It could have been worse. That’s the best that can be said for the performance last year of The Am Law 100, the top-grossing law firms in the nation. Three of the four key categories we’ve measured for 25 years–gross revenue, head count, and revenue per lawyer–fell, while profits per equity partner (PPP) barely increased by 0.3 percent, or $3,463, to $1.26 million.

But on average, even the bad results weren’t nearly as dire as many firms had feared just a year ago. Overall, gross revenue was off by 3.4 percent, and head count dropped by about 1 percent. The firms earned a total of $64.8 billion, down roughly $2.3 billion. And, in the first year-over-year reduction in head count since 1993, they cut their lawyer labor force by 1,219, to 80,772. For all the heated attention to layoffs, about half the firms actually increased their size last year. RPL, which we regard as the most telling economic indicator, was down $15,697, to $802,381, a 2 percent fall. This was the second consecutive year in which RPL fell, another sign of the toll of the weak economy.

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There were at least two reasons why the average partner profts eked out a small gain. Firms aggressively reduced expenses in 2009. And, the number of equity partners in The Am Law 100 dropped. There were 139 fewer of them, down 0.73 percent, to a total of 18,808. By contrast, the number of nonequity partners increased by 640; collectively they now constitute a record 37.9 percent of all Am Law 100 partners.

The averages mask two important developments:

The segmentation of The Am Law 100 continues. The 23 firms headquartered in New York, on average, outperformed the rest of the pack. And, of that group, the 13 firms with PPP of $2 million or more did better still, with a 3 percent gain in per-partner profits. In this group, there wasn’t any growth in equity partners. The other ten New York firms showed 1 percent gains in profits, spurred by a 4 percent drop in equity partners, mainly at White & Case and Dewey & LeBoeuf. The remaining 77 firms dropped about 0.8 percent in PPP. This was a sharp contrast to 2008, when the New York firms underperformed the rest of The Am Law 100.

Putting geography aside, the top quintile of firms in PPP was the only segment of the market to show modest increases in both profits and RPL. This group includes New York’s 13-firm moneyed elite, plus such giants as Latham & Watkins, Kirkland & Ellis, and Gibson, Dunn & Crutcher, as well as smaller, pure litigation plays like Quinn Emanuel Urquhart & Sullivan and Boies, Schiller & Flexner.

After the Wall Street implosion, some competitors had predicted that the era of the "bulge bracket" firms was over. For the moment, at least, the reverse is true. Is this a one-year blip, the result of short-term cleanup work–the lucrative bankruptcy and securities defense work that stemmed from the financial collapse–plus one-time-only firings and deferrals? (Note that on average both groups of New York firms shrunk last year while the head count at the other 77 remained flat.) Or is this evidence of the much-discussed "flight to quality" by clients willing to pay top dollar to a shrinking number of firms, a disproportionate number of whom have 212 area codes?

Is there life in the Old business model? From 2001 on, The Am Law 100 grew steadily. In 2007 and 2008, that growth turned into irrational exuberance with big jumps in revenue and profits accompanied by a surge in hiring, just as the bottom fell out on the demand side. As a thought experiment, erase those two years from the charts and consider the growth of The Am Law 100. The average result: A steady upward progression from 2006 to 2009. On every measure, the firms advanced from where they were three years ago. They were 11 percent bigger, ahead 3 percent on RPL, and up 5 percent on PPP.

All of which creates another difficult set of choices for the owners of law firms that boils down to how they see the state of the market. Last year was the first in memory in which firms couldn’t automatically increase their rates and make them stick. Now there are signs that client demand is picking up. For all the talk about the broken law firm model, leverage remains a very lucrative 3.29 lawyers for every equity partner. To put that more starkly, for the 50 biggest firms leverage hasn’t disappeared, it’s doubled since 1984.

Will firms wait for the supply-demand curve to work its magic? Or will they gauge that a reset has taken place, that clients, having flexed their buying power and liked it, will not readily return to their old ways? Our guess, and it’s only that, is that for the short term, no single model will emerge. Instead, firms will try to follow their customer base, some facing only more challenges and demands, others embracing every sign of the old normal. The latter should resist overconfidence.

Here are some other highlights of the new Am Law 100 numbers:

• Baker & McKenzie surpassed Skadden, Arps, Slate, Meagher & Flom for the number one position on the gross revenue charts. Baker hasn’t held this spot since 1994. Baker and Skadden continue to be the only two firms that grossed more than $2 billion; 13 grossed more than $1 billion.

• Fifty-two firms posted increases in compensation-all partners, the average pay for a firm’s entire partnership, both equity and nonequity.

• And, perhaps most intriguing, the well-publicized and painful firings and deferrals of associates did not guarantee financial success for individual firms. See No Easy Answers.

For law firm owners and employees, this year’s results suggest that easy answers will be hard to find, wherever they look.