Jim Beaubien, managing partner of Latham & Watkins’ L.A. offices, wants the firm to be the New York Yankees of L.A. law – and he’s George Steinbrenner.
Since becoming managing partner five years ago, Beaubien has focused on building Latham, founded 81 years ago, into a powerhouse by both signing top free agents and developing young talent.
His latest coup was engineering the defection late last year of 16 members of rival O’Melveny & Myers’ entertainment, sports and media practice, including six of its eight partners. Led by Joseph Calabrese and Christopher Brearton, the group is considered by many to be among the best in the business. More acquisitions in the litigation and private equity realm could be in the offing.
“I’m building the Yankees,” Beaubien said. “You can come play for the Yankees or you can play against them.”
To get to that level, though, he has faced a long rebuilding project.
The firm peaked at 312 attorneys in Los Angeles in 2008, just before the Great Recession hit, and, until this year, saw its head count decline every year since. At 214 lawyers last year, it had lost nearly one-third of its prerecession attorneys. With the pickup of the bulk of O’Melveny’s entertainment practice, it has risen this year to 221.
Founded in 1934, Latham, the city’s fifth-largest firm, grew slowly in its early years. While it expanded domestically, it wasn’t until 2000 that it opened its first office outside the United States. Today, the firm has 32 offices around the world, including Germany, France, China, Saudi Arabia, Spain and London, to name a few.
It historically has grown in spurts, often adding entire practice groups in bulk. The decision to build its entertainment practice by acquisition rather than developing the talent in-house reflected an approach it took in 2010 when it launched its international energy industry practice in Houston by bringing in eight partners from three different firms: Akin Gump Strauss Hauer & Feld, Baker Botts and Vinson & Elkins.
It is a strategy that has benefits, but typically only the largest law firms have the resources to pull it off.
“It’s not like they would have to spend a year or two or three developing that practice,” Michael S. Sherman, a veteran entertainment lawyer in the Century City office of Reed Smith, said of the hires from O’Melveny. “If you’re adding one or two people, you would have to build a group around them. The senior people in that group have been together for a number of years, and they just simply have to pick up all their stuff and move from one place in Century City to another.”
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.
“We’re very much a firm of initiatives and a firm that evolves,” he said. “We’ve got this fantastic global platform, but we were on nobody’s short list in entertainment. We went from being nowhere in that industry to being at the top.”
Indeed, Beaubien said the addition of the entertainment and media practice marks the first large step in an ongoing growth plan for Latham in Los Angeles.
The firm opened an office in Century City to accommodate the new group and Beaubien said the firm’s presence on the Westside will likely open the door to entice even more prominent lawyers who otherwise wouldn’t consider Latham.
“There are a lot of successful lawyers on the Westside who won’t come downtown,” he said.
And, unlike the present-day Yankees, Latham is not just focused on acquiring heavy hitters but on cultivating the next generation of rainmakers.
It has recently added nine lateral partners, each of whom are 45 or younger.
Last year, for instance, the firm hired John Pierce, a 42-year-old litigator focused on complex business disputes, as well as Kevin Ehrhart and Scott A. McPhee, who are both 42 and partners in the firm’s finance department.
Even as the existing partners continue to age, Latham has shaved the average age of its L.A. partners. In 2010, the average was 49.5 years, while it now sits at 48.8 as of March 1.
“Almost all of the lateral partners we’ve attracted in the last five years have been relatively young,” Beaubien said. “If you hire someone who’s 55, how much longer are they going to practice?”
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