More than half of the top 50 U.S. law firms may have overstated their profits per partner, the Wall Street Journal reported, citing an industry analysis prepared by a unit of Citigroup Inc.
About 22 percent of the top firms overstated the measure by more than 20 percent last year, the newspaper reported today, citing an unidentified person briefed on the analysis by Citi Private Bank Law Firm Group. Citigroup disclosed the findings earlier this month in a meeting with law firm managing partners and chairmen in Armonk, New York, the paper said.
American Lawyer magazine ranks profits per partner annually in May. The measure, which divides net operating income by the number of equity partners at a firm, is the most commonly used gauge to determine the health of the $100 billion global corporate law firm industry, the newspaper reported.
American Lawyer, which is published by ALM Media Properties LLC, reported in May that profits per partner at the 100 largest law firms rose 8.4 percent to an average of about $1.4 million last year, the newspaper reported. Citigroup’s analysis found that 16 percent of the firms overstated their numbers by 10 percent to 20 percent, it said. An additional 15 percent of the firms had figures that were inflated by 5 percent to 10 percent, the Journal said.
Robin Sparkman, American Lawyer’s editor in chief, said the magazine stands behind its published ranking and report.
“Like all good journalists, we are eager to correct errors when we get better data, which we have not yet seen from Citi,” Sparkman said by e-mail. “We ask only to be judged on what we report, rather than on second- and third-hand accounts about figures that none of us can independently confirm.”
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