New York's elite defy the prophets of doom

Well, it looks like the City's largest firms can kiss what little hope they had of securing a deal with a top Wall Street practice goodbye. Based on the 2009 results from The American Lawyer, Manhattan's legal elite have comprehensively disproved the widespread claim that their business model would falter in a recession. Instead, New York's most profitable law firms have emerged as the clear winners in 2009, outperforming the average US top 100 firm by a significant margin.

This is the group of firms, typified by Sullivan & Cromwell and Cravath Swaine & Moore, that either exclusively focus on the US or maintain only lean and targeted foreign operations. This club also largely refused to make redundancies or cut associate salaries, a conservatism that earned them the scorn of some rivals and observers who argued they were badly out of step with the Great Reset, the New Normal or whatever it was called that week.

Having in reality seen their focused and expansion-phobic model defy the critics, you can bet your bottom dollar that the lesson these firms will take from 2009, rightly or wrongly, is that it's definitely not broke so they don't need to fix it. That will make them even more loath to consider major structural reform or to substantially bulk up abroad. It will certainly make them even more dismissive of the concept of a cross-border merger (if that's possible). And who can blame them? You can believe that, in the long term, prospects are very bright for firms like Freshfields Bruckhaus Deringer and Latham & Watkins, but the plain reality is that what Manhattan's top firms do works well for them – and looks set to continue to do so.

Elsewhere, the fortunes of the rest of the top 100 seem to be diverging considerably. Below the top corporate and litigation firms, it was an underwhelming year for the US top 50, which saw eight firms face double-digit percentage falls in revenue. The next 50 down, being in a better position to benefit from a push for value, had a better time of it.

The story of the legal services recession has tended to split between those arguing it would be about a flight to quality and those predicting a dash for value. The experience of the world's largest legal market suggests that it has been both, but some firms have failed to benefit from either trend. Although given how wrong some of the predictions have been about where this is all going, the best advice is to keep a close watch on your business and plan where you will be a year from now with a brutally critical eye. Not on the basis of some grandiose trend, but in reality.

For more, see Wall Street's legal elite stage recovery but fees fall at US top 100