March 14, 2011 5:50 AM
The Am Law 100: New York Firms' Profits Spike on Wall Street Rebound
Posted by Julie Triedman
With both M&A and capital markets work surging, and litigation holding steady, partners at many elite New York firms with traditional ties to the investment banks saw their compensation rise last year, at times dramatically. The performance of these New York firms contrast with other Am Law 100 firms, which had more mixed financial results in 2010.
Six New York-based Wall Street firms in the $2 million-plus PPP club saw profitability soar last year. Paul, Weiss, Rifkind, Wharton & Garrison, as we reported in late February, saw PPP rise 15 percent to $3.05 million. "We had an extraordinary year across all of our primary practice areas," firm chairman Brad Karp told The Am Law Daily. As with the other firms in this report, the firm counts a number of major banks, including Citigroup, Deutsche Bank, JPMorgan Chase, and UBS, among its clients.
According to our reporting, Cleary Gottlieb Steen & Hamilton saw both profits and average profits per equity partner (PPP) jump by about 18 percent. The firm's PPP was $2.6 million in 2010, up from $2.2 million last in 2009. Simpson Thacher & Bartlett saw a 9 percent increase in profits and in average profits per equity partner last year, to $2.64 million, on increased revenues; Skadden, Arps, Slate, Meagher & Flom's PPP was up about 10 percent, to $2.32 million, with overall net 6 percent higher and revenue remaining flat; and Davis Polk & Wardwell's PPP rose nearly 5 percent to $2.2 million, on the backs of marginally higher revenues and net. Further down the New York elite tier, Willkie Farr & Gallagher's partners took home about 4 percent more, to $2.1 million on average; the firm's overall profits were up slightly, about 1 percent, but in contrast with the other firms, gross revenue at Willkie declined by 3 percent.
Another standout: Fried, Frank, Harris, Shriver & Jacobson. In 2010, the firm saw a staggering 28 percent increase in average profits per equity partner, to $1.6 million--under the $2 million PPP mark, but the biggest percentage increase among the firms included in this report.
Fried Frank's equity partner ranks fell slightly, from 139 to 136, in 2010, while lawyer head count stayed essentially flat at 485, as we originally reported here.
Increased profitability for several firms--Skadden, Davis Polk, and Willkie Farr--was similarly accompanied by a drop in the partner ranks. The steepest contractions in head count were at Willkie, Skadden, and Davis Polk, all of which had around 3 percent fewer partners last year.
Meanwhile, Simpson's and Cleary's partner ranks were roughly flat year-to-year. Paul Weiss, bucking the trend, saw its equity partner ranks grow, with 2.5 percent more partners, respectively.
The exceptions to the strong results this past year were Shearman & Sterling and Weil, Gotshal & Manges, which both saw declines in profitability. Shearman saw average PPP drop by 8 percent last year on low collections, to $1.56 million, as we reported here. The firm's senior partner, Rohan Weerasinghe, attributed the dip to a number of big deals that haven't closed yet; the firm's work flow remained flat year-to-year. "We're going into 2011 with a strong pipeline," he told The Am Law Daily.
Weil saw average profits per equity partner decline 2 percent, to $2.26 million,as reported here. Weil's partner ranks thinned by more than 5 percent and its overall head count plunged by more than 7 percent.
Results have not yet been reported for the three Wall Street firms that historically have ranked the highest in profitability: Sullivan & Cromwell, Cravath, Swaine & Moore, and Wachtell Lipton Rosen & Katz. Last year, Sullivan and Cravath were closing in on $3 million PPP, while Wachtell reported a breathtaking $4.3 million, according to the final results of the survey.
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This report is part of The Am Law Daily's ongoing Web coverage of 2010 financial results of The Am Law 100/200. Results are preliminary. Final rankings and full results for The Am Law 100 will be published in The American Lawyer's May 2011 issue and on AmericanLawyer.com. The Am Law Second Hundred will be published in the June issue.
Results for the 2010 fiscal year reflect a change in the survey methodology. Per-lawyer and per-partner results for 2010 are based on a full calendar year average FTE head count, while published results for previous years were, in most cases, based on an August 31 FTE head count. When possible, we have recalculated fiscal year 2009 numbers to reflect the change in head count and based percentages on those adjusted numbers.
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