lawlistory/mike1st/mark2nd

BENJAMIN MARK COLE

Senior Reporter

As it has been, so it is: The largest law firm in Los Angeles County remains downtown Los Angeles-based O’Melveny & Myers, the powerhouse outfit with 259 local lawyers.

The reign of O’Melveny & Myers is not of the flash-in-the-pan variety. The firm was founded in 1885, and has for generations been prominent in nearly all areas of business law.

However, in something of a switch, the No. 2 firm on The List this year is Latham & Watkins, also based in downtown Los Angeles, with 220 local lawyers.

Latham & Watkins has been growing in the 1990s, while other firms have been hard-pressed to retain the status quo, or even have been shrinking.

By moving into the No. 2 spot, Latham & Watkins has supplanted Gibson Dunn & Crutcher, long the No. 2 local law firm behind O’Melveny.

But Gibson Dunn & Crutcher has been downsizing in the 1990s in Los Angeles, leading to a smaller headcount, confirmed Ronald Beard, managing partner.

“We have been using the Los Angeles office as a kind of feeder branch to other offices around the country, particularly East Coast branches,” said Beard. “But that’s a process we are going to change.”

Reflecting the tough times for L.A. law in general, both O’Melveny & Myers and Gibson Dunn & Crutcher have much smaller phalanxes of lawyers locally today than five years ago.

(O’Melveny has decreased to 259 from 300 in 1992, while Gibson Dunn has fallen to 217 from 260 in 1992).

The local recession, and the failure of Los Angeles to emerge as a financial center that would rival New York, are two reasons for the contraction among major firms, said Beard of Gibson Dunn.

“There was a feeling in the late 1980s that Los Angeles, if not eclipsing New York, would emerge as a second financial center. But instead, the opposite has happened,” said Beard, referring to the disappearance of major bank headquarters in Los Angeles, and the failure of major brokerages to establishment investment banking operations in Los Angeles.

“When the financial work went back to New York, you saw the lawyers go there too,” he said.

Too, the law profession has become very competitive in the 1990s, a change that many firms were unprepared for, said Beard.

“Before the 1980s, law firms didn’t know what competition was, but then it literally changed overnight,” said Beard. “Some firms, which were sort of just pulled along in the more-plush times, came in for a shock in the 1990s.”

Such well-recognized firms as Kindel & Anderson; Lawler, Felix & Hall; and Adams, Duque & Hazeltine have disappeared in this decade, noted Robert Long, managing partner at Latham & Watkins, which has been growing.

Keeping the proper culture is one necessity for acheiving growth, said Long. “You have to get talanted lawyers, but you also have to get people who want to work together. They have to work together to create a culture.”

In the last year, the business climate has improved dramatically, said Long. “We have a lot of younger partners, who have developed relations with their clients. And that is a great shot in the arm.”

In general, the pattern of law firms in Los Angeles appears to be this: They were larger in 1992 than they are now, but they appear to be growing again.

For example, in 1992, the 25th-largest firm in Los Angeles County was the now-defunct Adams, Duque & Hazeltine, with 78 lawyers. On this year’s List, the 25th-largest firm is Brobeck Phlegar & Harrison LLP, with just 70 lawyers.

The 50th-largest firm in 1992 was Spray, Gould & Bowers, with 52 lawyers. This year, the 50th-largest firm is O’Flaherty & Belgum, with 34 lawyers.

But compared with last year, 32 of the 50 largest firms reported growth, on this year’s List. The industry appears back in a growth mode, even if the picture is somewhat mixed, on a firm-by-firm basis.

The rise and decline of law firms is a topic of speculation among lawyers, but even practitioners say they are stumped to explain exactly why some firms grow and others do not.

“I am reflecting on what has happened here, looking for some common factor to explain why some firms grow, but I am not coming up with any unifying themes,” said Ron Olson, nameplate partner at Munger, Tolles & Olson, based in downtown Los Angeles, and the county’s 14th-largest firm.

Founded in 1962, Munger, Tolles has steadily grown in the intervening decades. Olson said the growth is the result of hiring talent, not the product of a business plan, or marketing efforts.

“We are out trying to hire the very best young lawyers that are available, with the best talent, and that, esssentially, will allow us to attract superior clients,” said Olson. “Success starts with the talent. We don’t start out each year with a plan on the number of people we are going to hire.”

Munger, Tolles & Olson does not advertise or otherwise market itself, or follow other business procedures to raise its profile, said Olson. “I certainly observe more of that going on, but we don’t have a marketing agency guiding our actions, no marketing brochures. We let the results do the talking.”