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The terrible year New York’s top law firms had last year turned out to be not so terrible for most. The American Lawyer‘s annual Am Law 100 survey came out July 1, cataloging the financial results of the nation’s highest-grossing law firms in what is generally acknowledged to have been a brutal year. But while many major firms’ profits were hit hard by the downturn in transactional work, the majority of the 20 most profitable New York-based firms increased their profits per partner in 2001. Five of the top 20 showed double-digit growth. (See chart of The Top 20 New York Firms) Paul, Weiss, Rifkind, Wharton & Garrison showed a 38.8 percent increase in profits, the greatest improvement of any firm in the Am Law 100. Paul Weiss’ 2001 profits per partner were $1.68 million, compared with $1.21 million in 2000. Paul Weiss Chairman Alfred D. Youngwood said he would not credit the firm’s record year to any particular matter or practice area. The firm’s marquee litigation department and its bankruptcy group had extremely busy years, he said, but so did the firm’s corporate practices, which he said are less dependent on the depressed capital markets and mergers-and-acquisitions areas. “We didn’t have the drag issues that some of our peer firms did,” said Youngwood. Willkie Farr & Gallagher showed a 15.3 percent increase in profits per partner, to $1.17 million last year from $1.02 million in 2000. Chairman Jack H. Nusbaum attributed the improvement particularly to the firm’s bankruptcy practice, now handling the filings of Adelphia Communications and XO Communications. Bankruptcy powerhouse Weil, Gotshal & Manges increased profits per partner 10.2 percent to $1.13 million from $1.03 million, and is on track for an even more spectacular 2002 with the Enron Corp. bankruptcy ongoing and the WorldCom filing in the works. Milbank, Tweed, Hadley & McCloy undoubtedly got a shot from its bankruptcy practice, showing a 10.3 percent increase in profits per partner, to $1.6 million from $1.45 million. Cahill Gordon & Reindel also showed a strong 12.1 percent improvement, for profits per partner of $1.81 million from $1.61 million the year before. Other firms were not so well hedged. Heavily weighted in capital markets and M&A and committed to massive international expansion, Shearman & Sterling was hit particularly hard by last year’s sharp downturn in transactional work, resorting in October to large-scale associate layoffs. The firm’s profits per partner plunged a precipitous 29.6 percent, to $950,000 from $1.35 million. The only firm in the Am Law 100 whose profits fell farther was San Francisco’s Brobeck, Phleger & Harrison, which saw a 44 percent drop in profits from $1.17 million in 2000 to $660,000 last year. Profits per partner at Fried, Frank, Harris, Shriver & Jacobson dropped 16.3 percent, to $875,000 from $1.05 million, knocking the firm out of the top 20 among New York firms. Other traditional M&A and capital markets heavyweights showed more modest declines in profits, buffered in many cases by strong litigation and bankruptcy practices. Wachtell, Lipton, Rosen & Katz remained the No. 1 firm in the nation in terms of profits per partner, though those profits fell 3.7 percent to $3.17 million from $3.29 million in 2000. Cravath, Swaine & Moore saw a 4.9 percent drop to $2.14 million from $2.25 million. Simpson Thacher & Bartlett; Sullivan & Cromwell; and Skadden, Arps, Slate, Meagher & Flom all saw profits decline by less than 3 percent, posting respective 2001 profits of $1.69 million, $1.67 million and $1.57 million. Meanwhile, Davis Polk & Wardwell actually saw a slight increase — 2 percent — in profits per partner, to $1.81 million from $1.74 million, and Cleary, Gottlieb, Steen & Hamilton had a 6 percent improvement, to $1.33 million from $1.25 million. NEW YORK PROFITABILITY New York firms continue to comprise most of the firms at the high end of the Am Law 100 profitability charts. Nine of the 10 most profitable firms in the country are based in New York, and 17 of the top 20. The most profitable non-New York firm in the country in 2001 was Chicago’s Kirkland & Ellis, whose profits per partner increased 7 percent, to $1.5 million from $1.4 million. Los Angeles firms Gibson, Dunn & Crutcher and Latham & Watkins made the top 20, with respective profits per partner of $1.11 million and $1.05 million. Clifford Chance Rogers & Wells is not counted in the Am Law 100 owing to its London headquarters. James Benedict, the firm’s managing partner for the Americas, said the firm’s 2001 profits per partner from American operations were $1.02 million, up from $919,000 in 2000.

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