For lawyers, it's akin to the Holy Grail: The American Lawyer's annual ranking of the top 100 grossing firms in the country, released today with the monthly magazine's May issue.

It's all about three little words — profits per partner — a term that partners at the big firms track as closely as their golf handicaps. Yet for all the anticipation, each year yields pretty much the same results of who's on top.

This year was no exception: Wachtell, Lipton, Rosen & Katz came in first, with a record-breaking $4.94 million PPP — a 23 percent jump from last year's $3.98 million.

Wachtell regained its perennial top spot after a temporary blip last year, when Wiley Rein, a Washington firm with a strong telecommunications practice, got a cool $245 million in legal fees from the settlement of a Blackberry patent case, yielding $4.43 profits per partner for 2006. Wiley Rein did not make it onto the AmLaw 100 list this year.

The feudal order is now restored: Wachtell on top, followed, as usual, by Cravath, with $3.3 million in profits per partner — a more modest 9 percent jump from their 2006 numbers. Rounding out third place is Sullivan & Cromwell, with a $3.3 million PPP.

The biggest loser, at the top, was Cadwalader, Wickersham & Taft, where profits per partner dropped 6 percent, to $2.72 million from $2.9 million. Cadwalader has a deep structured finance practice and was hit by the subprime crisis, laying off 35 lawyers in January.

The "comer" on the list has to be Quinn Emanuel Urquhart Oliver & Hedges, the Los Angeles litigation boutique, with $3 million in profits per partner this year, up from $2.43 million last year.

In a webinar yesterday afternoon, Aric Press, American Lawyer's editor in chief, called the last five years a "golden age" for law firms: "surging demand" for high-end legal work, "unrelenting rate hikes," and partners "pulling up the ladder behind them" by relegating many lawyers to nonequity partnerships.

(Earlier, a picture of Audrey Hepburn in "Breakfast at Tiffany's" appeared as Press called $2 million per partner the "new black," noting that 19 firms now boast a profit per partner at that level or above, four more firms than last year.)

Alas, it may be coming to an end. "Now the great run may be over," Press intoned, citing the fall off in deal activity and the fact that litigation and bankruptcy work have yet to kick in.

For the first time since the tech bubble burst in 2001, the head count of lawyers at the big firms grew at a faster rate than The American Lawyer's favorite statistics for gauging the economic health of a law firm: revenue generated per lawyer.

There was also the "much brooded about" increase in associate salaries. (Newbie lawyers start at $160,000 at the largest firms.)

"These costs may be fully felt this year, precisely when demand for high-priced legal help may fall," Press observed.

For lawyers worried about the impending recession, AmLaw offers the very long view to cheer them up. It hired Peter D. Sherer, a professor from the University of Calgary to project the AmLaw numbers to the year 2025. The outlook? Profits per partner at Wachtell will be $15.7 million, he estimated.

"For all the stress of the moment, if the past is prologue, then the future looks bright," Press said. "That assumes, of course, that there is enough high-end work to go around, that clients continue to pay the rate increases, and that enough young lawyers can be found to fill the offices of all these firms."

How certain is this? "It is as certain as Alex Rodriquez breaking the major league home run record," Press said. It was hard to tell whether he was waxing ironic.

by Karen Donovan