Average profit per equity partner fell 15 per cent to $2.05m last year at Davis Polk & Wardwell, it has emerged.
Although the New York-headquartered firm managed to post flat revenue growth for 2008, remaining at $767m, the collapse of its core financial services markets was reflected in its bottom line.
“Davis Polk is likely to have suffered because of the lack of M&A work but it has been propped up by the rescue work it has been doing and its bankruptcy practice,” said New York-based recruitment consultant Alisa Levin of Greene-Levin-Snyder.
Late last year the signs were already there that Davis Polk was likely to post a significant drop in profits. In December, The Lawyer reported that Davis Polk had followed the lead of US rivals Cravath Swaine & Moore and Simpson Thacher & Bartlett by halving its bonus payouts for 2008 (2 Dec 2008).
Nevertheless, the firm was successful during the year in winning a significant number of credit crunch-related mandates. These included advising the US Treasury on the bailout of beleaguered insurance company AIG, Citigroup on its failed approach to US bank Wachovia and the same client on its $20bn (£13.4bn) government bailout.
Meanwhile, partners at Skadden Arps Slate Meagher & Flom are also facing a significant drop in PEP. The US firm’s PEP dropped 10 per cent from $2.28m in 2007 to approximately $2.05m last year. Revenue saw a minimal increase of 1 per cent up to $2.02bn from $2.002bn in 2007.
Last year, The Lawyer revealed that Skadden was one of the first firms ever to punch through the $2bn turnover barrier for revenue (12 Feb 2008).
During the past 12 months Skadden invested significantly into its Asia practice, launching in Shanghai in February. The office was the firm’s fifth in Asia and second in mainland China.
Neither Davis Polk nor Skadden was available for comment.