The A-List

The legal world has been transformed in the last year, and so has our seventh annual A-List. Only four firms held on to the same ranking that they had in 2008. Four firms fell off the list, which means another quartet joined this elite group. One constant, however, is the continuing reign of Munger, Tolles & Olson, which remains our top firm for the second year in a row. The Los Angeles-based firm beat the second-best firm, Hughes Hubbard & Reed, by a comfortable margin of 34 points.

This list, which we launched in 2003, aims to measure and quantify the qualities that define an elite law firm, making an effort to look beyond profits. We examine four factors: revenue per lawyer, commitment to pro bono, diversity among lawyers, and associate training and satisfaction. Our formula gives more weight to the first two factors; we double a firm's scores for revenue per lawyer and pro bono, and then add scores for diversity and associate satisfaction.

This year's top 20 rankings might be seen as further evidence that these are hard times for New York-based firms. All the firms that fell off are based in Manhattan; those that replaced them are headquartered elsewhere.

Two firms made our A-List for the first time: Irell & Manella and Kirkland & Ellis. The two that reappear on the list--;Wilmer Cutler Pickering Hale and Dorr and Howrey--are veterans of past lists.

The New York firms that fell off are Patterson Belknap Webb & Tyler (ranked third last year), Shearman & Sterling (ranked thirteenth before), Cravath, Swaine & Moore, and Simpson Thacher & Bartlett (both ranked fourteenth in 2008). ( We also consider Shearman to be an international firm. While Shearman's New York office is its biggest, more than 40 percent of the firm's lawyers are abroad.)

At the top firm, Munger, Tolles, the qualities we measure are ingrained in their culture, as we detailed in last year's profile of the firm ['A Firm of Equals,' July 2008]. Munger isn't highly leveraged with associates, which tends to make for more satisfied young lawyers. The firm also maintains a strong cultural commitment to pro bono. 'We want to give back to the community, and we think it makes for better lawyers,' says Mark Helm, one of Munger's co-managing partners. He notes that about a year ago, management noticed a dip in pro bono activity and made a push to bring it back up. The California firm also cares about diversity. (Minorities make up 22 percent of its lawyers and 15 percent of its partners.) 'We have made a strategic decision to look more systematically at diversity,' says Helm. As an example, Munger runs a 'diversity-based' summer program for first-year law students that has led to associate jobs for two lawyers. The firm last year also hired a diversity consultant to suggest ways that it could improve in this area, and devoted a day of its annual retreat to diversity discussions. 'We didn't feel we were doing enough,' says co-managing partner Sandra Seville-Jones. 'We've done a good job, but there is so much more. We want to take it to another level.' One thing the consultant suggested was formalizing the firm's associate review process, to make sure that the same standards were applied to everyone.

We made one change to our methodology that significantly affected some firms' rankings. To measure diversity, in the past we looked only at the percentage of minority lawyers at each firm's domestic offices. This year we gave more weight to a firm's minority partners: We added the percentage of minority lawyers (partners and associates) to the percentage of minority partners, which had the effect of magnifying the impact of minority partners.

One firm that was particularly hurt by our change in diversity scoring is Patterson Belknap, which had been a perennial on our A-List. Its diversity score plummeted from 159 to 65. Although 12 percent of the firm's lawyers are minorities, it has just two minority partners. Cravath likewise suffered: 21 percent of its lawyers are minorities, but it has only two minority partners. Unlike Patterson Belknap, however, Cravath didn't miss the list because of this factor alone. Its pro bono score also dropped, from 181 to 142.

On the flip side, the two first-timers on this list, Irell and Kirkland, can thank the new formula, at least in part. Irell--with nine minority partners, constituting 12 percent of its partnership--;saw its diversity score jump from 123 to 171. 'Irell has been known for a very long time as a very tolerant firm, ' says managing partner Elliot Brown, who also notes that former managing partner Morgan Chu was the first Asian American to lead a major U.S. law firm.

Kirkland saw its diversity score climb from 140 to 161. The firm has 50 minority partners, who represent 10 percent of its partnership. '[Diversity] is something that is a high priority for our firm,' says Kirkland chairman Thomas Yannucci. 'It's the right thing to do, and good for the law firm. Diversity helps us with clients.' In recent years, Kirkland has also made an effort to raise the profile of pro bono work firmwide, installing Thomas Gottschalk (the former General Motors Corporation general counsel) as pro bono leader. Associate satisfaction at Kirkland also improved markedly. 'We try to communicate more with associates and let them know what's going on,' says Yannucci, who notes that he sends out regular announcements with news and updates.

We should note that the associate survey we use to compute satisfaction was sent out in the spring of 2008, before the waves of layoffs, deferments, and salary cuts hit The Am Law 200. After those surveys came back, four of the firms on our list--;Latham & Watkins, Morrison & Foerster, Milbank, Tweed, Hadley & McCloy, and Orrick, Herrington & Sutcliffe--gave pink slips to lots of lawyers.

But as it turns out, the attorneys that are left may be happier. The preliminary results of our 2009 midlevel associates survey (which will appear in our August issue) show that Milbank and Orrick actually did better than in their prelayoff days. It could be that the remaining lawyers are very grateful to have jobs, or that layoffs swept out a lot of malcontents, or a little of both. Latham and MoFo, however, have taken hits in associate satisfaction this year.

A FEW MORE OBSERVATIONS:

Because of the importance of RPL in the formula (it, along with pro bono work, is doubled), it's nearly impossible to make the A-List without ranking among the top 50 firms in that category. The lowest RPL score on the list belongs to Orrick at $855,000. As a result, this formula admittedly gives an advantage to firms concentrated in the biggest cities with the highest billing rates.

Still, good RPL is necessary, but not sufficient. Of the firms with the ten highest RPL scores, six didn't make the A-List: Wachtell, Lipton, Rosen & Katz (the RPL leader at $2.455 million) got shut out because of a pro bono score of zero. Two firms with RPL over $1 million, Boies, Schiller & Flexner and Quinn Emanuel Urquhart & Hedges, didn't participate in our asso ciates survey, and thus get zeroes for those categories. (Quinn didn't give us information about pro bono or diversity, either. When the firm did provide pro bono data in years past, it ranked very low.) Pro bono is just as important as RPL, but some of the pro bono leaders were left off the list. Top firm Jenner & Block was undermined by mediocre scores for diversity and associate satisfaction.

The most variable score from year to year appears to be associate satisfaction. Associates can be fickle, and a firm's ranking depends on which associates complete the survey--the happy ones, or the unhappy ones. The A-List firm that showed the biggest jump in its standings was Morrison & Foerster, rising from twentieth place in 2008 to the ninth spot this year, helped mostly by improved associate satisfaction. Likewise, Wilmer and Howrey jumped back onto our list with markedly improved associate scores: At Wilmer it soared from 77 to 132; Howrey's increased even more, from 53 to 156. To address concerns about feedback, Wilmer changed its mentoring system to expand the responsibilities of partners who were considered good mentors. Howrey similarly has identified partners willing to help associates develop their careers.

A couple of firms took a steep fall off the A-List. Simpson Thacher fell the most: dropping 23 places, to thirty-seventh place. The firm slipped in every category, but the drop was particularly acute in associate satisfaction, where its score fell from 102 to 75. Cravath, which shared fourteenth place with Simpson last year, also tumbled, coming in thirty-third. While it dropped in diversity and pro bono, it did improve in associate satisfaction.

Last year we predicted that three firms were poised to join the A-List in 2009, because of promising scores in many of the categories. We struck out swinging. Our picks were Fenwick & West (sixtieth place this year), Cooley Godward Kronish (thirty-third), and Schulte Roth & Zabel ( fifty-third). We'll pass on predicting 2010's newcomers.

We are willing to bet, however, that next year the deciding factor for many firms will be associate satisfaction. It's hard to keep associates happy and fulfilled in these strained times. Those that manage it the best are likely to hold on to their A-List spots-- along with reaping more tangible rewards.

2009: The A-List

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