Orange County’s largest law firms broke a six-year streak of adding attorneys in 2009.
The 53 largest local firms, based on number of attorneys, saw a 4.3% drop in lawyers to a total of 2,098, according to this week’s Business Journal list.
It’s a change from last year, when the 50 firms on our list saw a 4.6% gain in lawyers. A year before that, they grew 6%.
Many law firms let lawyers go or stopped hiring, mirroring consolidation among their clients.
Some firms even have closed their doors in response to economic pressures, an anomaly for an industry that in the past has weathered down economies relatively well.
“There were a lot of firms who experienced real difficulty after over-expanding,” said Ski Harrison, managing partner at No. 2 Costa Mesa-based Rutan & Tucker LLP. “When the economy stopped, they were stuck with a surplus of office space and too many employees.”
Those who anticipated the downturn now are poised to add more business. But the deals look a lot different and more complicated than before the latest recession.
“The days of vanilla deals came to an end in 2008,” said Michael Flynn, chairman of the executive committee at No. 3 Stradling Yocca Carlson & Rauth of Newport Beach. “Most expect deals to be more complex, more challenging and overall more interesting in the next year and beyond.”
Practices related to bankruptcies and workouts, litigation, securities, labor and employment, intellectual property and public law should continue to see steady work, according to managing partners.
Many firms expect an uptick in government regulatory work to keep firms busy in 2010, but it is unlikely to add any significant headcounts.
In all, there were 10 firms that added lawyers, 23 that lost attorneys and 11 that saw no change. Nine were Business Journal estimates either this year or last.
Top Spots
Irvine-based Knobbe Martens Olson & Bear LLP held on to the No. 1 spot on the list after wresting it away from Costa Mesa’s Rutan & Tucker last year.
Knobbe Martens saw its OC headcount decline 4.4%, or seven lawyers, to 152, even as the Irvine office brought on 14 associates practicing patent and copyright law for various industries including medical devices, computer software and biotechnology.
The firm didn’t see any layoffs, but saw two partners retire, according to managing partner Steve Nataupsky.
The firm, which also has offices in Riverside, San Francisco, Los Angeles, San Diego, Washington, D.C., and Seattle, increased its lawyers firmwide 4.9% to 258.
Knobbe Martens, which does patent, trademark, copyright and trade secrets law, has expanded as more companies look to invest in and protect intellectual property during the slow economy.
The firm saw a steady stream of patent litigation and prosecution work in the past year, according to Nataupsky.
“Litigation is countercyclical to a certain extent,” Nataupksy said. “When companies are all doing exceptionally well financially they don’t always mind if someone is nipping at their heels. However, when the economy tightens up, companies are very aware of their market share. If another party is taking away some of their market share, they’re much more apt to fight.”
Knobbe Martens has seen a slowdown in patent applications as companies have curtailed spending on their research and development, Nataupksy said.
Rutan & Tucker saw a slight drop in lawyers—down two in OC and three firmwide—to 142 local attorneys and 148 total lawyers.
The county’s oldest law firm, Rutan has built its practice around real estate and government law with corporate and litigation work, as well.
Rutan has kept busy with litigation, labor and employment, intellectual property, bankruptcy and public law work, according to Harrison.
The firm is finding that its diversified practice areas have kept it afloat during the slow economy, Harrison said.
No. 3 Stradling’s headcount came in flat this year after it cut lawyers and staff but added senior associates and other staff to its Newport Beach and San Diego offices.
The firm maintained 109 attorneys in OC and 120 firmwide.
Stradling’s securities, litigation and employment departments are keeping busy, Flynn said, as mergers and acquisition work has tempered.
No. 4 Los Angeles-based Gibson, Dunn & Crutcher LLP saw its number of Irvine attorneys fall by one to 83. The firm saw its number of attorneys firmwide grow 5.4% to 1,105.
Gibson Dunn has seen growth in its intellectual property and regulatory practice areas, said copartner-in-charge Jeffrey Reeves.
Declines
No. 5 Los Angeles-based Latham & Watkins LLP, which has an office in Costa Mesa, saw notable declines.
Latham & Watkins counted 79 local lawyers, a 9.2% decline from a year earlier. Firmwide, it decreased its lawyers by 14.6% to 2,000—losing 342.
The drop was a response to a slump in business, according to Latham.
In addition to the layoffs, Latham—along with many of its counterparts—froze starting salaries for associates.
No. 7 Phoenix-based Snell & Wilmer LLP saw its local lawyers decrease by 8.5% from a year earlier to 65. Firmwide, its total lawyers dropped 5.4% to 420.
The firm, which has an office in Costa Mesa, has been keeping busy with litigation, bankruptcy, labor and employment work, according to managing partner Bill O’Hare.
Closing out the top 10 law firms: No. 8 Los Angeles-based Sheppard, Mullin, Richter & Hampton LLP in Costa Mesa; No. 9 Los Angeles-based Allen Matkins Leck Gamble Mallory & Natsis LLP in Irvine; and No. 10 Los Angeles-based Lewis Brisbois Bisgaard & Smith LLP in Costa Mesa.
Sheppard Mullin lost one local attorney for a total of 62.
Allen Matkins saw a 4.8% decline in OC lawyers to 59.
And Lewis Brisbois added two local attorneys in the past year.
No. 14 Irvine-based Jackson DeMarco Tidus Peckenpaugh saw the largest local decline on the list. It lost 21 lawyers in the past year for a total of 44.
Firmwide, it lost 20 lawyers for a total of 55.
The decline came after a slowdown in litigation in land-use cases, business transactions and administrative matters, which the firm specializes in, according to sources.
The biggest local gainer by actual number of lawyers was newcomer No. 28 Newport Beach-based Wright Finlay & Zak LLP. It added nine lawyers for a total of 30, a 42.9% increase from a year earlier.
The firm represents lenders, loan servicers and foreclosure trustees concerning default-related litigation.
“When loan defaults are up, which they are in this economy, so is the related litigation,” said Robin Wright, managing partner. “We expect a pretty strong run for the next few years.”
No. 28 Watt, Tieder, Hoffar & Fitzgerald LLP saw an 11.1% increase in attorneys in its Irvine office for a total of 30, three more than a year earlier.
The Virginia-based firm represents government contractors who work on federal, state and local construction projects, which have not been as impacted by the downturn.
“The economy has had less of an impact because the amount of stuff the government builds doesn’t really change a lot when the economy is not doing well,” said Michael Long, managing partner at the Irvine office.
This year’s list—always a work in progress—saw a few newcomers, including No. 40 Philadelphia-based Morgan, Lewis & Bockius LLP in Irvine; No. 47 San Diego-based Luce, Forward, Hamilton & Scripps LLP in Irvine; No. 50 Los Angeles-based Buchalter Nemer LLP with an office in Irvine; and No. 50 Santa Ana-based Prenovost Normandin Bergh & Dawe APC.
