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Biglaw firms are always looking for more — more money, more prestige, more power. But how can a firm achieve more without making any significant changes to its current model? That’s what Cleary Gottlieb is going to try to figure out.
Cleary is one of the most successful firms in the country. The firm brought in $1,393,989,000 gross revenue in 2022, putting it at No. 30 in the most recent Am Law 100 ranking. According to Michael Gerstenzang, the firm’s managing partner, being a Top 30 firm is no longer good enough for Cleary. Bloomberg Law has more Gerstenzang’s “ambitious” plans:
Gerstenzang’s ambitious goal is to land Cleary among the Top 20 firms by gross revenue, a feat that would require a leap of roughly $500 million from last year. That would mean a 36% gain from last year, when Cleary ranked No. 30 among US firms in gross revenue.
One solution could be for Cleary to introduce a nonequity partner tier as a way to offer more money to its highest earners, but Gerstenzang said the firm had already turned away from such a plan back in 2020.
Cleary decided its “culture” wasn’t prepared to be as “disciplined or ruthless” to manage out non-performing income partners, he said. It also had concerns a large non-equity tier could deteriorate its reputation for consistent, high quality work across its practices.
Still, he said the financial data show “how successful managing a big pool of nonequity partners can be.”
Could times be changing at Cleary Gottlieb? Possibly. “I want us to be higher in everything, but we also have to recognize there are different models,” Gerstenzang told Bloomberg. “I’m not that worried about the competition for talent given where we are today. We need to do better, we can do better.”
Tabling the nonequity partner issue, for the time being, it looks like the model Gerstenzang wants to focus on moving toward is value-based billing over the billable hour, and he wants to use artificial intelligence to get there. “It will be beneficial for clients and law firms to shift toward value-based billing,” he said. “Generative AI is going to be helpful to move us toward that model.”
It looks like Cleary Gottlieb is putting a lot of faith into the power of generative AI. Can it help one of the most successful firms in the country move up 10 places in the Am Law 100? Can it help the legal profession leave the billable hour in the dust? It sure seems like this might be one big AI hallucination… but hopefully it’ll work.
Cleary Leader Confident Amid Law Firm ‘Frothiness,’ AI Adoption [Bloomberg Law]
Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter and Threads or connect with her on LinkedIn.
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