Real estate attorney Tom Muller was the third partner out the door at O’Melveny & Myers LLP to join Manatt Phelps & Phillips LLP.

And even though they brought their clients with them, Muller and the two others weren’t simply jumping ship. They were pushed, or rather coaxed away from the firm.

All three took advantage of the Los Angeles-founded firm’s early retirement package, which was temporarily offered to partners at least 50 years old.

Under normal circumstances, partners would have to wait until they reached 55 years old to receive a retirement package from the firm. The new early retirement payouts were offered to partners who have logged at least 15 years with the firm. Partners were guaranteed annual incomes in the low six-figures for the rest of their lives, plus other incentives.

The departing attorneys are also free to move their practices, clients included, to other firms. Muller’s clients, Macerich Co. and Carson Estate Trust, went along with him to Los Angeles-based Manatt Phelps.

“O’Melveny is a wonderful firm, and my decision to leave was difficult,” said Muller, 54, who had spent 23 years with the firm. “But I thought my clients deserved more real estate support than I could provide them at O’Melveny.”

He didn’t mention the significant personal cash benefit of leaving. Why would a law firm pay some of its long time partners to go away?

O’Melveny leaders have been reluctant to talk about the early retirement plan and have limited their comments to vague generalities about wishing its “retirees” good luck in their future endeavors.

O’Melveny’s offer of early retirement to 50 year olds is highly unusual.

Gary Saenger, president of executive search firm Saenger Associates in Santa Clarita, said that it is more common for companies to want to retain experienced executives for a number of reasons, including their institutional knowledge.

“This is in opposition to the trend,” he said. “It is unique from what I have heard, rather than a common practice.”

But he said he was impressed.

“It’s creative and it’s humane that a person in an earlier part of their career can go and set up shop somewhere else.”

Behind the facade

Legal industry observers say offering generous retirement pay allows the firm to quietly shrink practice groups that are no longer a priority.

These early retirement plans can also serve as a means for firms to boost profitability by eliminating practices that are less lucrative. O’Melveny’s profits per partner were flat last year.

Also, legal observers say offering retirement incentives can make room for younger lawyers in higher billing practices to move up.

“Firms are looking for ways to open up the partnership ranks, which is hard to do if you want to maintain high levels of profits per partner,” said Peter Zeughauser, a Newport Beach-based legal consultant.

Early retirement incentives have long been common at many companies, including O’Melveny, but the current plan stands out because it lowers the retirement age to 50.

“O’Melveny is probably going a little younger than most firms go,” Zeughauser said.

O’Melveny was founded in Los Angeles in 1885, and counts local powerbroker and former Secretary of State Warren Christopher as a senior partner. But in recent years, the firm, which now has more than 1,000 attorneys in 13 offices in the U.S. and abroad, has focused on building its offices in Asia and on the east coast, according to knowledgeable industry sources.

O’Melveny’s chairman, Arthur B. Culvahouse, is based in the firm’s Washington, D.C. office, a sign that the power center has moved from L.A.

Amid this change in the firm’s culture, some practice groups have thrived and others have withered. The latter has led to a number of departures from the firm’s local offices in recent months.

In March, corporate attorney Masood Sohaili left O’Melveny to join the Los Angeles office of Manatt Phelps as partner. And real estate partner Steven Edwards followed Sohaili, joining Manatt Phelps’ Orange County offices as of counsel.

“We were very fortunate to be able to bring on Masood, Steve and Tom,” said William Quicksilver, chairman of Manatt Phelps. “Our real estate practice is one of our core practice areas, and they are part of our strategy to build the firm’s real estate and land use capabilities.”

In addition to bringing several real estate investment trust clients to the firm, Muller is also helping Manatt Phelps expand its land use practice by bringing Beverly Hills-based client Galaxy Commercial Holding LLC to the firm.

“I had been looking for a firm that has high caliber lawyers and a real estate practice that is broad enough to encompass both transactions and land use,” Muller said. “And Manatt stood out as a firm that has 70 attorneys doing what I do.”