Wednesday, April 28, 2004

Law.Com Scrutinizes PPP

Some say it's ruined the profession. Others say it's lost all meaning as a measure of success.

Yet per-partner profits -- or PPP -- still stand as a sort of shorthand for a law firm's status. PPP remains a staple of The American Lawyer's annual list of the country's top-grossing law firms. The data is devoured by law firm leaders, lawyers, consultants and recruiters looking for market intelligence.

The magazine is gearing up to run its latest rankings in June, so American Lawyer Media reporters, including some at The Recorder, have been discussing the numbers recently with industry leaders.

Most say that the metrics the magazine uses to rank firms -- profits per equity partner, revenue per lawyer, average compensation of all partners -- shed needed light on the relative performance of the nation's largest law firms. But some also say the numbers are imprecise, and can be influenced by a host of variables. PPP is seen as especially open to manipulation.

the money quote of the article:

Wetmore questions what he sees as a shortsighted focus on partner
income, noting that the performance of other industries isn't based on
how much money their senior executives earn.

"Is Colgate or Johnson & Johnson better run depending on the
average compensation of those labeled as senior vice presidents and
above?" he said. To continue to obsess on how much the average
partner makes "is increasingly anachronistic."

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