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).