Lies, Damned Lies, Statistics and the Law Firm Revenue Myths

One learns quickly to be sceptical, if not cynical, about the revenue and profitability figures floated by the legal press and picked up in the main stream media.

I was told years ago by the managing partner of Altman Weil Pensa that the audited financials of the top American firms bore scant resemblance to the AmLaw 100 figures.

Now The Lawyer has come out and admitted that yes, figures might be fudged or even at times overstated.

The article ends with some practical advice for managing partners wishing to number-fudge:

Top tips for making your figures look better or worse

* Shrink your number of equity partners.

* Dip into your provisions – whether for bad debts, dilapidations or pensions.

* Make a killing on property – distribute your rent-free period.

* Capitalise any major expenditures.

* Base PEP on the average or year-end number of partners, whichever suits you best.

* Beef up the paper profit with FRS5.

* When all else fails, make them up.

Even here in Toronto, the reports in Toronto Life of Goodmans’ managing partner Dale Lastman’s income were described in the Globe and Mail as “not remotely accurate”.

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