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Friday, Feb 3, 2023

L.A.’s Oldest Firm Losing Appeal for Lawyers?

For the second time in four months, O’Melveny & Myers bid farewell to a managing partner when Carla Christofferson resigned from her longtime post in the law firm’s downtown L.A. office.

Christofferson, who spent her entire legal career at O’Melveny, joined Century City engineering giant Aecom this month as executive vice president and general counsel, but her departure is no isolated incident.

More than three dozen lawyers have fled O’Melveny’s downtown and Century City offices in the past year alone. The drop in head count comes as revenue at the firm slipped 9.3 percent to $665 million last year, the lowest level in more than a decade.

Still, O’Melveny remains among the largest shops in Los Angeles County, according to the Business Journal’s annual list of law firms. (See page A2.) And Mark Samuels, partner in the downtown office and vice chair of the firm, said there’s nothing to be concerned about.

“We don’t have any particular focus on head counts for head counts’ sake; that’s not what we’re about,” he said. “We have a long-term strategy that calls for significant investment, and we’ve continued to invest in laterals and technology.”

Samuels noted that O’Melveny last year was coming off the two most profitable years in its 130-year history, which explains the drop in revenue. At the end of 2013, for instance, the firm advised Anschutz Entertainment Group as the downtown company defeated wrongful death claims brought by Michael Jackson’s estate.

However, the modest results stand out because most other major law firms reaped the benefits of an improving legal market in Los Angeles. Indeed, only six of the 44 law firms that disclosed financial results to the Business Journal this year reported a year-over-year drop in revenue. And while O’Melveny’s head count shrank, other firms have been hiring up.

“The general hiring landscape within law firms has improved significantly in the last six to eight months,” said Sunmi Kim, L.A. market manager at Menlo Park’s Robert Half Legal. “As the market continues to improve, we know that firms are actively and aggressively recruiting for top talent.”

Trouble begins

O’Melveny had been L.A.’s biggest law firm for 20 years. But it fell to No. 2 in 2013 and then to No. 3 last year. It is No. 4 on the Business Journal’s list this year with 222 lawyers, down 14 percent from last year.

Founded in 1885 in Los Angeles, O’Melveny is the city’s oldest law firm. Sticking to its Hollywood roots, the firm has built a strong reputation worldwide for its entertainment and media practice.

But it was in that arena that O’Melveny took its biggest hit last year. Longtime rival Latham & Watkins stole away six entertainment partners, including Christopher Brearton, who had served as O’Melveny’s other managing partner in the L.A. area; he was in the Century City office. About 10 other lawyers followed the group to Latham in November.

While the entertainment group accounts for only a fraction of the 37 attorneys who’ve left O’Melveny in the past year, Kim said it’s common for lawyers in other practice areas to jump ship after a firm loses key players.

“I have definitely seen the domino effect of certain key rainmakers leaving a firm and taking clients with them,” she said. “From a morale standpoint, I think it leads people to believe there might be some instability within the firm, and so there’s a greater likelihood of people looking to make a change.”

But Christofferson, who had been with O’Melveny for 22 years, said that had nothing to do with her decision to join Aecom earlier this month.

“I love living in Los Angeles and I now have the opportunity to work for a company here that has over $19 billion in revenue, and there was just no way I could pass it up,” she said. “It would have taken a lot to pull me out of O’Melveny, because I was very happy there, and this was a lot.”

Christofferson, who also made a name for herself as a co-owner of the Los Angeles Sparks basketball team until she sold it last year to Earvin “Magic” Johnson and Los Angeles Dodgers controlling owner Mark Walter, oversees about 120 in-house attorneys in her new role with Aecom. She’s also tasked with managing risk for the engineering company, which has grown tremendously in recent years, especially after it acquired San Francisco rival URS Corp. for $6 billion last year.

O’Melveny has since tapped attorney John-Paul Motley to head up its downtown office, replacing Christofferson. Bo Pearl filled the managing partner position in Century City, replacing Brearton.

High hopes

Despite the downward trend at O’Melveny, opportunities for lawyers continue to improve.

Nearly one-third of attorneys anticipate their firms will ramp up hiring efforts in the next year, according to a report published this month by Robert Half. Only 5 percent expect to see a drop in hiring, while 60 percent of lawyers say they don’t anticipate any change from the current pace.

Daniela Dakshaw, managing director in the downtown office of staffing firm Tower Legal Solutions, said she has observed a surge in her recruiting department.

“Permanent placement is absolutely booming right now,” she said. “Especially out here in California, I would say there’s a huge need for (legal recruiters) right now.”

Samuels, O’Melveny’s vice chair, said that he expects his firm will bounce back this year. He noted that business has already started to pick back up.

In November, for example, the University of Virginia hired O’Melveny to serve as independent counsel for an internal investigation into possible sexual violence on its campus. Plus, the firm was tapped last month to represent Houston food service supplier Sysco Corp. in a dispute with the Federal Trade Commission over its planned merger with US Foods of Rosemont, Ill.

“We don’t take anything for granted,” Samuels said. “We have to earn our business every day. We’re very fortunate to have a very strong base of loyal clients. Knock wood, we’re starting off very strong here and we don’t see any let up as we look down the road this year.”

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