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For five Am Law 100 and Second Hundred firms with roots in Los Angeles—Allen Matkins Leck Gamble Mallory & Natsis; Jeffer Mangels Butler & Mitchell; Loeb & Loeb; Manatt Phelps & Phillips; and Sheppard Mullin Richter & Hampton—2012 was largely a year for maintaining the status quo, according to The American Lawyer's reporting.
Most of the firms—which range in size from 126-lawyer Jeffer Mangels to 521-lawyer Sheppard Mullin—posted 2012 financial results on par with their respective performances in 2011, while also holding their head counts relatively steady. And though litigation accounts for a big chunk of revenue at all five firms, their practice mixes aren't identical. At Allen Matkins, for instance, up to 60 percent of the firm's gross revenue is the product of real estate–related work, while Manatt and Sheppard Mullin offer a broader array of legal services.
Still, given that Southern California remains a main, if not the main, revenue center for each, an examination of how the five firms fared in 2012 sheds some light on the state of the region's legal industry.
Sheppard Mullin, the largest of the five, was also the standout financial performer. The firm posted gains in most key financial categories, with gross revenue up 9.4 percent, to $437.5 million, revenue per lawyer up 4.3 percent, to $840,000, and profits per partner flat, at $1.27 million.
Sheppard Mullin's solid financial performance was accompanied by a 5 percent increase in overall attorney head count. The firm's equity partner ranks grew 14 percent, from 86 to 98, while the number of nonequity partners rose 1.4 percent, from 147 to 149.
“I was really proud of the growth we accomplished in a challenging market,” says Sheppard Mullin chairman Guy Halgren, who notes that much of that growth was tied to the firm’s technology- and digital media–focused practices in Del Mar, Century City, and Palo Alto. The firm also opened offices in Chicago and Seoul last year.
Prominent matters in which Sheppard Mullin played a leading role last year included its representation of Dick Clark Productions in a trial against the Hollywood Foreign Press Association over rights to the Golden Globe Awards show and kidney dialysis provider DaVita Inc. in its $4.42 billion acquisition by HealthCare Partners, an operator of medical groups and physician networks.
At real estate–focused Allen Matkins, meanwhile, the firm's gross revenue was essentially flat in 2012, declining 0.9 percent to $159.5 million. Thanks in part to a drop in attorney head count, the firm actually posted increases in other financial categories. Its profits per equity partner rose 3.2 percent, to $805,000, and its revenue per lawyer climbed 5.6 percent, to $855,000.
The firm’s overall attorney head count, meanwhile, declined 6 percent, to 187. The equity partner ranks dipped 4.7 percent, to 101, and the nonequity partnership shrank 23.5 percent, to 13.
David Osias, Allens Matkins's San Diego–based managing partner, calls last year's financial performance “strong but not spectacular.” The strength, he says, is reflected is in the firm's ability to essentially sustain the rebound it experienced in 2011, when gross revenue climbed 11 percent. Osias says the firm's core real estate practice saw an uptick in demand in last year's fourth quarter and that the labor and employment and general commercial litigation groups experienced robust demand throughout 2012.
For Jeffer Mangels, 2012 was nearly a rerun of 2011 in many respects. At $103 million, the firm's gross revenue was flat. Profits per partner rose 2.6 percent, to $1.55 million, and revenue per lawyer slipped 1.2 percent, to $815,000.
As at Allens Matkins, Jeffer Mangels's head count remained largely unchanged in numerical terms last year, rising 0.8 percent, to 126. The firm's equity partnership shrank by 2.4 percent, from 41 to 40, while the nonequity partner ranks fell 6.3 percent, from 32 to 30.
Managing partner Bruce Jeffer's take on the 2012 results: “Basically it is still not a great business environment. For most firms, us included, you had to keep your head down, watch your expenses, and make sure your ratios are good.”
Jeffer pointed to litigation as one of the firm’s busiest practices in 2012. In one high-profile matter, Jeffer Mangels is representing Saudi prince Prince Abdul-Aziz ibn Abdul-Aziz al Saud in his efforts to build a controversial residential compound in Los Angeles’s Benedict Canyon neighborhood.
At Loeb & Loeb, the year was one of modest declines across the key financial categories. The 299-attorney firm's gross revenue dipped 2.1 percent, to $252 million; its profits per partner fell 3.2 percent, to $1.5 million, and its revenue per lawyer slipped 1.2 percent, to $845,000.
In terms of overall head count, Loeb & Loeb ended 2012 with two fewer attorneys—a 0.7 percent drop—than it started the year with. The firm's equity partnership ranks shrank by 4 percent, from 50 to 48, while the number of nonequity partners rose 3.4 percent, from 116 to 120.
Loeb & Loeb’s notable matters last year included defending Showtime Networks Inc. against copyright infringement allegations related to The Big C.
Manatt Phelps & Phillips was another firm whose gross revenue—$268 million—was flat. On a positive note, the firm did register slight gains in both profits per partner (1.6 percent, to $1.25 million) and revenue per lawyer (0.6 percent, to $825,000).
Manatt's total lawyer head count came in at 325, one fewer lawyer than it had in 2011. The firm's equity partner ranks declined by 1.9 percent, or one partner, to 52, while the nonequity ranks rose 5.8 percent, from 137 to 145.
Managing partner William Quicksilver told The Am Law Daily via email, “Manatt had a solid 2012 in what continues to be a challenging business environment.”
While saying that the firm "achieved increases in efficiency and productivity, particularly in converting our work effort into collections and controlling expenses.” Quicksilver also noted that 2012 wasn’t solely about keeping expenses down. Along those lines, he said, the firm continued to make investments in “cross-disciplinary” practices such as digital media and health care strategy and transactions.
This report is part of The Am Law Daily’s early coverage of 2012 financial results of The Am Law 100/200. Click here to see an interactive chart comparing this firm's 2012 finances to those of other Am Law 100 and Second Hundred firms that The Am Law Daily and its sibling publications have reported on to date. Final rankings and full results for The Am Law 100 will be published in The American Lawyer’s 2013 issue and on AmericanLawyer.com. The Am Law Second Hundred will be published in the June issue.
