Half of US top earners in profits limbo

Only half of the US 10 most profitable firms increased their average profits per partner last year, despite an incredibly busy year for deals.

Figures compiled by The American Lawyer show that only five of the 10 leading firms by profits per partner saw partners earning more in 2000 than in 1999.
Profits at New York firms Wachtell Lipton Rosen & Katz, Sullivan & Cromwell and Cahill Gordon & Reindel all fell, down 2.9 per cent, 4.1 per cent and 5.9 per cent respectively.
Skadden Arps Slate Meagher & Flom, the firm with the highest revenue in the country, saw profits stay the same as the previous year's. Minneapolis firm Robins Kaplan Miller & Ciresi, the second most profitable firm in the country, by virtue of its premium billing product liability practice, saw profits per partner dip by 8.7 per cent.
Most firms saw gross revenues increase by more than 10 per cent though, so the collapses in profits are being blamed on last year's dramatic increases in associate compensation.
Jerry Kowalski, head of New York recruitment consultants Kowalski & Associates, said: “The biggest inroad into profitability is labour costs. The average mid-level associate at Wachtell is making more money than most partners in firms below The American Lawyer's top 25.”
Firms outside the top 10 were also hit, including New York's Debevoise & Plimpton, where profits per partner fell by 0.1 per cent to $1.225m (£870,000), and Los Angeles firm Latham & Watkins, where profits per partner dropped 1.5 per cent to $990,000 (£707,000). Willkie Farr & Gallagher was the only other top 30 firm to suffer, seeing profits per partner drop 7.8 per cent to $1.015m (£750,000).
Firms that had particularly good years included New York's Shearman & Sterling, which saw profits per partner rise 18.9 per cent to $1.35m (£964,000) and revenues 20.3 per cent to $590m (£420m), and San Francisco's Brobeck Phleger & Harrison, which increased revenues by 51.7 per cent to $476m (£340m).

Ranking by profits per partner
Rank Firms Rank by no of lawyers Profits per partner from 1999 Change in profits No of lawyers No of equity partners
1 Wachtell, Lipton Rosen & Katz 100 $3,285,000 -2.9% 146 72
2 Robins, Kaplan, Miller & Ciresi 98 $2,790,000 -8.7% 220 63
3 Cravath, Swaine & Moore 87 $2,245,000 6.4% 344 80
4 Davis Polk & Wardwell 39 $1,740,000 8% 535 138
5 Simpson Thatcher & Bartlett 40 $1,740,000 5% 533 127
6 Sullivan & Cromwell 46 $1,715,000 -4.1% 495 127
7 Cahill Gordon & Reindel 99 $1,610,000 -5.9% 203 53
8 Skadden Arps Slate Meagher & Flom 2 $1,600,000 0% 1441 302
9 Milbank, Tweed, Hadley & McCloy 64 $1,450,000 13.8% 419 91
10 Kirkland & Ellis 27 $1,400,000 4.4% 662 128

Ranking by gross revenue
Rank 2000 Rank 1999 Firm Gross revenue Change from 1999 No of lawyers No of equity partners
1 1 Skadden, Slate Meagher & Flom $1,154,000 12.6% 1,441 302
2 2 Baker & McKenzie $940,000,000 14.9% 2,721 566
3 3 Jones Day Reavis & Pogue $675,000,000 13.4% 1,298 291
4 4 Latham & Watkins $642,500,000 10.5% 951 288
5 5 Shearman & Sterling $590,000,000 20.3% 805 163
6 7 Mayer, Brown & Platt $533,500,000 15% 853 324
7 8 Davis Polk & Wardwell $525,000,000 14.1% 535 138
8 6 Sullivan & Cromwell $516,5000,000 9% 495 127
9 13 Morgan Lewis & Bockius $515,500,000 20% 999 230
10 11 Weil Gotshal & Manges $505,500,000 15% 750 170

Source: The American Lawyer 100