The Old Guard of L.A.’s legal scene might finally cave.
For years, Los Angeles-based Gibson Dunn & Crutcher LLP has been the last of the city’s largest law firms to pay all its partners with firm profits.
But in recent weeks, Gibson’s senior partners have been in talks to include among its ranks “non-equity” partners, or those partners who do not get paid with profits. No details have been divulged about the plan, which has yet to be approved.
The shift would mimic moves at most other firms, which have replaced traditional legal partnerships with a system in which a small percentage of partners are paid with salaries. Such a structure allows firms to add partners while continuing to boost profits for each partner.
“We are aware that many of our peer firms have had a non-equity structure in place for many years, and we are simply evaluating whether we should consider a change,” said Ken Doran, the firm’s managing partner and chairman of its executive committee, in an e-mail.
The talks come as Gibson Dunn has fallen in the past year from being the most profitable firm in Los Angeles. In 2004, the firm’s profits per partner were $1.5 million, up 10.2 percent from the year before but not enough to top the profits of two rival firms, Quinn Emanuel Urquhart Oliver & Hedges LLP, which reported $1.9 million per partner, and Irell & Manella LLP, with $1.54 million.
“They’re all profitable,” Edward Poll, president of LawBiz Management Co., said of today’s law firms. “The point is: How profitable? In order to attract lateral talent, or to keep existing talent, you have to make sure your number falls within a given range.”
The move would put Gibson more in step structurally with its closest rival in size, Latham & Watkins LLP, which reported $1.4 million in profits per partner last year. Latham, with $1.2 billion in revenue, has twice the number of lawyers as Gibson does but over the years has shifted about one-fifth of its partners to “non-equity” status.
Bigger Games
Two video game associations that have filed suits to prevent laws restricting the sales of violent video games won a court injunction in Michigan last week that could stop a similar law in California from becoming effective.
A U.S. federal judge ordered that a Michigan law barring retailers from selling violent video games to minors not become effective until the litigation gets resolved. The law was originally set to become effective on Dec. 1.
The law is similar to legislation signed into law by Gov. Arnold Schwarzenegger that is supposed to become effective on Jan. 1. Violators must pay a $1,000 fine and are subject to prosecution by city and state governmental agencies.
Sean Bersell, vice president of public affairs at the Video Software Dealers Association, said he expects the Michigan ruling will help video game associations in their case against California.
“We’ll include that decision in our arguments to the judge in California,” Bersell said. “We’ll be in court in San Jose on Dec. 9, making similar arguments to the judge, and we’re confident (the judge) in San Jose will come to the same conclusion that the plaintiffs are likely to win.”
In the California suit, the Entertainment Software Association and the Video Software Dealers Association claim that the new law restricts their free speech rights. They also say the law is vaguely written, particularly the definition of a violent game, which is described as one that “includes killing, maiming, dismembering, or sexually assaulting an image of a human being,” the suit says.
The two groups also have sued to prevent a similar law from becoming effective in Illinois.
Comings & Goings
Three former lawyers at the Los Angeles office of Coudert Brothers have joined other firms. John St. Clair and Paul Lin, both mergers and acquisitions lawyers, have joined Jones Day, where St. Clair will be a partner and Lin will be of counsel. Robert Jesuele, whose clients include the estate of author C.S. Lewis, has joined Hogan & Hartson’s Los Angeles office as a partner.
*Staff reporter Amanda Bronstad can be reached at (323) 549-5225, ext. 225, or at
[email protected]
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