US firms’ Smoke signals

There was a palpable whiff of optimism in the air in New York last week, and it wasn’t just the unseasonably early hint of cherry blossom in the Brooklyn Botanical Garden.

At the start of 2009 many firms seemed on the brink of the abyss. Twelve months later and activity ­levels for most were once again sufficiently high to make a repeat of last year’s layoff carnage unlikely.

For most US firms attention has already turned to getting in shape for the recovery. Indeed, the investments several have made around the globe will be one of the key focuses of The Lawyer Transatlantic Elite next month.

To some extent, the US is on the way back. More than half of its domestic IPOs in 2009 came in the fourth quarter, while certain practices (think high-yield) look like night and day compared with where they were 12 months ago.

But this side of the Atlantic it’s not only the Easter weather that was different from the US. As we report today (page 14), the majority of US firms have painted a bleak picture of their 2009 UK ­performances. A total of 21 US firms saw their ­London office revenues drop last year, some ­precipitously, while two firms (Cadwalader ­Wickersham & Taft and O’Melveny & Myers) dropped out of the US top 30 altogether.

The results raise a number of questions for a ­variety of US firm leaders (not least the exchange rate at which results are converted – for the record, The Lawyer used an average for 2009 of $0.64115 to £1).

For example, it might be worth asking Steve Davis at Dewey & LeBoeuf whether, in hindsight, he still thinks it was a good idea to have struck such an enormous combination right at the start of the worst trading environment in living memory.

Further down the line, it will be equally interesting to contrast Dewey’s performance with that of Hogan Lovells’, the first major post-crash merger.

Closer to home, the UK revenue of these top 30 US firms also serves another purpose. It offers a tantalising glimpse, ahead of time, into what the year-end results of their UK counterparts are likely to be.

On these numbers, it doesn’t look good.