Though there are still firms at the top of L.A.’s legal pyramid with a chokehold on higher-rate work, the industry has been shifting to the middle market. The Business Journal’s annual survey of law firms once again shows that growth is coming from lower-rate or midsize firms. Meanwhile, firms that lost the most attorneys in the last year were either those with higher rates or those that saw fallout after proposed or completed mergers.

Of the largest 150 firms, ranked by the number of attorneys, the ones to grow the most in Los Angeles in the last year were Littler Mendelson and Blank Rome, which each gained a dozen attorneys. Both are national firms that charge lower rates and have quickly growing L.A. outposts: San Francisco’s Littler has expanded to 79 attorneys in Los Angeles from 53 in 2008, while Philadelphia’s Blank Rome has grown to 42 attorneys since opening in Century City in 2009. Third was West L.A. midsize firm Manatt Phelps & Phillips, which gained 11 attorneys. Other firms to see healthy bumps were Liner, a midsize firm in Westwood, and Indianapolis’ Barnes & Thornburg.

“In this postrecessionary environment, those who pay for legal services want to get greater bang for the buck. A lot of law firms are very eager to step into the void and are more rate sensitive and the firms that are not that flexible in rates are going to lose business,” said Sandy Lechtick, president of legal search firm Esquire Inc. in Woodland Hills. “One also has to look at the folks that left and where they went, and in some cases they’re leaving to go to smaller or midsize firms.”

On the flip side, perhaps no firm better illustrated the changes in the market over the last year than Kaye Scholer. The highly profitable New York firm lost 21 attorneys in Los Angeles, about half of the local staff, after management publicly announced it would no longer be emphasizing its corporate practice here. Sources familiar with the firm said the office’s corporate group struggled to match the higher rates of East Coast counterparts.

After Kaye Scholer, the firms that shrank the most locally were Akin Gump, McKenna Long & Aldridge, Skadden and Norton Rose Fulbright, which each saw double-digit drops in L.A. attorney count. Akin Gump and Skadden are national firms with higher rates like Kaye Scholer (white-shoe Skadden has shed 60 attorneys in Los Angeles in the last five years). McKenna, meanwhile, saw an exodus amid merger talks with megafirm Dentons. Norton Rose saw attorneys leave after a merger that grew the firm to 3,800 attorneys worldwide from 800. Attorneys often leave immediately after mergers due to client conflicts or cultural shifts.

Cumulatively, the 100 largest firms in Los Angeles by head count lost 76 attorneys in the past year, a loss of about 1 percent. That was a smaller drop than in previous years. L.A.’s largest firms lost an average of more than 2 percent annually from 2008 to 2013.

This was the first year the list was expanded to 150; in previous years the Business Journal tallied the 100 largest firms in Los Angeles.

Another Manatt Hire

Manatt Phelps & Phillips, which added the third most attorneys among L.A.’s largest law firms in the last year, has continued its recent growth spurt with the hiring of litigation partner John M. Gatti.

Gatti is known as one of the entertainment industry’s top litigators. In addition to joining as partner, he now co-chairs Manatt’s entertainment and media litigation group. Gatti comes from the Century City office of New York’s Stroock & Stroock & Lavan, which is down to 39 attorneys from 55 in 2008.

He cited Manatt’s depth in entertainment and media as a reason for his move.

“There’s definitely more of a focus of Manatt’s practice in the areas that are becoming very important to clients in the entertainment and media space, in issues related to privacy and digital media rights, both in litigation and in transactions,” he said. “It’s always nice to see growth and the addition of talented attorneys.”

Gatti, 50, is a commercial litigator with mostly entertainment and media clients. One of his biggest cases was a 2007 win for film producer Alan Ladd Jr. against Warner Bros. that set precedents for television licensing allocations. He has also represented CBS Entertainment and MGM.

Staff reporter Alfred Lee can be reached at alee@labusinessjournal.com or (323) 549-5225, ext. 221.

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