Brad Karp, chairman of Paul, Weiss, Rifkind, Wharton & Garrison. Courtesy photo

Paul, Weiss, Rifkind, Wharton & Garrison saw both revenue and profits per partner slide down last year, halting several years of financial growth. But the firm's chairman, Brad Karp, said the firm had a strong start in 2020, and its lawyers are now busy on pro bono efforts and advising clients in response to the pandemic.

Last year, Paul Weiss' gross revenue fell 3.6% to $1.39 billion last year, and with flat head count around 1,020 lawyers, revenue per lawyer fell at a similar rate to $1.36 million. Average profits per partner fell 6.4% to $4.7 million, amid a 5.5% growth in the firm's equity-only partnership ranks.

In an interview on Thursday, Karp said the firm did well in 2019 and the declines were due to the firm's exceptionally high collection of premium fees in mergers and acquisitions in 2018—"close to $100 million," he said—contrasted with a more normal flow of premiums in 2019. He said collections in early 2020 were unusually good, including two eight-figure premiums.

Through March 25, the firm's billings were up 28%, collections up 19%, net income up 52% and income per share up 63% over last year, he said. "Our average profit per partner last year was $4.7 million, so I don't think anyone is going to start a GoFundMe page or hold a telethon for Paul Weiss partners," he said, noting "it feels somewhat strange for me, and a little off, to talk about our firm's revenue and profitability right now, given the global pandemic."

Paul Weiss YOY financials

Karp said his focus now is on the coronavirus crisis. He said the firm has been pouring pro bono resources into matching laid-off workers and other hard-hit families with assistance. Paul Weiss also has been helping clients, including corporate boards and senior management, chart a course through the crisis, he said.

Karp said the firm was positioned well to handle clients' long-term legal needs that may result from the pandemic.

"While the courts are largely closed, the prelitigation maneuvering today … feels a lot like it did in 2008, which … led to the largest litigation surge in our firm's history," he said. As the dust settles, he said, "You're going to see a flight to quality … and I very much like how Paul Weiss is positioned."

While Karp cited a systemic decline in litigation and a drop in white-collar and regulatory enforcement under the Trump administration, he said he had "no doubt that litigation and white-collar work will return to more robust levels over time." He said the firm continued to invest in litigation practices in 2019 with hires such as Loretta Lynch, Jeannie Rhee and Kannon Shanmugam.

Asked about what impact the coronavirus might have on the firm's overall budget for 2020 and whether the firm might cut back in areas such as partner draws, Karp highlighted the firm's financial success in the year so far and said no final decisions had been made.

"Obviously, the global COVID-19 pandemic is going to have a significant impact on every major law firm's business over the next several months, if not longer," he said. "It's too early for any of us to evaluate how significant the impact will be. … We haven't made any determinations about partner distributions yet."

Paul Weiss last year handled headline-grabbing matters across its core practice areas — public M&A, private equity, restructuring, litigation and white-collar regulatory defense.

The firm's lawyers worked on major public-company transactions, including CBS Corp.'s merger with Viacom, which has been valued at $28 billion to $40 billion, where Paul Weiss advised a special committee of CBS's board, and Novartis' $9.7 billion acquisition of The Medicines Co., where it represented the target.

The firm last year hired M&A partner Sarah Stasny from Kirkland & Ellis and executive compensation partner Jean McLoughlin from Davis Polk & Wardwell.

In litigation, Paul Weiss represented Carlos Ghosn, helping him cut a deal with the U.S. Securities and Exchange Commission before he ultimately opted to smuggle himself out of Japan. The firm also represented Exxon Mobil in several lawsuits, including the successful defense of a case by the New York attorney general that accused the oil giant of defrauding shareholders about climate change.

The restructuring practice in 2019 was also "extraordinarily busy," Karp said, working for debtors such as resin manufacturing giant Hexion Holdings, canned tuna titan Bumble Bee Foods, and vehicle logistics firm Jack Cooper Ventures. It also represented the California Public Utilities Commission in PG&E's bankruptcy, among other creditor representations.

Karp highlighted the firm's commitment to pro bono cases. Last year, he said, Paul Weiss upped its pro bono work from about 100,000 hours in 2018 to 130,000 hours, working on cases such as the representation of immigrants in family reunification cases and women's health groups in cases over abortion access. The firm is set to deliver even more pro bono work this year, he said.

The 2019 financial figures reported in this article are preliminary. ALM will report finalized data for the Am Law 200 in The American Lawyer's May and June issues.