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In the 1990s, the top Southern California firms were obsessed with crossing the million-dollar profits-per-partner mark. Now they’re closing in on that mark in a more telling—and exclusive-metric: revenue per lawyer. Three Los Angeles firms—Gibson, Dunn & Crutcher; Irell & Manella; and Munger Tolles & Olson—hauled in more than $900,000 per lawyer last year. Latham & Watkins edged above $800,000. The revenue-per-lawyer figures are among the most striking results of an annual survey of Southern California-based firm finances carried out by The Recorder, a sister publication of The National Law Journal. As a whole, the region’s highest-grossing firms posted strong revenue gains and, in most cases, even stronger gains in profitability. “These are firms with strong management, focused on high utilization and with very high billing rates,” said Newport Beach, Calif.-based management consultant Peter Zeughauser. Firm leaders said billing rates and hours were up, while head count wasn’t. “Our rates went up in 2004 consistent with the market,” said Gibson’s managing partner, Kenneth Doran. “Many of our practice groups and offices were more engaged in 2004 than in 2003, resulting in higher hours.” Latham & Watkins leads Latham & Watkins once again led the way with revenue of $1.2 billion, an increase of 17% over 2003. O’Melveny & Myers, with $697 million in revenue, edged out Gibson Dunn for second place for the second straight year. O’Melveny and Gibson Dunn were the only two of the 10 firms to record single-digit increases in revenue. The growth and profits-per-partner leader was Los Angeles-based Quinn Emanuel Urquhart Oliver & Hedges, which saw revenue increase by 25%. Profits per partner, meanwhile, leapt by 9%, to a staggering $1.9 million. All told, seven of the top 10 firms recorded profits per equity partner above $1 million. Irell & Manella saw average partner profits increase by 32%, to $1.54 million. Gibson Dunn was right behind, with $1.5 million, a 7% increase. The rest of the firms saw per-partner profits increase by between 2% and 19%. O’Melveny, which saw just 2% growth, to $1.31 million, pruned its partner ranks in 2004 with early retirement packages. But O’Melveny’s chairman, Arthur Culvahouse Jr., said the effect of those departures won’t be felt until the numbers for 2005 are in. Consultant Ward Bower of Altman Weil, noted that New York firms still lead the profit pack. But some California and Chicago firms are catching up-due in part, Bower said, to their success in New York and London.

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