Litigation heavyweight finds success being the tortoise rather than the hare.

Paul Weiss sets the paceThere are not many law firm chairmen who could truthfully make the following statement right now: “Our hope is that 2009, like 2008, will be a strong year.”

Then again, there are not many international firms like the one Brad Karp heads: Paul Weiss Rifkind Wharton & Garrison.

In ;January ;the ;US ;firm posted another year of steady, if ­unspectacular, growth. Total ­revenue was up by 6.3 per cent to $692m (£486.34m), while ­average profit per equity partner (PEP) increased by 2.3 per cent to $2.7m (£1.9m).

Over the past three years Paul Weiss’s growth has been similarly slow and incremental. The firm’s 2006 revenue total of $594m (£417.46m) grew by just under 10 per cent in 2007 to reach $652m (£458.23m), while PEP over the same period grew by around 4 per cent.

The results are verging on the boring. Until recently at least, the international legal market would accept nothing less than double-digit increases in revenue and PEP. But steady and predictable is just the way Karp and his partners seem to like it. And the firm’s lack of showiness does not appear to be hurting it in the recruitment ­market.

“We’re seeing a great deal of interest, and lots of resumes, from partners at our peer firms,” reveals Karp. “We’re perceived as an attractive, stable, collegial and highly profitable firm that’s well positioned to deal with, and capitalise on, the economic challenges of today and tomorrow.”

The firm’s most recent big-name recruit was Beth Wilkinson, the former general counsel at US ­mortgage finance company Fannie Mae, who joined Paul Weiss in ­January (, 21 ­January). Formerly the co-chair of Latham & Watkins’ white-collar crime practice group, Wilkinson had been thought to be either set for a return to her old firm or to accept an offer of partnership from Cleary GottliebSteen & Hamilton. Instead she plumped for Paul Weiss.

“As a consensus-based firm, we tend to be deliberate when hiring laterally, but as in the recent case of Beth Wilkinson we can move ­nimbly and with alacrity when we need to,” observed Karp.

So the firm is still hiring, but after this month’s Bloody ­Thursday, when one US firm after another lined up to announce ­layoffs, is it firing? Apparently not. On the afternoon The Lawyer went in to Paul Weiss’s 6th Avenue offices to meet Karp, the firm’s chairman had just delivered a state-of-the-firm update to its associates in a two-hour session.

“I assured our associates that we’re not intending to make any layoffs,” says Karp.

It is a given that Paul Weiss’s ­historic strength in litigation is going to shield the firm from the worst ravages of the downturn and help it capitalise on the opportunities the recession ­creates. ­Dispute resolution ­generates at least 55 per cent of the firm’s fee income – most ­likely considerably more in the current year.

The firm’s biggest client, ­Citigroup, has alone provided it with a flood of instructions, most recently the successful defence of the bank in a $2bn (£1.45bn) ­lawsuit against Italian dairy giant Parmalat (currently on appeal).

“In our financial institutions practice we’ve been inundated with subprime-related litigations and regulatory inquiries, credit-related litigations and regulatory inquiries, and failed investment litigations,” adds Karp. “These matters are on behalf of existing clients as well as clients that are new to the firm.”

Then there is regulatory work, including class actions, internal investigations and disputes.

“If there’s something to fight about these days, people will fight,” Karp admits.

On ;top ;of ;that ;there ;is ­restructuring and bankruptcy.

“The distressed space has ­provided enormous investment opportunities for our private ­equity, hedge fund and financial institutions clients,” says Karp. “The asset markdowns have been extraordinary.”

Karp’s comments echo the ­findings of a study commissioned by Bingham McCutchen released last month. The survey of asset managers and traders predicted that there would be a significant increase in distressed investments during 2009.

Paul Weiss’s restructuring and bankruptcy group is chaired by partner Alan Kornberg, whose recent deals include advising one of the firm’s biggest clients, Time Warner, on its acquisition of cable TV assets from Adelphia ­Communications Corporation. Kornberg’s group is currently busy enough to provide work for some of Paul Weiss’s trans-actional lawyers on matters such as investments into distressed companies, a number of smaller private equity deals and some asset sales.

The fact that Paul Weiss’s ­corporate group is historically small relative to the majority of its New York elite rivals is looking prescient in the current market. That said, there is the occasional mega-deal to be done. Paul Weiss corporate partners Ariel Deckelbaum and Robert Schumer are continuing to advise Time Warner Cable on the $9.25bn (£6.25bn) acquisition of Time Warner’s cable television operations.

“The looming question is when the lending markets will open up,” says Karp. “Once financing becomes more freely available, the pace and intensity of investment and acquisition activity will ­accelerate.”

That, of course, is a big ‘if’. In the meantime, Paul Weiss looks well set to weather the current economic storm.

Paul Hastings and Simpson Thacher reveal all
By Julia Berris and Matt Byrne

Last week (16 February) The Lawyer added several significant contributions to its US firm revenue counter, not least Paul Hastings and Simpson Thacher & Bartlett.

There have been some surprises so far this year, but Simpson Thacher’s 14
per cent profit per equity ­partner (PEP) plummet was widely expected.

The private equity boom was largely responsible for giving Simpson Thacher 20 per cent and 15 per cent hikes in 2007 revenue and PEP respectively. The absence of that work is equally responsible for the dramatic drop.

Last ;year ;Simpson Thacher’s revenue dropped by 6 per cent to $904m (£635.33m), while PEP saw a 14 per cent drop, down to $2.48m (£1.74m), almost level with the firm’s $2.49m (£1.75m) figure in 2006.

It has been a tough year for Simpson Thacher, but there is some optimism for the firm in the market.

“Simpson will be okay,” argues one former New York-based lawyer. “They’re pretty good at refocusing and moving lawyers into their litigation department. It’s going to be tough, but they’ll survive.”

In contrast, Paul Hastings, which has a 31 January year-end, posted a 1 per cent hike in revenue, up to $986m (£692.96m) from $980m (£688.74m), and a 1 per cent drop in PEP to $1.9m (£1.34m).

“I’m satisfied with our performance,” firm chairman Seth Zachary told The Lawyer. “It was steady and consistent and is reflective both of the confidence our clients place in us and the breadth of our practice and international footprint.”

The past year was also one of expansion for Paul ­Hastings, most notably in Europe, where the firm hired a group of seven partners and 12 associates from the ­London office of Cadwalader Wickersham & Taft (The, 14 January).