A 31-year-old partner with a prominent New York law firm specializing in mergers and acquisitions has resigned after coming under investigation in the Dennis B. Levine insider-trading case.

A spokesman for Wachtell, Lipton, Rosen & Katz said Ilan K. Reich resigned Monday evening and has retained an attorney. The spokesman, Lawrence Pedowitz, said the law firm understands that Reich is under investigation for conduct while he was an associate, before he became a partner on Jan. 1, 1985.

"Mr. Reich is a brilliant young lawyer who had enjoyed the confidence of the firm and its clients," the Wachtell, Lipton statement said. Pedowitz declined to elaborate further.

Other lawyers said the disclosure is devastating to Wachtell, Lipton, which is known as an adviser to companies involved in mergers and takeovers. American Lawyer magazine, in its current issue, ranked Wachtell, Lipton as the most profitable among the nation's major law firms, with an average of $880,000 in annual profits for each partner in the firm. It has 41 partners and about 50 associates, according to the article.

In its case against Levine, the Securities and Exchange Commission cited 54 instances between June 1980 and December 1985 in which Levine profited from secret investments made with advance knowledge of pending deals.

In 25 of those deals, neither Levine nor his employer was involved, and the SEC contended that, in these cases, he was tipped off by others. The Wachtell, Lipton firm represented the initiator in nine of those deals, according to press reports. All but one of those deals occurred before Reich was promoted from associate to partner in the firm.

Reich's attorney, Robert Morvillo, said Reich "has been advised to refrain from commenting upon this situation until his attorneys become more conversant with the facts." Reich did not return telephone calls to his Manhattan residence. Officials of the SEC and the U.S. Attorney's Office in Manhattan declined to comment.

Sources close to the case said that Reich is suspected of providing Levine with information about takeovers and mergers, although it is not known whether Reich allegedly received any money in return. Levine, who had been a managing director and merger specialist with several leading Wall Street investment banking firms during the past six years, pleaded guilty to four criminal counts last month related to his illegally trading on insider information. He has been cooperating with prosecutors since then, identifying sources of his information.

Born in Brooklyn, Reich received undergraduate and law degrees from Columbia University and was an editor of the Columbia Law Review in 1979, his last year at law school.

The implication of Reich in the Levine case, if true, would further extend the insider-trading network that prosecutors believe was centered on Levine.

In addition to Levine -- a former managing director at Drexel Burnham Lambert Inc. and vice president of Shearson Lehman Bros. -- two others have settled civil complaints by the SEC, agreeing to repay profits from insider trading transactions connected with Levine.

The two, Robert M. Wilkis, a former merger specialist with Lazard Freres Inc. and later a first vice president in E. F. Hutton & Co.'s mergers and acquisitions department, and Ira B. Sokolow, a vice president at Shearson Lehman, also are cooperating with the U.S. Attorney's Office.

In a separate insider-trading case, Andrew Solomon, a former arbitrage analyst with Marcus Schloss & Co., has asked to be sentenced soon for his part in an insider-trading ring, his attorney said. Solomon, two other young Wall Street professionals and a fourth colleague have pleaded guilty to various federal charges in connection with their exchange of confidential information on mergers and other deals. His sentencing is expected to occur late next week.

Solomon and three of the other defendants have been cooperating with prosecutors. Their sentencing has been postponed until their cooperating has concluded, attorneys said. A fifth defendant has pleaded innocent and is awaiting trial.