Seventeen of L.A.’s biggest law firms reported that their profits rose last year, up from 12 in 2009 and four in 2008 – in a strong sign that the field is on its way to recovery.
And in a further indication that firms are bouncing back from the recession, nearly a dozen reported better profits than they did in 2007, according to the Business Journal’s annual law firms ranking.
The strong financial results coming in from firms in Los Angeles and elsewhere around the country have surprised some in the industry. Peter Zeughauser, a Newport Beach–based legal consultant, said it appears law firms have turned the corner.
“I was expecting a good year, but not this strong,” he said. “I think it’s over. It certainly will be in 2011, if not already.”
Still, the pace of recovery has been uneven, favoring firms with strong litigation departments.
Quinn Emanuel Urquhart & Sullivan LLP and Gibson Dunn & Crutcher LLP, which have two of Los Angeles’ most successful litigation departments, enjoyed record years in both revenue and profits per partner.
Last year, profits per partner at Quinn Emanuel, which focuses exclusively on business litigation, rose 16 percent to an astronomical $3.6 million, while overall revenue rose nearly a third to $551 million. In 2007, Quinn Emanuel became the first, and still only, L.A. firm to hit $3 million in profits per partner.
Gibson Dunn cracked $1 billion in revenue and $2 million in profits per partner for the first time last year, with partner profits rising 21 percent to $2.3 million.
Among other large firms, Latham & Watkins LLP, which sustained a 21 percent drop in profits per partner after the financial crisis in 2008, reported single-digit increases in profits per partner and revenue. O’Melveny & Myers LLP, which remained the largest firm on the list with 295 attorneys in Los Angeles County, reported increased profits but a slide in revenue.
Only three firms, Sheppard Mullin Richter & Hampton LLP, Munger Tolles & Olson LLP and Loeb & Loeb LLP, reported drops in profits per partner, each in the single digits. In all, 30 of L.A.’s 50 biggest law firms on the Business Journal list did not report profits and 26 did not report revenues.
Quinn Emanuel and Gibson Dunn are examples of strong litigation departments that had record years.
At Quinn Emanuel, name partner Bill Urquhart listed three main factors for the firm’s big year: a burgeoning intellectual property practice, steady work handling cases against financial institutions and continued success with high-upside contingency cases.
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