It was a year of mixed fortunes for US firms, proving at last that they are not invincible in Europe. While some saw impressive turnover and profit rises, others saw headcount, turnover and profits fall.

White & Case posted a phenomenal 22 per cent turnover rise on a 14.5 per cent increase in lawyer numbers, while Cleary Gottlieb Steen & Hamilton, Dechert, Hogan & Hartson, Latham& Watkins , McDermott Will & Emery, Shearman & Sterling, Sidley Austin Brown&Wood andWeil Gotshal &Manges all reported significant profit rises.

But Europe was not good news for all US firms: five of the 16 in The Lawyer Euro 100 posted reductions in headcount and four suffered drops in profit.

Coudert Brothers suffered the biggest fall in European headcount, with lawyer numbers tumbling 13.7 per cent. Mayer Brown Rowe&Maw (MBR&W) saw its lawyer numbers slump from 353 in 2003 to 327 last year. Baker &McKenzie (B&M) and Hogan saw falls of 7 per cent and 5.1 per cent respectively. Even the US elite was not immune, with lawyer numbers at both Sullivan & Cromwell and Shearman declining.

Partner numbers also fell at some US firms, with the equity at B&M shrinking from 232 in 2003 to 229 last year, while Coudert saw partner numbers fall to 76 across Europe. MBR&M, Jones Day and Hogan also posted decreases in their European partner counts (see table, page 22).

Declining lawyer numbers point to an ongoing problem for US firms. Despite a clutch of high-profile lateral hires and the promise of large bonuses, they have struggled to recruit high-quality partners and mid-level UK associates. In response, Shearman has raised pay levels for all its UK-qualified associates. Although this happened early in 2005, it is a telling sign of the battle US firms still have in luring expertise away from the magic circle. Turnover results at the US firms were also mixed. MBR&M reported a 4.4 per cent drop in European turnover (ie revenue) to €144.59m (£98.1m), while Dewey Ballantine suffered a 9 per cent turnover slump.

On the profits front, the global fullservice franchises suffered most, with B&M and Coudert both reporting profit slides. B&M saw its profitper equity partner (PEP) dip 9.6 per cent to €493,180 (£334,600), while Coudert suffered a 15.8 per cent fall in PEP to €324,260 (£220,000).

Coudert had its first full financial year without an Italian operation, after its Milan office jumped ship for DLA, now DLA Piper Rudnick Gray Cary, at the end of 2003. Last year also saw the firm lose a significant chunk of its German turnover after the departure of its high-billing Munich arm to Dechert. The departures of private equity star Federico Pappalardo also saw Coudert miss out on the 3i panel review and Dechert swoop in, while 2004 saw the collapse of Coudert's merger negotiations with Squire Sanders & Dempsey .

On balance, however, US firms posted a strong 2004, with the majority reporting increases both in turnover and PEP in Europe (see table, page 20). Strategic conservatism paid dividends, with partners at Sullivan and Cleary among the most profitable firms in Europe, taking home a yearly average of €1.84m (£1.25m) and €1.36m (£922,700) respectively. Weil had a storming year, largely powered by its London office, during which PEP rose an impressive 10.3 per cent. Niche excellence continued to pay dividends for Sidley, which reported a PEP rise of 15 per cent, powered primarily in Europe by its London office.

Despite declining European headcount at some US firms, UK outfits remained vulnerable to US firms' expansion. Again in 2004, the Americans pulled off a swathe of head-turning lateral hires in Europe. Last year, Ashurst proved a happy hunting ground for its acquisitive US rivals: private equity superstar Thomas Forschbach left the firm's Paris office for Latham, Ian Nisse quit to start up a real estate practice at Shearman in London and Justin Spendlove and Sian Withey both left for former merger partner Fried Frank. Elsewhere, Roberto Cassati left Allen & Overy (A&O) for Cleary, while A&O's London-based IT and outsourcing guru Lawrence Jacobs quit for Milbank Tweed Hadley & McCloy . Even the traditionally conservative Sullivan (of the firm's 159 partners, 150 are home-grown) leapt on the lateral hire bandwagon, nabbing corporate rainmaker Dominique Bompoint from Clifford Chance . 2004 was also the year when US salaries proved too tempting for Europe's private equity stars. Forschbach aside, Travers Smith 's Mark Soundy resurfaced at Weil, Andrew Capenter left DLA Piper for O'Melveny &Myers, while Milbank heralded its entry into the Munich market with the hire of Freshfields Bruckhaus Deringer rainmaker Peter Nussbaum.

The Americans continued their dominance in a number of practice areas, including high-yield and bondholder representation in major restructurings, as well as Europe's project finance market. Sullivan concluded the deal of the year, advising on the Baku-Tbilisi-Ceyhan pipeline project, while Shearman secured the work for Dragon LNG, the joint venture between Petroplus, British Gas and Petronas, on the planned 'Dragon' liquid natural gas terminal at Milford Haven in South Wales.

The US firms continued to dominate in Russia, too, particularly in the burgeoning capital markets arena. Latham had an especially good year, securing the issuer role on the two standout equity capital markets transactions of the year, advising on the London Stock Exchange initial public offering of Sistema and on the New York Stock Exchange listing of steel company Mechel.

But it was London that really shone for the Americans. Skadden Arps Slate Meagher & Flom may have had a flat year, with partners attributing the firm's modest performance to the weakness of the US dollar, but currency weakness had little effect on the clutch of firms for which London was their strongest asset.

The London offices of Shearman, Sullivan & Cromwell, Weil and White & Case all had storming years. Heavy investment during 2002-03 paid dividends for White & Case, with the London office claiming an astonishing 73.9 per cent PEP increase in 2004. PEP rose from €449,830 (£305,200) in 2003 to €884,980 (£600,430) in 2004. At the same time, London reported a stunning 42.3 per cent increase in turnover. The firm's banking and projects groups were the key drivers behind the results, with both recording revenue rises of around 76 per cent. At the same time, Shearman's London office was a key driver behind the firm's European success. London revenues rose 29 per cent to €86.07m (£58.4m), with European revenues hitting €221.25m (£150.1m), up 22.3 per cent on 2003. A tough line on costs saw Dechert's PEP rise to €965.445m (£655,000) in London. Despite the weak dollar, it remained a strong year for US firms in Europe. The message - despite poor performances from a clutch of firms - is that the Yanks are here, and here to stay.