine, publisher of the AmLaw 50, that reflects a complicated issue over financial performance reporting with some seriously competing interests, and more than a few skeletons in the closet for both the lender and the magazine.
Of course, we cannot forget the law firms that fundamentally are called out for lying about their financial performance.
We must take note that neither of the players here are disputing or denying that the numbers supplied by a majority of law firms are wildly out of the realm of truth. Citi is allegedly saying more than half of the top 50 law firms in America are materially misstating their financial performance, and that American Lawyer’s numbers are misleading. American Lawyer is claiming
it’s not their fault, they just report the numbers firms have told them. What they have not said is, “and we have known for a long time they were misleading.”
(Reprinted with permission of the Daily Journal Corp. (2011).)
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