Despite their roots as partnerships, law firms large and small today operate as traditional corporations. Much as when one company acquires another, law firms that add practices must invest enough resources to ensure the move will be viable in the long run, said Erin Pitman, director of an incubator at Loyola Law School in downtown Los Angeles who helps recent graduates learn the business of law.
“For a big firm model, you’ve got a lot of corporate clients and complex litigation matters,” Pitman said. “One partner could never really have their own solo practice. It’s just too much to do.”
When launching a practice on any level, it takes years to earn a strong reputation and build a large book of business, she said. That’s why it makes sense for firms to hire experienced and well-established attorneys in bulk, when possible.
Calabrese, now the chair of Latham’s entertainment and media practice, said his new firm’s previous success with adding practice areas was one of the biggest factors in his decision to move.
“Latham has a demonstrated track record of taking practice groups on board and allowing them to thrive,” he said. “People have been courting me and our group for many years, and I generally looked at that with indifference. The Latham folks were probably the most persistent, the most studied and had done the most deep thinking about what they would do with a practice like ours.”
Calabrese said he also appreciated the firm’s respect for its roots. While it has experienced tremendous growth outside of Los Angeles, there remains a strong willingness to invest in its home market.
Those roots date to 1934, when Dana Latham and Paul Watkins formed a three-lawyer boutique tax and labor firm in downtown Los Angeles.
Today, Latham & Watkins has 70 partners in Los Angeles and firmwide revenue that exceeds $2.6 billion. Yet despite its growth, the recession and retirement of older attorneys took its toll as its head count declined. (Despite those reductions, Latham last year reported to the Business Journal that profits per partner in 2013 were $2.5 million. O’Melveny’s were $1.7 million in the same period.)
Luring the O’Melveny entertainment team reflected Beaubien’s effort to push Latham’s business model forward.
He joined the firm in 1991 and practiced in the corporate finance, mergers and acquisitions and public company advisory group. For generations, tax law and transactional work were the firm’s bread and butter. Now with an entertainment practice, one of the most lucrative areas of law, Beaubien said the firm will benefit from enormous opportunities.
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