Are BigLaw Firms Inflating Partner Profits? Citigroup Unit Reportedly Finds Fudging
Are law firm rankings suspect because of fudging on figures?
More than half of the nation’s top 50 law firms could be overstating profits per partner to the American Lawyer magazine, the Wall Street Journal (sub. req.) reports.
An analysis by Citi Private Bank Law Firm Group reportedly found that 22 percent of the top 50 firms overstated profits per partner by more than 20 percent in 2010, the newspaper says. Another 16 percent inflated partner profits by 10 to 20 percent, and 15 percent boosted partner profits by 5 percent to 10 percent.
Citigroup disclosed its figures in a briefing this month attended by law firm leaders, but it did not confirm the findings when contacted by the newspaper. The Wall Street Journal relied on a source briefed on the findings for its report.
Part of the problem may be differences in definitions of equity partners, according to Robin Sparkman, editor in chief of the American Lawyer. “As best we can tell, the majority of our numbers about law firm profits—then and now—are identical to, or within 10 percent, of Citi’s,” she told the Wall Street Journal. Calculations of overall changes in year-to-year revenue have been very close, she added.
This spring, the American Lawyer reported that profits per partner are on the upswing for the nation’s top 100 law firms. The increase was about 8.4 percent. The magazine says it stands behind its rankings.