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Even before the coronavirus wreaked havoc on the economy, many New York firms were struggling in 2019 to match their performance from prior years.

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Average revenue growth for 19 elite New York firms in the Am Law 100 was 3.4% last year, according to The American Lawyer's data, down from 7% growth in a similar study the year before. In profits per equity partner, the average growth for these 19 firms was 3.7% in 2019, compared with 8.6% the prior year. Average revenue and profit growth for the Am Law 200 were 5% last year.

There were some standouts. Debevoise & Plimpton saw 12.9% revenue growth, rising above $1 billion for the first time, and 13.4% growth in profits per equity to $3.7 million. Fried, Frank, Harris, Shriver & Jacobson boosted revenue by 13.3% to $776 million and grew PEP by 16% to $3.79 million, as the firm's equity tier ranks remained flat.

But of the 19 firms in the Am Law 100, five saw declines in revenue: Cleary Gottlieb Steen & Hamilton; Cravath, Swaine & Moore; Kramer Levin Naftalis & Frankel; Paul, Weiss, Rifkind, Wharton & Garrison; and Skadden, Arps, Slate, Meagher & Flom. That's in contrast with just one firm in the 2018 study that experienced a revenue decline.

New York lawyers and market observers cite a variety of reasons for the low growth rate in 2019. Cross-border M&A volume declined in the first half of 2019, while premium fees on M&A work slowed down for some. Realization on fees for New York firms declined. And for some Wall Street firms, it was simply hard to match the success of 2018.

Average growth for New York firms in the second half of the Am Law 200 was similarly sluggish. Half of these 12 firms saw revenue drops. Overall, as a group, New York firms in the Second Hundred had slower average growth in revenue and profits than New York firms in the Am Law 100. But the Second Hundred group's average growth in revenue per lawyer, at 4%, far outperformed their Am Law 100 counterparts in New York.

Second Hundred firms with declining revenue last year included Curtis, Mallet-Prevost, Colt & Mosle; Hodgson Russ; Hughes Hubbard & Reed; Kasowitz Benson Torres; and Kelley Drye & Warren. 

Overall, New York firms' performance in several metrics was lower than industry averages, according to figures from Citi Private Bank's Law Firm Group. For instance, the average demand in Citi's sample of New York-headquartered firms declined 1.2% in 2019, in contrast with the industry growing 1.1%, according to Gretta Rusanow, head of advisory services at Citi.

Revenue growth in the industry also outpaced New York firms' growth, she notes. The average realization for Citi's New York sample declined by 0.9%, while the industry saw only a 0.5% drop.

But Rusanow also points to a few positive factors in the New York market for 2019, including an improving demand market as the year progressed. New York firms' fourth quarter through early March 2020 saw high levels of activity, she says. 

And even though realization declined, New York firms aggressively marked up billing rates, averaging 5.2% for Citi's sample of New York firms, compared with 4.5% in the industry. Ultimately, these New York firms could bring in more money than firms with modest rate increases.

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"The firms that follow the strategy of putting through higher rate increases with a willingness to take a deeper discount have for the past several years realized a wider rate advantage," Rusanow says.

As for 2020, Rusanow says that as of late April, firms across the country were projecting a roughly 15% drop in demand and revenue in the second quarter.

But one advantage for some New York firms is a relatively higher profit margin. Most New York firms in the Am Law 100 had profit margins above 40%. Among the 12 New York firms in the Second Hundred rankings, seven had profit margins above 30%. None reached 40%.

Higher-margin firms "are in different positions in terms of the expense decisions they have to make and the timing of those expense decisions," Rusanow says.