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LA firms reveal strong profits for 2005

A recent study indicates that Los Angeles’ top firms have been among the best performers in the U.S. legal market for the past five years. The City’s ‘big four’ have posted robust figures for 2005, with a combined income of $3.6 billion, as they begin to challenge the leading New York firms in terms of profitability and size.

O’Melveny & Myers marked the steepest increase in profits per equity partner, with figures rising 23% to $1.62 million. Latham & Watkins maintained its position as the City’s richest firm, with revenue rising to $1.41 billion. Gibson Dunn & Crutcher, meanwhile, recorded a 25% increase in revenue in Europe, while Paul Hastings Janofsky & Walker saw profits and revenues rise by more than 10%.

Paul Hastings chairman Seth Zachary claims that the “traditionally Los Angeles-based firms are becoming more and more globally-focused. [Our] markets are increasingly intersecting with Wall Street firms.” Throughout 2005, Los Angeles maintained its reputation as being at the forefront of innovative corporate management and aggressive expansion policies. According to Joseph Shenker, new Vice Chairman of top Wall Street firm Sullivan & Cromwell, “We view [the larger LA firms] as just another New York firm—they are holding their own.”

02-24-2006

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Kelley Drye partners vote to merge with Collier Shannon

The expected merger between Kelley Drye & Warren and Collier Shannon Scott is moving towards finalization. Partners in the Washington, D.C., office of Kelley Drye & Warren voted in favor of the merger on Friday. The merger, however, still requires the approval of Kelley Drye's New York partners.

The deal will increase Kelley Drye’s Washington numbers to nearly 140 with the addition of Collier Shannon’s 80 attorneys. According to Kelley Drye Chairman John M. Callagy, it will also add practice groups in lobbying, international trade, consumer protection and antitrust. Mr. Callagy said the Washington firm's practices were complementary to Kelley Drye's New York practices, particularly in the field of litigation. "Their litigation practice is right now not as deep as ours," he said, "but they have a great client base."

Callagy feels it is important to maintain a moderate firm size to ensure quality service, and he described the deal as an attempt to grow Kelley Drye without participating in a much larger merger.

02-23-2006

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Change in leadership at Shearman & Sterling signals revival

“I believe we are a top-tier firm, and I think we will remain a top-tier firm,” emphasized Senior Shearman & Sterling partner Rohan Weerasinghe. “We’re cognizant of the fact that for the past four years, we’ve done well but not as well as our peer firms,” said Mr. Weerasinghe.

Chief responsibility for reversing Shearman’s downward trend of the last five years fell to the Sri Lankan-born Weerasinghe last June, when he was selected by Shearman’s policy committee and elected by partners to the firm’s top leadership position.

In 2001, the firm dismissed around 80 attorneys, 10% of its total staff, the first downsizing in its history. “We grew the firm probably faster than demand warranted,” said Weerasinghe, who once headed the capital markets group. “Other firms did the same thing, though not as visibly,” he said. “Since that time, head-count size has not been an issue.” The firm ranked first in representing clients in global IPOs in 2005, and it was the 11th-biggest adviser to buyers and sellers in global M&A for 2005.

The transition in leadership has spurred talk of a fresh start for the 133-year-old firm. As the first non-white partner to lead a large New York law firm, Weerasinghe succeeded Senior partner David W. Heleniak, who led the firm from 2001 until last May. Weerasinghe has attempted to narrow the profit gap and retain top partners by consolidating units, putting more resources into litigation and expanding in Asia. The firm says its profits per partner grew 22% last year, finally pushing past its 2000 peak to reach $1.4 million.

02-23-2006

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Reed Smith eyeing Texas for expansion

Pittsburgh-based Reed Smith is reportedly planning to venture into the Texas legal market. The 1,000+ lawyer firm plans to open offices in Houston, Dallas and Austin.

Reed Smith is seeking to merge with a firm that has an established presence in Texas. Managing partner Gregory Jordan says, “Our approach to these things is to find a very strong firm, a fit in that market.” The firm expanded into California in a similar fashion in 2003, when it merged with Crosby, Heafey, Roach & May, which had offices in Oakland and Los Angeles.

Jordan says Reed Smith finds Texas particularly appealing because a number of the firm’s financial services and pharmaceutical clients are in the state. The firm’s clients include leading banks such as Bank of America, JPMorgan Chase, and Wells Fargo NA and drug companies Merck and Pfizer.

The firm remains coy about the decision to branch into Texas, declining to reveal the scale of their plans. Jordan reports, “We’ve had lots of cups of coffee with lots of different firms in different states, including Texas.”

02-21-2006

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McDermott reports slow growth in 2005

Chicago-based McDermott Will & Emery has reported a 7% increase in turnover for 2005, with gross revenue hitting $799.5 million, an increase from last year’s $745 million. The 1,000-lawyer firm’s profit per equity partner climbed slightly from $1.19 million in 2004 to $1.28 million in 2005, a 7.5% increase.

These results indicate a decline in McDermott’s growth. This comes in spite of the firm’s major 2005 merger with the Italian firm Carnelutti. Ranked the 17th largest law firm globally by The American Lawyer (November 2005), McDermott has offices in Boston, Brussels, Chicago, Düsseldorf, London, Los Angeles, Miami, Munich, New York, Orange County, Rome, San Diego, Silicon Valley and Washington, DC.

02-21-2006

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Layoffs predicted at Pillsbury

The rumor mill is abuzz about layoffs at Pillsbury Winthrop Shaw Pittman LLP. This comes in the wake of a number of staff members departing voluntarily. The firm’s Vice Chair Stephen Huttler has been frank about it, saying they “are continuing to look at our staffing levels to make sure they are in alignment with the attorneys we have. We will be making decisions about whether we need to eliminate additional staff positions within the next month.”

The number of positions to be eliminated is not expected to be large. Other methods being considered for reducing cost include leasing out some of the firm’s excess space and cutting down in areas such as marketing, recruiting and office supplies. Huttler says the firm is also mulling over outsourcing.

Meanwhile, the reception organized last week for those who took advantage of the voluntary departure plan was attended by associates and partners and celebrated in style.

02-21-2006

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Two Chicago firms raise salaries

Last week, Seyfarth Shaw increased first year associate salaries from $125,000 to $135,000, following a similar move by Chicago-based Mayer, Brown, Rowe & Maw.

With more than 650 attorneys in 10 offices, Seyfarth Shaw’s practices include corporate, securities, real estate, litigation, intellectual property and employment law.

Chicago’s Mayer Brown & Platt merged with the British firm Rowe & Maw in 2002, which still remains one of the most successful transatlantic mergers to date. The merged firm now has offices across seven U.S. and six European cities.

02-21-2006

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