LATHAM & WATKINS

Latham & Watkins had the most spectacular year of any firm on the list. The 2,000-lawyer behemoth grew revenue by nearly $400 million, or 22 percent, to $2.005 billion. Profits were up a similar percentage, to $2.27 million.

Scott Haber, the managing partner of the firm's San Francisco office, credited the success to a diverse array of practices spread across the world. Latham's new Spain offices started clicking last year, and the firm added a local Italian practice in 2007 as well. Within Europe, the firm increased its M&A and finance reach.

"If the market in one country isn't that strong, chances are there is another country where it is strong," Haber said.

Project finance remained strong all over the world. In the M&A markets, while the biggest deals might not have obtained funding as easily in the later part of the year, the middle market for deals was still strong — and Latham took advantage of it. Worldwide, Latham advised on $182.6 billion in debt offerings and $72.7 billion in public equity offerings, including $32.0 billion of IPOs, the firm said.

Among Latham's 2007 highlights in California were representing Oracle Corp. in its acquisition of BEA Systems Inc. for $8.5 billion; representing Advanced Micro Devices Inc. in its acquisition of ATI Technologies Inc. for $5.4 billion; and representing Kyphon Inc., a spinal function restoration company, in its acquisition by Medtronic Inc. for $3.9 billion.

On the litigation side in California, a team of attorneys from Latham and Cooley Godward Kronish won a defense verdict in a long-running patent infringement case against Monolithic Power Systems Inc. and several others. The plaintiff was seeking $160 million in damages and a permanent injunction.

Haber acknowledges that an economic recession will have an inevitable impact on law firms. But he remained optimistic about Latham's future.

"We're as well-positioned as anyone to weather it," he said. "But I think it's got to have an effect."

DLA PIPER

DLA Piper raked in $1.1 billion last year, a 12 percent increase from 2006, while PPP grew 9 percent to $1.2 million. (Worldwide, DLA's revenue jumped nearly 20 percent. Recorder parent ALM considers DLA Piper a set of alliances, and so focuses on the U.S. operation only for financial surveys.)

The size of the firm makes it hard to pinpoint one geographic or practice area that was particularly responsible for the firm's revenue increase, said firm co-Managing Partner J. Terence O'Malley.

"In a lot of ways, we're a large mutual fund," O'Malley said.

"We're the only firm with … about 1,400 lawyers on each side of the Atlantic."

Still, the firm's real estate and corporate practices had strong years, O'Malley said.

"We had some headline opportunities in our real estate capital markets practice through our involvement in the [more than $20 billion] acquisition of Archstone-Smith by Tischman Speyer," O'Malley said. The firm's name also appeared on the first page of the 409-page Mitchell Report on substance abuse in baseball, which was authored by former U.S. Sen. and current DLA partner George Mitchell.

MORGAN, LEWIS

Despite only a small increase in headcount, Morgan, Lewis enjoyed significant increases in revenue, profits per partner and revenue per lawyer in 2007. The firm raised revenue by 12 percent, inching past the billion-dollar mark. PPP grew by 15 percent to $1.4 million.

"We try to be efficient; we try to work on our leverage, we work on our expenses," Chairman Francis Milone explained.

The firm added some 40 attorneys, but had three fewer equity partners while adding 15 non-equity partners.

"In some cases we're not bringing in as many lateral partners as we are elevating income partners," he said. "Like everybody else, it is becoming a little difficult to become an equity partner in our firm."

The year was driven by intellectual property litigation and private equity and other M&A deals, Milone said. Labor and employment litigation also played a major role.

PAUL, HASTINGS

Paul, Hastings, Janofsky & Walker attributed its powerful increases across the board to a combination of better realization and billing rates plus strong hours.

The firm grew gross revenue by 20 percent up to $975 million while increasing PPP to $1.9 million.

"Our strategy over the past few years has been to focus on more highly valued, complex cases, and to be called on for bet-the-company cases," said Chairman Seth Zachary.

The firm also has been working to capture market share outside the United States, growing those practices significantly more than the practices here, he said. Revenue from the firm's London office grew nearly 40 percent, and the firm beefed up its Asia presence to 150 lawyers. In late 2007, Paul, Hastings announced it would open in Frankfurt.

In the United States, New York has been growing significantly, Zachary said, with a 34 percent hike in revenue there last year.

Across practice areas, the firm's strength was in capital markets, finance, private equity and a growing IP component, he said.

Major work included representing Dubai World in a $5.4 billion joint venture with MGM Mirage in Las Vegas; representing Wal-Mart in its $875 million tender to acquire all shares of Seiyu Japan, the largest department store chain in Japan; and representing China Cosco in its acquisition of the world's largest bulk carrier fleet for $4.6 billion.

O'MELVENY & MYERS

O'Melveny & Myers reported an 8 percent revenue gain in 2007, bolstered by a stronger transactional practice and growth in its overseas offices, according to Chairman Arthur Culvahouse Jr.

That was tempered by a slowdown in litigation, which makes up about 50 percent of the firm's practices, he said.

O'Melveny represented Merck & Co. in the class action over Vioxx, which concluded in November with a $4.85 settlement. The firm had about 40 attorneys working on the matter at one point, Culvahouse said.

"When that matter settled, trying to redeploy that many lawyers and the slow litigation cycle was a challenge," he said.

The firm's profits per partner were flat, which Culvahouse attributed to being in "strong investment mode," bringing in 12 lateral partners in 2007, something that is dilutive for months until those new partners generate revenues, he said.

Those lateral hires were part of the firm's strategy to bolster transactional work, which had been slow in 2006. In 2007, the firm was involved with transactions such as a $10.6 billion acquisition of Huntsman Corp. The firm represented Apollo Management and its portfolio company Hexion Specialty Chemicals Inc. The firm represented fashion company Betsey Johnson in its purchase by private equity concern Castanea Partners; and air conditioning company Goodman Global Inc. in its $2.65 billion acquisition by PE firm Hellman & Friedman LLC.

Even though the firm's transaction work drove revenues in 2007, the pipeline for deals isn't what it once was, Culvahouse cautioned. "Like everyone else, our transactional practice has slowed with the credit crunch," he said.

GIBSON, DUNN & CRUTCHER

Gibson, Dunn & Crutcher had a solid year for revenue, growing 12 percent to $908 million. The firm profits per partner were up 9 percent to $1.9 million.

Managing Partner Kenneth Doran said the year would have been even stronger but for the subprime housing meltdown that hurt transactional work.

"It started in the summer, and it clearly had an impact on M&A and finance transactions in the later part of the year," he said. "That said, our transactional practice was overall quite strong. And, litigation was extraordinary."

Doran pointed to a steady stream of work in antitrust, white collar, appellate and environmental work. IP litigation grew as well, an area the firm has been targeting.

The firm represented Intel in its antitrust suit with AMD and Microsoft Corp. in an AT&T case; handled billions worth in deals in Europe for Marriott Hotels; and served as counsel to the board of directors of Altria Group in its spin-off of Kraft Foods for $60 billion. Gibson also represented Borse Dubai in a $4 billion acquisition of the Nordic financial services company OMX.

In 2007, Gibson moved into Dubai, looking to capitalize on the booming economy there. This year, the firm will continue to look at Asia, which Doran deems "a region of interest."

MORRISON & FOERSTER

For the sixth straight year, Morrison & Foerster's revenue grew more than twice as fast as headcount. The firm collected $894 million, a solid 16 percent increase, while adding 58 lawyers, just inching past the 1,000-lawyer mark.

Profits per partner was up 12 percent to $1.27 million.

The revenue growth was thanks to across-the-board success, said Chairman Keith Wetmore. "There were no slow spots. We had strength in M&A, in securities litigation, in IP litigation. We had virtually no sense of a downturn in any of the practices," he said, noting that the firm remains "mindful" of an economic slowdown.

While MoFo was busy as a whole, Wetmore said litigation did especially well. One big-ticket case Wetmore pointed to was the JDS Uniphase defense verdict, in a class action where plaintiffs had thrown around figures like $18 billion.

ORRICK, HERRINGTON & SUTCLIFFE

Orrick, Herrington & Sutcliffe boosted revenue by 16 percent to $770 million, with profit also growing 16 percent to $1.7 million. The firm added more than 60 lawyers to end the year with just over 900.

Chairman Ralph Baxter Jr. said the firm's practice and geographic breadth were responsible for the increases. "From the beginning [of the year], we were positioned in China, in Japan, in Western Europe and on both coasts of the United States," Baxter said.

While 2007 was a good year, Baxter said the economy held it back, by slowing down the firm's clients. "We will be actively involved in working with our clients as they explore new ways to finance transactions," he said. Still, the firm benefited from a variety of practices last year.

"That includes, for example, sophisticated finance, M&A and IP and other litigation," he said.

BINGHAM McCUTCHEN

Boston-based Bingham McCutchen had a solid year with 8 percent top-line and 10 percent bottom-line growth.

Chairman Jay Zimmerman said the firm's corporate practice was hot at the beginning of the year and that bankruptcy picked up when the credit crunch hit.

"The first part of the year was strong with our corporate work (which is more cyclical), and we had an even stronger second half of the year because of our financial restructuring work (which is counter-cyclical)," Zimmerman wrote in an e-mail while vacationing in Vietnam.

In spite of three mergers in 2007 — two with Japanese firms and one with Los Angeles' Alschuler Grossman — Bingham's headcount grew by only one. That's because the two Japanese deals weren't included in the year-end accounting.

There was another reason, too: "We continuously focus on practices that are the strongest, and some practices are better-suited and comfortable on different platforms," Zimmerman wrote.

The deal with 40-lawyer Alschuler added to Bingham's already-large California presence. The firm now has around 330 lawyers in California.

PILLSBURY WINTHROP

Despite being two dozen lawyers lighter, Pillsbury Winthrop Shaw Pittman floated along with a positive, albeit small, revenue increase last year.

The 2 percent growth, to $590 million, was the result of better collaboration among firm lawyers, which led to more work from existing clients, said Chairman James Rishwain Jr.

"We put ourselves in a position to gain greater engagements," he said. "One of the things that we have done is to spend more time … talking to our clients."

PPP climbed 13 percent to $985,000, bringing the firm close to its goal of $1 million in 2008.

The firm continued its focus on technology, energy, real estate and finance, Rishwain said. While he stressed that the firm is well-diversified, Rishwain did cite Pillsbury's role advising Crescent Real Estate Equities Co. in its $6.5 billion sale to Morgan Stanley Real Estate as a big case for the firm.

WILSON SONSINI

Wilson Sonsini Goodrich & Rosati led its competitors in a strong year for Silicon Valley firms. The firm's revenue climbed 13 percent to $531 million and PPP rose 10 percent to $1.44 million.

"We had growth across the board," said CEO John Roos. "M&A was strong, litigation was strong and IPOs were stronger than previously — everything came together in a very nice fashion."

Roos said that on the litigation side the firm was busy in intellectual property and commercial litigation. On the corporate side, the dealmakers were busy as were the start-up lawyers, particularly in the clean-tech sector. "I would call it a growing revenue driver," Roos said.

The firm didn't open any new offices in 2007, but did close its Salt Lake City office over the summer.

HELLER EHRMAN

Heller Ehrman was the only Cal Law 25 firm to see declines in revenue, revenue per lawyer and profit per partner in 2007.

Heller's revenue slid 3 percent to $491 million. PPP fell to just above $1 million. Chairman Matthew Larrabee said the declines were the result of eight or nine pieces of litigation wrapping up in the first quarter of the year.

"It left a hole in our business," he said. "These are matters that were employing dozens of employees full time." One such case was the last in a series of antitrust trials against Heller client Microsoft Corp., which was settled in February 2007.

Total lawyers increased only slightly, but the number of equity partners dropped by 25 while non-equity partners increased by 26.

That, Larrabee explained, was the result of the firm complying for the first time with the Recorder affiliate the American Lawyer's definition of equity and non-equity partnership.

"It was increasingly important to report on an apples-to-apples basis with other firms," he said. The firm considers itself as having only one tier of partnership, Larrabee added.

Last year was a year of change for the firm, which laid off 65 support staff in October and opened up an office in London in early 2007 and another in Shanghai in January 2008.

"We've done the things we needed to do," Larrabee said. "We feel very good about 2008."

COOLEY GODWARD KRONISH

Cooley Godward Kronish had a very strong year, boosting revenue by 45 percent to $485 million.

While that outsized hike was thanks in large part to its 2006 merger with New York's Kronish Lieb Weiner & Hellman, Cooley said that a strong year across all of its practices also boosted its 2007 results.

COO Mark Pitchford said IP and commercial litigation, plus M&A, were particularly busy in 2007. The firm's work for emerging companies rose on an increase in clean-tech activity, he said.

Profits per partner were up 42 percent at Cooley, hitting $1.42 million — but that number was aided in part by a drop in equity partners and a huge increase in non-equity partners. The firm reported six non-equity partners in 2006 and 72 in 2007. The equity ranks went from 148 to 129.

Changes were made to the Cooley pay system in 2007 that caused a number of mostly junior partners to be reclassified as non-equity partners under American Lawyer criteria, explained Joseph Conroy, Cooley CEO. The Recorder and the American Lawyer define a non-equity partner as a partner who receives more than half of his or her compensation from guaranteed salary rather than from profits.

Conroy said the change was made to better manage partner compensation as partners move up through the ranks. It also, he said, provided a more "apples to apples" comparison with PPP at other firms.

QUINN EMANUEL

Quinn Emanuel Urquhart Oliver & Hedges reported a stunning 29 percent increase in revenues to $384.5 million and an equally jaw-dropping $3.01 million in PPP. Growth in revenue per lawyer was much more modest, a 7 percent increase to $1.09 million.

"Our margins are pretty good," said Managing Partner John Quinn. "They always have been very good, and since we get a fair amount of contingency fee income, the amount that we generate per hour tends be a lot better than hourly cases."

Quinn said that about a quarter of the firm's revenue comes from contingency fees. He said "several" came in 2007, including one from a $60 million settlement for restaurant owners against Rewards Network, in which that company was accused of gouging the owners on loans. Plaintiff's counsel got around $10 million for the work, according to court papers.

The firm added 60 lawyers, including Wilson Sonsini litigator Robert Feldman in Silicon Valley, as well as a new office in Tokyo. That meant a lot of investment, Quinn said.

"In a way, this year was a building year for us," Quinn said. "Next year, we're going to be hitting on all eight cylinders."

THELEN

The first full year as the newly merged Thelen Reid Brown Raysman & Steiner — or simply Thelen, thanks to a recent rebranding campaign — yielded a nearly 50 percent increase in both headcount and revenue. But the full impact hadn't yet trickled down to the partners.

Revenue hit $345 million, with revenue per lawyer up 2 percent compared to Thelen Reid in 2006, and profit per partner dropping 4 percent to $805,000.

Sharing work within the firm helped drive revenue growth, Chairman Stephen O'Neal said. "We enjoyed very strong financial performance from our real estate finance practice, energy finance practice, China practice and London office," he said.

O'Neal blamed the slide in profits on the merger. "That's due to one-time merger costs," he said.

SHEPPARD, MULLIN

Sheppard, Mullin, Richter & Hampton had what Chairman Guy Halgren said was a year that "avoided peaks and valleys." The firm had strong growth in all key metrics, while slightly reducing headcount.

Litigation and corporate were both strong, with bankruptcy picking up in the last portion of the year, Halgren said.

The firm's fastest growing office is the tech and IP-heavy Del Mar Heights outpost, which is now the firm's third-largest. 2007 was a significant year for Sheppard internationally, as it opened its first overseas office in Shanghai.

The firm brought in 15 laterals, many in San Francisco, the firm's second-biggest office. In 2008, Sheppard will be looking to set a stake in Silicon Valley.

LITTLER MENDELSON

Labor and employment specialty firm Littler Mendelson continued to canvass the country in 2007, opening four new offices and adding 200 lawyers. At its fiscal year-end in August, Littler employed 664 lawyers, up 50 percent over 2006. Gross revenue grew by 27 percent to $305 million.

Managing Partner Marko Mrkonich attributed much of the growth to new offices in Portland, Ore., Orlando, Cleveland and New Haven, Conn. The best performing areas were cross-border and global migration matters, payroll and traditional labor law, and class actions, he added.

Mrkonich said the firm has had to tap partners' wallets to fund some of that growth. Profits per equity partner dropped by 11 percent, from $465,000 in 2006 to $411,000 in 2007. Revenue per lawyer was down 15 percent.

MANATT, PHELPS, & PHILLIPS

Manatt, Phelps & Phillips had a strong year in complex business and IP litigation as well as M&A work, said Managing Partner William Quicksilver.

Manatt opened a San Francisco office in 2007, and then announced it would be adding Steefel, Levitt & Weiss to beef up the firm's Bay Area presence.

"We really are focused on our four strategic markets — Southern California, Northern California, New York and Washington, D.C.," Quicksilver said. "Now, with Steefel, we should be close to 60 lawyers in the Bay Area, and we think that's a good platform."

IRELL & MANELLA

Irell & Manella was the most productive firm on the Cal Law 25 in 2007, posting $1.2 million in revenue per lawyer, a 14 percent jump from 2006.

The firm also reported double-digit gains in revenue and PPP, to $227 million and $1.9 million, respectively. Headcount dropped 7 to 189.

"It was basically working hard, and slightly higher billing rates," said Morgan Chu, Irell's iconic IP lawyer, adding that the rate increase was no different than any other year.

Chu said the firm was busy in IP, securities and general business litigation as well as on the corporate side. The firm won big cases for Tivo, Texas Instruments and ASML. Chu said that the firm sometimes works for contingency fees, but said there were no unusually large ones in 2007.

LOEB & LOEB

After a 23 percent increase in 2006 gross revenues, Loeb & Loeb added another 21 percent in 2007, for a total of more than $218 million.

Firm leaders attribute some of the success to the addition of lateral partners with books of business. The firm also had busy practices across the board — including M&A and restructuring work, particularly in the media and entertainment sector. Loeb & Loeb also gained work from the meltdown in the subprime mortgage market, primarily through client Merrill Lynch, which the firm is representing in about 12 subprime bankruptcies, according to New York-based Co-Chairman Michael Beck.

The firm added a patent litigation practice to augment its IP, trademark and copyright practice. "It's a major new practice area for us," Beck said. "We expect to grow it some more."

MUNGER, TOLLES & OLSON

Munger, Tolles & Olson had a robust year in litigation, with special success in the patent, criminal white-collar and legal malpractice arenas.

Co-Managing Partner Mark Helm also pointed to bankruptcy, which is "going great guns," and labor and employment as engines for the firm's success in 2007.

While real estate was still strong, it "wasn't going gangbusters like it was in other areas — an effect of the downturn," he said.

As in past years, Munger stayed away from lateral hiring from other firms, and kept with its moderate growth policy.

LEWIS BRISBOIS

Los Angeles-based Lewis Brisbois Bisgaard & Smith, known for insurance work, is another firm that has expanded into new corners of the country and moved to diversify its practice in recent years.

Gross revenue totaled $193.5 million, up 11 percent over the previous year's $173.5 million while per-partner profits climbed 7.5 percent to $513,906. Headcount grew by 14 percent, to 588 lawyers. The firm opened offices in Ft. Lauderdale and New Orleans.

Lawyers were busy across areas, according to one partner, who said that employment, environmental, IP, real estate and elder law were among the busiest. Medical malpractice was down. Feeling bullish about 2008, the firm added eight partners to its equity ranks, a 14 percent increase over the previous year. "They were all substantial contributors to the firm," the partner said. "It's a function of the growth we've had over the last five years."

Southern California legal recruiter Sandy Lechtick, who works with the firm, said Lewis Brisbois watches its costs closely and keeps its rates flexible, which in many cases allows it to expand into new practice areas.

SEDGWICK

Litigation firm Sedgwick, Detert, Moran & Arnold saw a 9 percent increase in revenues to $188.5 million and a 4 percent increase in PPP to $740,000.

Chairman Michael Tanenbaum said the firm saw increases in various areas of litigation, namely products liability, pharmaceutical and mass tort. Tanenbaum said there were two main factors pushing up revenue. "It's a combination of lawyers working harder … [and] better rates," he said.

Tanenbaum said the firm plans to continue growth by adding offices, with a focus on certain regions. The Southeast, he said, is "probably the one area of the country … where there's a hole or a gap so it's a market at which we look," he said.

FENWICK & WEST

Fenwick & West boosted its top line nearly 10 percent to $183 million. The firm also raised its PPP nearly 8 percent, breaking the million-dollar mark for the first time in firm history.

"Litigation was busy, corporate was busy, tax was busy and IP was busy," said Chairman Gordon Davidson.

The firm dropped four equity partner slots and gained six non-equity partners. Davidson said that's because new partners get a certain amount of compensation guaranteed for the first two years, a new practice at the firm.

"It was our strongest year ever, including the bubble," Davidson said.

ALLEN MATKINS

Partners at Allen Matkins Leck Gamble Mallory & Natsis, where the billable hour requirement has long been 1,800, worked longer hours finishing deals in 2007, according to Los Angeles-based Managing Partner Brian Leck.

Partners averaged 1,950 hours last year, he said. Along with partner and associate hires and increased rates, that contributed to revenue growth of 8 percent to $154.5 million. Profits per partner edged up 3.5 percent to $766,840.

Leck said that most practice areas were busy, including litigation, tax, employment, bankruptcy and corporate. Work also picked up in the infrastructure practice, he said, with projects ranging from highways to desalination plants. Real estate finance and residential real estate slowed down in the latter part of the year, he said.

Leck said the slowdown wasn't reflected in Allen Matkins' results because the firm's fiscal year ends in June.