March 12, 2010 3:02 PM

THE AM LAW 100: Davis Polk Leads the New York Pack; Sullivan, Cleary Hang In

Posted by Julie Triedman

Davis Polk & Wardwell did what few New York firms were able to do last year: the firm increased both revenue and profits per equity partner (PPP) significantly, according to our reporting.

Meanwhile, our reporting indicates that Sullivan & Cromwell posted extremely modest 1 percent gains in revenue and PPP. Revenue and profits at a third Wall Street firm, Cleary Gottlieb Steen & Hamilton, were basically flat in 2009.

Davis Polk and Sullivan fared better last year than in 2008, when both posted flat revenue and lower profits.

Head count at both firms grew 5 percent last year. Accounting for at least some of the increased profitability, leverage increased at both Davis Polk and Sullivan, with associate ranks growing faster than partner numbers, which stayed basically flat. The ratio of nonpartners to partners rose to 3.2:1 from 2.9:1 at Sullivan; at Davis Polk, it increased to 3:1 from 2.9:1.

The firms said fewer lawyers left the firm last year; in the past, a larger number of lawyers have gone in-house to banking and other large institutional clients.

Davis Polk was the biggest success story. Our reporting shows that revenue at the firm was up roughly 7 percent, which represents the highest percentage growth among New York firms. The firm's PPP rose an astonishing 10 percent--at least 5 percent higher than roughly a dozen other elite New York firms for whom we have collected information, including Shearman & Sterling, Paul, Weiss, Rifkind, Wharton & Garrison, Dewey & LeBoeuf, Willkie, Farr & Gallagher, and Weil, Gotshal & Manges, among others.

Davis Polk partners took home an average of nearly $2.1 million last year, up from $1.9 million in 2008. Revenue per lawyer, an indicator of just how busy lawyers were, also rose by nearly a percent to $1.2 million.

Though M&A work was down globally, Davis Polk appeared to get the lion's share of the biggest deals struck. According to Thomson Reuters's worldwide data, Davis Polk ranked fifth in M&A last year, compared with twenty-first in 2008, handling deals totaling $245.5 billion, an increase of 71.3 percent over the $143.3 billion it handled in 2008.

The firm also had a busy year in restructuring work, representing Ford Motor Company, for example, among many other matters. That work drew in not just restructuring lawyers, but lawyers from the firm's extensive credit and capital markets practices, lawyers knowledgeable about the firm said.

Sullivan, meanwhile, continued to be among the most profitable Wall Street firms, with nearly $3 million PPP, up less than a percent, according to our reporting. Gross revenue stood just shy of $1 billion;  RPL dropped 4 percent.

The firm was less busy last year in its core M&A and financial institutional M&A business. Globally, M&A work fell by 54 percent from 2008, according to Thomson Reuters, to $214.5 billion from $491.9 billion. But Sullivan partly made up for that with strong showings in restructuring and project finance work. It was co-lead counsel to the consortium on an $18 billion LNG plant in Papua, New Guinea, that was the largest project of 2009 globally, according to Dealogic. The firm was also one of the debtor's counsel (though not the lead) in CIT's bankruptcy, the second-largest filing of the year. Among its M&A work that was not listed on the league tables was its representation of Fiat in its acquisition of Chrysler from bankruptcy last spring.

Last year was also an excellent year for corporate bond issuance, with Sullivan and Davis Polk finishing numbers one and two, respectively, on our investment grade adviser-to-issuers chart.  Both handled more than triple the amount of high-yield bond issuances than they did in 2008.

At Cleary, partners earned about $2.2 million in 2009, 8 percent less than in 2008. Revenue was flat, at $965 million, according to our reporting. Head count stayed about the same. This year's numbers are in contrast to those reported in 2008, when Cleary posted a 7.9 percent jump in revenue and an 11.6 percent hike in PPP.

Additional reporting contributed by Ben Hallman and James Schroeder.

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