Some big news just in, from Am Law Daily:
In one of the sharpest drops in revenue and profitability among Am Law 100 firms, Cravath, Swaine & Moore saw 2008 gross revenue fall 13 percent, while profits per partner tumbled 24 percent to $2.5 million….
The firm signaled last November that 2008 was a tough year, when it announced in an internal memo that it was cutting associate bonuses, and that the firm would not do as well as in 2006 and 2007. In 2007 Cravath’s profits per partner had been $3.3 million, according to our Am Law 100 survey, second only to Wachtell, Lipton, Rosen & Katz. In 2006, PPP was $3 million.
This means that Cravath has forfeited its traditional second-place spot on the PPP rankings (second only to Wachtell). It seems that a number of firms — including the historic #3, Sullivan & Cromwell — will surpass Cravath in profitability for 2008.
According to the American Lawyer’s reporting, S&C boasted 2008 profits per partner of $2.94 million. This will probably be good for third place in the next PPP ranking, since Wachtell apparently had a rather good year too (at least based on the relatively robust bonuses it paid its associates, plus all the crisis-related M&A work performed by Ed Herlihy & Co.).
Now we know why the Cravath bonuses were so anemic. And it had nothing to do with the hookers — er, client entertainment expenditures.
Will disappointing bonuses and declining profits affect the institutional prestige of Cravath? Will the firm fall from its traditional #2 spot on the Vault 100? Stay tuned.
THE AM LAW 100: Cravath Profits Falls 24 Percent [Am Law Daily]