For many of New York's most elite law firms, the question in 2018 was not if they would get even richer, but how fast.

A banner year in the legal industry—with the fastest profit growth since the recession—was particularly kind to the New York firms that regularly advise on the largest M&A deals and handle high-profile investigations and litigation. Among a representative basket of 18 elite law firms that are homegrown to New York, nearly all saw increases in revenue and profits.

Wachtell, Lipton, Rosen & Katz again led the pack in profits per equity partner (PEP), with its 80 partners averaging more than $6.5 million in profits as the firm generated revenues of $856 million, according to ALM reporting.

Despite the remarkable growth in the firms' top and bottom lines, few of the 18 firms chose to greatly expand their equity partner ranks, boosting PEP even more.

Eight of them saw net declines in equity partner ranks even when they had increases in revenue and PEP: Cleary Gottlieb Steen & Hamilton (down by two partners); Davis Polk & Wardwell (down by one); Debevoise & Plimpton (down by two); Fried, Frank, Harris, Shriver & Jacobson  (down by four); Schulte Roth & Zabel (down by three); Shearman & Sterling (down by four); Skadden, Arps, Slate, Meagher & Flom (down by 12); and Wachtell (down by one).

Only two firms grew their equity partner ranks above 2 percent in 2018: Milbank and Cadwalader, Wickersham & Taft.

Meanwhile, ALM recorded nonequity partners for the first time for two Wall Street firms: Simpson Thacher & Bartlett and Willkie Farr & Gallagher.

Simpson Thacher had its best year ever, including a 10.7 percent in growth in revenue and 11 percent rise in profits per equity partner, with 190 equity partners and seven non-equity partners in 2018. (The American Lawyer defines nonequity partners as those who receive more than half their compensation on a fixed-income basis.) Asked about the new category of nonequity partners, a firm spokeswoman said, “These are partners who for a variety of reasons fit Am Law's definition of nonequity partner.” She declined to comment further.

As for Willkie, the firm had 146 equity partners and 10 nonequity partners last year. Willkie recently adopted a new compensation system for new partners that fits within the Am Law definition of nonequity. A firm spokeswoman declined to comment.

For those already sharing in the profits flowing into New York's elite firms, there appears to be little appetite to let too many others in. Maintaining or even shrinking the equity partner tier has become a trend among many firms, said David Altuna, a client adviser at Citi Private Bank Law Firm Group.

“Our view is that the majority of firms are aiming for net zero” change in the size of the equity partnership, Altuna said, while others are seeing “an upward lift” on profits from contracting their equity ranks.

Even for firms that have gained partners, “Firms are managing it very closely and trying to keep it at a very low growth,” he said.

New York firms were also lifted up by increases in demand and billing rates. Altuna, citing Citi data, said New York firms saw demand increase by about 2.1 percent, as measured by billable hours, and billing rates increased an average about 4.5 percent, with both measures in line with wider industry trends.

Pushing demand was the breakout deal year—2018 was reported to be one of the highest years on record for M&A volume—while several firms reported an uptick in litigation.

Among the 18 firms examined for this article, 12 had revenue growth at or above 5 percent, according to ALM's figures. Overall, these firms averaged 7 percent revenue growth, ALM found. That's on top of the rosy year in 2017 for many New York firms.

Profit growth was even stronger. Fifteen of the firms saw profits per equity partner growth of at least 5 percent, according to ALM's figures. Overall, average PEP growth for this sample was 8.6 percent, even with the associate salary raises across the legal industry last year, according to ALM's analysis.

The only firm of the 18 that saw a decline in revenue or profits per partner was Cahill Gordon & Reindel. The firm attributed its 7 percent slide in both metrics to a down year in the leveraged finance market, high-yield bond work in particular.

What Goes Up…

Are the firms now facing a potential correction? Altuna said Citi Private Bank calculated a slowdown in law firm demand starting in the fourth quarter of 2018. While he still expects 2019 to be a successful year for firms compared with most years in the post-recession period, law firms will have a tough time beating last year.

“2018 will be hard to replicate,” he said. “People have short memories, understandably so, so they're always trying to beat the prior year, and that's going to be difficult.”

Below is a rundown of the financial performance for each of the 18 firms tracked for this story. Finalized financial reports for these firms and the rest of The Am Law 100 will be published in the May issue of The American Lawyer, and online on April 23.

Cadwalader, Wickersham & Taft: Cadwalader's PEP jumped 8 percent to $2.7 million, even as the firm's equity tier grew by three partners to 43. Gross revenue rose about 3 percent to $420.7 million. While the firm's total lawyer head count remained unchanged, at 373 attorneys, revenue per lawyer rose 3 percent to nearly $1.13 million. (See our previous report.)

Cahill Gordon & Reindel: A tough year in the high-yield bond market pushed down Cahill's revenue and profits. Gross revenue, profits per equity partner and revenue per lawyer at the New York firm each declined about 7 percent last year. Revenue sank to $360.5 million, profits per equity partner lowered to $3.43 million and revenue per lawyer dropped to $1.24 million. Total lawyer head count, at about 291 lawyers, and equity partner ranks, at 62, stayed level. (See our previous report.)

Cleary Gottlieb Steen & Hamilton: Gross revenue rose 5 percent to $1.27 billion, revenue per lawyer rose 3 percent to $1.03 million and PEP rose 3 percent to $3.16 million, according to ALM reporting. While head count rose slightly to 1,235 lawyers, the firm's equity ranks dipped by two to 186 partners.

The firm's profit margin fell from 48 to 46 last year, after a series of offices moves, including in London and Washington, D.C. The firm also made investments in its billing and finance platform and its intranet system to share information across practices.

Cleary's litigators were lead counsel last year to the Redstone family and National Amusements, a Redstone family company, in the fight for control of CBS Corp. The firm also represented software supplier Bosch in various investigations and litigation related to the vehicle emissions scandal.

In M&A, the firm represented data and analytics company Dun & Bradstreet Corp. in its acquisition by a group of investors in a $6.9 billion deal and represented JUUL Labs in the $12.8 billion investment by Marlboro cigarette maker Altria.

Cravath, Swaine & Moore: Despite some high-profile lateral exits early on, 2018 was a record financial year for Cravath, which saw revenue and profits per equity partner soar about 15 percent, according to ALM reporting. Gross revenue reached $815.87 million, while PEP grew to $4.62 million.

Cravath's profits per equity partner would be even higher if it did not have a generous unfunded retirement program. The firm's profits per equity partner would have stood at $5.4 million in 2018 if Cravath stopped paying its retired partners and if guaranteed income for first-year partners was not included, according to ALM reporting.

While the pension program drags down partner profits, the firm's “cradle to grave” benefits are one incentive for partners to remain loyal.

Cravath's head count grew by 3 percent to 519 lawyers in 2018, while equity partner head count stayed flat at 83. The firm's partnership saw some lateral exits and new additions. Litigator Sandra Goldstein and corporate partner Eric Schiele left for Kirkland & Ellis. Meanwhile, the firm elected six new partners for 2018 and three for 2019, while former U.S. District Judge Katherine Forrest of the Southern District of New York rejoined Cravath as a partner last year.

High demand in deal work and litigation drove the firm's record year. The firm advised Disney in overcoming Comcast's interloper bid to break up Disney's merger with 21st Century Fox. Cravath is also advising Disney in the sale of Fox's regional sports networks. Cravath advised a special committee at Viacom as it explored a combination with CBS and advised Time Warner in the merger with AT&T, including as trial counsel against the Justice Department in the spring.

The firm's litigation department obtained a victory for American Express in an antitrust lawsuit before the U.S. Supreme Court and has represented Qualcomm in disputes around the world relating to the company's patent licensing and chipset businesses. The firm has represented PG&E as lead trial counsel in over 145 lawsuits arising out of California wildfires and advised the utility in its Chapter 11 strategy. (The utility paid Cravath about $75.7 million leading up to its bankruptcy filing, according to court records.)

Davis Polk & Wardwell: Amid the exit of managing partner Thomas Reid, the firm posted its best financial results ever. Gross revenue at the firm jumped 12 percent in 2018 to just under $1.4 billion. Profits per equity partner climbed 19 percent to $4.4 million while revenue per lawyer jumped about 10 percent to $1.41 million. (See our previous report.)

Debevoise & Plimpton: The firm's gross revenue increased 13 percent in 2018 to $929 million. Revenue per lawyer jumped 8.8 percent to $1.4 million, while profits per equity partner climbed to $3.26 million, an increase of 15.5 percent over 2017. (See our previous report.)

Fried, Frank, Harris, Shriver & Jacobson: Gross revenue grew 7.9 percent in 2018 to $684 million, and revenue per lawyer rose 3 percent to $1.33 million. Fried Frank surpassed the $3 million mark in profits per equity partner for the first time, as equity partners declined by about five lawyers to 104 and the firm grew its nonequity partner ranks from 23 to 35 lawyers. (See our previous report.)

Kramer Levin Naftalis & Frankel: The firm's revenue rose 9 percent to $423 million, revenue per lawyer increased by 7 percent to $1.27 million and PEP rose by 8.3 percent to $2.33 million.

The firm's head count rose slightly to 333 lawyers, while its equity partner count stayed stable around 71 lawyers and its nonequity partner ranks rose by four to 40 lawyers.

The firm stayed busy in all its major practice areas. It represented VICI Properties Inc. in major transactions, including its $1.4 billion initial public offering of common stock and a $724.5 million public offering of shares of common stock. The firm has also advised clients in various roles for the bankruptcies of Toys R Us Inc., Westmoreland Coal Co., FirstEnergy Solutions Corp. and Nine West Holdings Inc.

Meanwhile, the firm defended Theodore Huber, an analyst at Deerfield Management, in parallel actions brought by the U.S. Attorney's Office for the Southern District of New York and the Securities and Exchange Commission arising from Huber's trading based on purportedly confidential government information.

In real estate, the firm represented The Walt Disney Co. in its $650 million acquisition of the rights to 4 Hudson Square for 99 years from Trinity Church and advised Disney in the sale of its ABC campus on the Upper West Side for $1.2 billion to Silverstein Properties.

Milbank: Under a new shortened name, the firm's gross revenue surpassed the $1 billion mark for the first time, growing by 12.8 percent to $1.034 billion in 2018. PEP surged 10.5 percent to $3.825 million last year. Even as total lawyer head count grew more than 5 percent to 728 lawyers, the firm's revenue per lawyer rose by 6.9 percent to $1.42 million. (See our previous report.)

Paul, Weiss, Rifkind, Wharton & Garrison: PEP jumped 10 percent to about $5.02 million in 2018. Gross revenue climbed 10.6 percent to $1.439 billion. Revenue per lawyer rose 8.2 percent to $1.4 million. Head count at the firm was up 2.2 percent to 1,022 lawyers, while the equity partnership remained stable about 145 partners. (See our previous report.)

Schulte Roth & Zabel: Gross revenue increased by 3.7 percent in 2018, to $439.97 million, as revenue per lawyer increased by 4 percent, reaching $1.24 million. Profits per equity partner jumped 8.2 percent to $2.77 million in 2018, split across a slightly smaller equity partner tier of 79 lawyers. The firm has no nonequity tier. (See our previous report.)

Shearman & Sterling: Gross revenue rose 4 percent to $955.5 million and the firm's total lawyer head count increased 3 percent to 882. While PEP rose 5 percent to $2.4 million, its average compensation among all partners, including equity and nonequity, declined by 3.3 percent. The firm shed a few equity partners, dropping to 138, and increased its nonequity partner ranks from 42 to 65  last year. (See our previous report.)

Simpson Thacher & Bartlett: The firm said 2018 was a record year, with strong performance across all practice areas. Gross revenue rose nearly 11 percent to $1.523 billion, revenue per lawyer rose 13 percent to $1.58 million and profits per partner soared 11 percent to $4.088 million, according to ALM reporting.

Total lawyer head count dipped by about 24 lawyers to 964. While equity partner head count increased to 190 partners, Simpson Thacher had seven nonequity partners last year, the first time ALM has recorded nonequity partners for the firm.

The firm advised some of the largest private equity deals last year, including Blackstone and consortium's $20 billion deal with Thomson Reuters for its Financial & Risk business. The firm also advised L3 Technologies in its merger with Harris Corp., creating a $33.5 billion military technology company.

The firm said its private funds practice guided four of the top five fund closings in 2018, while its financing lawyers handled high-profile tech IPOs involving Dropbox and Sonos.

In litigation, the firm secured a number of securities victories last year, including for UBS, La Quinta and the underwriters of Etsy's IPO.

Skadden, Arps, Slate, Meagher & Flom: The firm was in the spotlight in 2018 for a guilty plea of a former Skadden associate and an investigation leading to a settlement with the Justice Department over the firm's past work for the Ukrainian government.

Despite all the distractions, gross revenue rose 3.5 percent to $2.672 billion and profits per lawyer rose 7 percent to $3.716 million, according to ALM reporting. As head count dipped by 2 percent to 1,744 lawyers, its revenue per lawyer rose nearly 6 percent to $1.533 million. The firm's equity partner tier dropped by 12 lawyers to 349 partners.

Skadden advised on some of the largest M&A deals last year, including advising 21st Century Fox Inc. in its $71 billion acquisition by the Walt Disney Co. and the related pre-merger spin-off of certain news, sports and broadcast businesses. The firm also advised Express Scripts in its $67 billion acquisition by Cigna.

Meanwhile, the firm represented Société Générale in its resolution of long-standing investigations by several state and federal enforcement agencies into the French bank's historical compliance with U.S. economic sanctions laws.

Sullivan & Cromwell: The firm's gross revenue grew 2.5 percent to $1.436 billion while its profits per equity partner grew 5.6 percent to $4.5 million, according to ALM reporting. With a slight increase in head count, growing to 826 lawyers, revenue per lawyer stayed steady around $1.739 million. The size of the partnership stayed flat at 164 equity partners.

The firm's M&A group had a blockbuster year, ranking at the top of several league tables in global announced deal volume. Sullivan & Cromwell represented Andeavor in a $35.6 billion merger agreement with Marathon Petroleum Corp. and represented Harris Corp. in its $33.5 billion merger agreement with L3 Technologies Inc. When Japan's Takeda Pharmaceutical Company Ltd. completed its $62 billion acquisition of Shire PLC earlier this year, Sullivan & Cromwell served as Takeda's U.S. counsel.

In litigation, Sullivan & Cromwell represented Fiat Chrysler Automobiles in obtaining the dismissal of a putative class action claim brought by members of the United Auto Workers in Ohio federal court.

The firm also defended Barclays in persuading the Justice Department not to bring criminal charges against the bank relating to allegations that bank employees used confidential merger information to front-run trades and enable the bank to profit at a client's expense.

Sullivan & Cromwell executive director Karen Braun said the firm is paving the way for the legal industry in technology and artificial intelligence. It has outsourced some of its technology functions, with improved performance and service to lawyers as well as projected savings of at least 20 percent, allowing it to invest heavily in practice AI and cloud-based software, she said.

Wachtell, Lipton, Rosen & Katz: Wachtell continues its legacy as having the highest profits per equity partner in the Am Law 100, reaching more than $6.5 million last year, according to ALM reporting. As one of the smallest firms by head count in the Am Law rankings, the M&A powerhouse generated more than $856 million in gross revenue, with revenue per lawyer at $3.2 million.

While it may be small, Wachtell is growing: Its head count expanded by about 10 percent last year, reaching 267 lawyers, while its single-tier partnership decreased by one to 80 partners.

Wachtell was ranked No. 1 in representing principals in global announced deals last year. It was involved in many of the largest mergers and acquisitions in 2018, including advising Cigna on its $67 billion acquisition of Express Scripts and advising Broadcom in its plan to acquire CA Technologies for $18.9 billion.

Weil, Gotshal & Manges: Boosted in part by a string of large bankruptcies, Weil, Gotshal & Manges recorded its highest-ever revenue and profits in 2018. The firm's gross revenue rose 5 percent to $1.46 billion. Average profits per equity partner increased 5.4 percent to $3.8 million. While its head count stayed flat around 1,117 lawyers, the firm's revenue per lawyer also rose about 5 percent, to $1.3 million. (See our previous report.)

Willkie Farr & Gallagher: While Willkie became the focus of headlines for former co-chair Gordon Caplan's role in a college admission cheating scandal, the firm saw growth in several financial metrics in 2018.

Revenue increased by 5.8 percent to $817 million and profits per equity partner increased about 4 percent to $3.089 million, surpassing the $3 million mark for the first time. Revenue per lawyer grew by 3.6 percent to $1.24 million. As ALM recorded nonequity partners for the first time at Willkie, average compensation among all partners, equity and nonequity, contracted by nearly 1 percent,

The firm in December launched a new office in Palo Alto, California, expecting to serve longstanding tech and fintech clients. “We continued to grow our partnership through both organic growth and lateral hires,” said co-chair Steve Gartner in a statement, adding the firm has “continued to grow our platform in London and Houston, both of which had record years.”

Willkie was busy in private equity last year. The firm said it represents more than 150 U.S. and international private equity sponsors, as well as many portfolio companies and management teams. Over the past two years, the firm said, it has represented sponsor-side clients in forming more than 75 funds.

It was also involved in several large insurance transactions, including advising Assured Guaranty in its deal to reinsure substantially all of Syncora Guarantee's insured portfolio in a $14.5 billion transaction. The firm's litigators have represented Xerox Corp. in separate actions in the state and federal court arising out of Xerox's terminated merger with Fujifilm Holdings Corp.