Big Law Sportsbook 2024: Bet the House on These Things Happening
Welcome back to the Big Law Business column. I’m Roy Strom, and today we place the odds for what might happen in the year ahead. to receive this column in your Inbox on Thursday mornings. Programming note: Big Law Business will be off for two weeks. Happy New Year!
It’s been a long year, but the moment we’ve been waiting for has finally arrived: The Big Law Sportsbook’s return!
Welcome back, punters!
We have a big slate of Big Law odds to preview next year. For newcomers, here’s how it works. Most of the odds are in the form of an “over-under” bet. I set a prediction for a total amount, and you choose whether the outcome will come in “over” or “under” that total.
It’s straightforward. And from a prognosticator’s point of view, it’s the perfect crime: These are almost like predictions, except I retain plausible deniability.
I’m not getting anything right or wrong, you are.
If you played last year, make sure to scroll to the bottom to find out how you did.
Number of firms that will report $3 billion or more in revenue: 7.5
In 2022, only five firms reported $3 billion in revenue, AmLaw data show. So, this number for 2023, 7.5, might raise eyebrows. Will three more firms reach that once-unimaginable threshold?
To be honest, there’s a chance the number doubles to 10 firms. Most likely to reach that new plateau are Sidley Austin and White & Case, which reported $2.9 billion and $2.8 billion in revenue, respectively, in 2022. Modest growth would push them over the line.
Morgan Lewis & Bockius, Gibson Dunn & Crutcher and Ropes & Gray are also within striking distance. That group would require revenue growth of around 10% to hit the mark.
Those are high numbers, no doubt. But Ropes & Gray and Gibson Dunn have posted financial performances in recent years that would blow past those growth rates.
If you take the under, it’s a bet that none or only one of these three firms will hit that target. Feeling optimistic?
Highest profits per partner figure: $8.1 million
There must have been some frustration in the hallways at Wachtell, Lipton, Rosen & Katz last year when the firm lost its grip on the profits per equity partner title. Kirkland & Ellis vaulted into the top spot with $7.5 million, surpassing Wachtell’s $7.3 million. These two firms will duke it out for the top spot in 2023.
Will either firm hit $8.1 million? That would require Kirkland to grow PPP by 8%, while Wachtell would need an increase of slightly more than 11%.
Both firms have recently eclipsed those figures: Kirkland’s PPP rose 19% from 2020 to 2021 while Wachtell grew that figure 12%. Things leveled off in a flat market last year, but there’s a decent chance one of these firms will return to heady profit growth.
Bonus Bet: Kirkland profits per partner will eclipse Super Bowl ad prices: Yes -300, No +250
Earlier this year I highlighted how Kirkland’s partner profits have grown at a trajectory eerily similar to the price of a 30-second Super Bowl ad. Up until this year, Kirkland partner profits had eclipsed the cost of a Super Bowl ad only three times, but the lawyers appear to have gained the upper hand.
Super Bowl ads for 2024 will cost $7 million for a 30-second spot. Kirkland’s profits would have to decline by about 7% to hit $7 million.
It’s not out of the realm of possibility, but it is unlikely Kirkland’s profits will fall by that much. That’s why the odds indicate “Yes” is the heavy favorite.
To make $100, you’ll need to bet $300. But there’s good returns to be had on the other side: Bet “no,” and a $100 wager pays $250.
Partners in Paul Weiss’ London office by end of 2024: 24.5
In the span of just a few months, Paul Weiss’ London office has made more news than most firms produce in a year or two. After losing partners to Kirkland and Sidley Austin, the firm has gone on the offensive in a major way. Since September, Paul Weiss has hired at least 10 partners in London from rival firms and promoted another London lawyer to partner.
The hires have come so fast that the firm’s website appears unable to keep up. My unofficial tally lists 16 partners at Paul Weiss in London as of this writing.
The number here—24.5—indicates they’ll hire about eight or nine more. That could look shockingly low if Paul Weiss stays at its current pace: The firm added five partners just since Thanksgiving. But the sportsbook is tempered by historical trends, and few firms hire at that pace for a prolonged period.
Stroock bankruptcy filing likelihood: No -200, Yes +150
The downfall of Stroock & Stroock & Lavan was a major development in 2023. The next story will be whether the firm’s planned wind down can stay out of a bankruptcy court. The firm hired Gary Polkowitz, a senior managing director of global CEO advisory firm Teneo, to serve as liquidation manager. He’s responsible for overseeing the wind down of the firm, which he has said he intends to keep out of a formal bankruptcy filing.
Other firms that have attempted orderly wind downs have been unsuccessful. Sedgwick closed its doors in January 2018 and filed its Chapter 11 case in October that year. The sportsbook is willing to give Stroock’s effort the benefit of the doubt, but the odds here imply it’s far from certain the firm will avoid bankruptcy.
Legal fees paid by the PGA Tour: $28.5 million
Professional golf wasn’t always a Big Law customer. That changed in 2022, when the PGA Tour became locked in litigation with the Saudi Arabia-backed rival LIV Golf. The Tour paid $20 million in legal fees in its 2022 fiscal year, Sportico reported, citing the non-profit’s most recent tax filing. It was more legal fees than the PGA Tour had paid in the past 14 years.
Will the legal fee spigot turn off for the 2023 report? That’s unlikely. The filing will include legal fees from the case that began in August 2022.
The matter concluded in June, when the Tour and LIV Golf announced a truce and their intention to form a partnership. PGA Tour Commissioner Jay Monahan said the legal battle cost $50 million in fees, the Wall Street Journal reported.
That implies there is about $30 million more in legal fees that could show up on next year’s tax return. The number here, $28.5 million, doesn’t exactly take Monahan at his word. He had an incentive to exaggerate, arguing the legal fees were part of an existential threat to the Tour.
But there could also be transactional fees involved, as the tour works to hammer out a deal with LIV and other investors. Wachtell’s Ed Herlihy, a member of the PGA Tour board, said he was advising on the transaction. The sportsbook estimates the fee will be at a discount; Herlihy hasn’t been paid for his position on the Tour in the past.
Number of firms to report zero income partners in 2023: 14.5
Prestigious Big Law firms have been making room for “partners” that don’t share in firm profits. Last year, 17 of the top 100 firms had zero income partners, according to The American Lawyer.
This year, news reports have said Cravath added a non-equity tier and that Paul Weiss is considering the same. That would make for a publicly known estimate of 15. Have reporters missed the mark on at least one other firm leaving that ever-shrinking list? Let me know!
Bonus “prop” bet: There will be more non-equity partners than equity partners at the top 100 firms in 2023: +1500
This is highly unlikely to happen next year, and that’s why we’re offering such juicy returns: 15-to-1 odds.
Are you feeling brave?
Last year, the top 100 firms reported a total of 21,472 equity partners and 19,657 non-equity partners, according to AmLaw data. That’s a difference of 1,815.
From 2021 to 2022, the gap between equity and non-equity partners closed by more than 900. Can that pace double in a single year? It’s unlikely. But hitting the 15-to-1 price would be something to brag about. Regardless of whether it happens next year, the time appears to be coming where this threshold will be breached.
Kirkland new income partner class: 223.5 lawyers
Kirkland has named a record partnership class for six straight years. Last year, the total grew to an eye-watering 205 attorneys. The firm’s partnership class has grown more than 156% from 2013 to 2023. But the pace slowed last year, up just 6% from 2022.
The total here, 223.5, represents a middle ground of 9% year-over-year growth.
Last Year’s Results
Top 100 Firms Reporting Declines in Profits Per Partner: 51
Winner: Over
There were 58 firms from the 2022 AmLaw 100 that reported declines in PPP last year.
Largest Percentage Decline in Profits Per Partner: 38%
Winner: Under
Cadwalader Wickersham & Taft recorded the largest decline in PPP, 30%.
Highest Reported Hourly Billing Rate: $2,600
Winner: Under
I’m not omniscient, but the highest billing rate I saw reported was $2,500 an hour for an unnamed senior partner at Covington & Burling. Send any higher figures to me to settle a dispute with the Big Law Sportsbook.
Litigation Funding Commitments in the US in 2022: $3.1 billion
Winner: Over
Litigation funders in the US committed $3.2 billion to new cases in 2022, according to Westfleet Advisors.
Lateral Partner Hires by Top 50 Firms: 1,101
Winner: Under
There were 826 lateral partner hires by the AmLaw 50 through Dec. 18, according to Adam Oliver of FirmProspects. The number could grow by 15 or more, but it will not surpass 1,101.
First-Year Starting Salaries at End of 2023: $215,001
Winner: Over
Milbank in November raised first-year starting salaries to $225,000.
Worth Your Time
On WilmerHale: WilmerHale’s investigation into Sam Altman’s ouster at OpenAI has dual aims, Justin Wise reports. The mandate could help the company restore credibility and assist the law firm in moving beyond a congressional hearing debacle where it coached two university presidents.
On Litigation Insurance: Insurance brokers have spotted multiple ways to become a part of the legal finance ecosystem, Emily Siegel reports, by offering products that work in tandem with litigation funding and at times in lieu of it.
On Prison: A visiting Brazilian attorney who was employed by Gibson, Dunn & Crutcher in the US must spend two months in prison after pleading guilty to insider trading in shares of companies represented by the law firm, Bloomberg’s Sabrina Willmer reports.
That’s it for this week! Thanks for reading and please send me your thoughts, critiques, and tips.
