A strong local economy again fueled modest growth at local law firms.
For the third consecutive year, Orange County law firms added 3% to their ranks of attorneys, pushing the total to 1,940, according to this week’s Business Journal list, which ranks firms by the number of lawyers based in the county.
Of the 50 firms on the list, there were 23 gainers and 17 decliners, with the balance seeing no change.
However, the gainers added many more than the decliners lost, with one firm doubling its attorney count to 28 while the biggest decliner lost seven lawyers, or 26%.
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Managing attorneys credited a surge in mergers and acquisitions, intellectual property work and continued strength in real estate matters for the gains.
Many firms are upbeat about 2006, including No. 3 Stradling, Yocca, Carlson & Rauth in Newport Beach, which plans to open a new office.
Costa Mesa-based Rutan & Tucker LLP once again came in at No. 1 on the list.
After posting zero growth last year, the firm expanded its attorney count by 7%, or 10 people, to 145.
A big portion of that growth was from the continued resurgence in mergers and acquisitions,deals that demand a lot of legal work.
Companies are seeing stronger sales and profits, and they’re getting heftier price tags from buyers, who are looking for good deals.
“If you’re going to sell, it’s an attractive market right now,” said Tom Crane, managing partner of Rutan & Tucker. “It’s certainly been a good climate.”
The healthy market has been especially helpful to midsize companies, which is “the bread and butter of Orange County,” Crane said. He estimated mergers and acquisitions work is up 10% to 20% this year.
Rutan & Tucker also continues to gain from its work with municipalities. The firm is one of the representatives for the city of Anaheim in its lawsuit against the Los Angeles Angels of Anaheim over the team’s name change.
Intellectual property work was healthy as well, as the rebound in the tech sector fueled demand.
Knobbe, Martens, Olsen & Bear LLP’s focus on intellectual property helped it climb from the No. 3 spot last year to No. 2 on this year’s list.
The Irvine firm added 13 lawyers, or 13%, putting its total at 116. On last year’s list, the firm posted a loss of 16%, pushing it down from No. 2 to No. 3.
The company’s rebound in hiring reflected a long hiring cycle that began a few years ago, said Jim Bear, managing partner of Knobbe Martens.
The firm does not recruit attorneys from other firms, even when the economy strengthens, but rather hires only law school graduates, Bear said. That process typically takes two years, and the firm didn’t begin to increase its hiring efforts until 2003, when the economy began to emerge from its doldrums following the tech wreck in 2000.
“It is the lag time that results in the return to growth,” Bear said, noting the firm searches for lawyers whose undergraduate degrees are in technical fields such as engineering and chemistry.
The growth of late has come from the biotech and pharmaceutical areas in particular, Bear said.
Clients are seeking more patent and trademark protections as their well-funded labs churn out new products, he said.
Meanwhile, litigation activity has cooled off.
“When the economy is struggling, people are much more aggressive in litigation to hold on to what they think is their own,” he said. “When the economy is booming, then people are willing to spend a lot more money to file new applications and more money on development of new products.”
About one-third of his firm’s business is in OC, another third is in the U.S. and the balance is offshore, Bear said.
Slipping to No. 3 this year was Stradling Yocca. The firm went from 107 lawyers to 101 lawyers on this year’s list, a drop of 6%.
Michael Flynn, chairman of the firm’s corporate practice, said the losses were from attrition.
Stradling Yocca could grow 5% to 7% this year, he said.
One big reason: For the first time in six years, it plans to open another location, this time with a west Los Angeles office. The firm, which already has two other offices in California, plans to staff it with four to six lawyers.
Stradling Yocca also is studying whether to expand into north San Diego County with another office. That likely would happen in the latter part of 2006.
The firm has seen growth in its mergers and acquisitions business. Strong sectors include retail, restaurants and technology. IP litigation has done well the past few years as well.
Lawyers are hopeful the public markets could rebound as well after just a trickle of initial public offerings in the past few years. One reason for hope: the Dow Jones Industrials Average recently cleared 11,000.
“There’s more optimism on this issue,” said Shiv Grewal, a partner of Stradling Yocca.
At No. 4 was Latham & Watkins LLP in Costa Mesa. The office added one lawyer, or 1%, to its rolls.
Last year the firm was No. 4 after losing 3% of its lawyers.
Rounding out the top five was Gibson, Dunn & Crutcher LLP in Irvine, also part of a large international firm. The number of local lawyers dropped by 4%, to 71 this year.
One of the bigger gainers on the list this year was Jackson DeMarco Tidus Peckenpaugh in Irvine.
The firm rose from No. 13 to a tie for No. 8 after adding 17 lawyers, the biggest gain in raw numbers, or 43%, to total 57.
The firm added an intellectual property practice this past year, which handles legal matters such as patent applications and some litigation work.
It also has seen growth in mergers and acquisitions and in finding financing for young firms.
“The last year, the strength of the economy in Orange County has certainly been a factor in our growth,” said Ruth Mijuskovic, president of the firm. “Many of our clients are here in Orange County.”
The growth has pushed the firm to nearly double its leased space to about 35,000 square feet, she said.
Coming in flat was No. 10 Sheppard, Mullin, Richter & Hampton LLP in Costa Mesa.
The firm, which had 53 lawyers, was No. 9 last year.
Sheppard Mullin has seen healthy fees in litigation work, including defending companies against wrongful termination suits, said Finely Taylor, managing partner.
“We have a litigious society,” Taylor said.
Newmeyer & Dillion LLP in Newport Beach grew 5% and came in at No. 14 with 42 lawyers.
Mergers and acquisitions have been strong, but also real estate work, said Greg Dillion, co-managing partner of the firm.
Although available land in OC is shrinking, homebuilding continues with more complex projects such as condominium towers and in-fill projects, Dillion said. Regulations also continue to create work for the firm.
Greenberg Traurig LLP in Costa Mesa showed the biggest percentage gain on the list. It doubled the number of lawyers to 28,and rose to No. 27.
Much of that growth occurred with the start of an intellectual property practice about a year ago.
“Definitely, intellectual property is a very hot area for us,” said Gordon Schaller, managing shareholder of the OC office of the Miami-based firm. “Orange County went from zero intellectual property lawyers in December 2004 to eight today.”
As with other firms, Greenberg Traurig also saw an increase in mergers and acquisitions work.
“There is a lot of private money that is seeking good company (acquisitions),” he said.
A couple of firms debuted on the list this year because of growth:
Riverside-based Best Best & Krieger LLP’s Irvine office grew from 13 lawyers to 22, putting it at No. 40.
Samuels, Green, Steel & Adams LLP in Irvine was at No. 42, growing 31% to 21 lawyers.
