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On the surface, Allen, Matkins, Leck, Gamble & Mallory doesn’t look like an associate’s favorite. The Los Angeles-based firm is stingy with bonuses, and while it has begun dabbling in high-tech dealmaking, the bulk of the firm’s practice is old economy: real estate, land use and environmental law. Yet for the past three years, the 215-attorney firm has enjoyed one of the lowest attrition rates among the nation’s largest 250 firms. Good retention has helped Allen Matkins double its size since 1995, making it one of the fastest-growing firms in California. With revenues of $80 million for the last fiscal year, the firm is expected to crack The American Lawyer magazine’s AmLaw 200 list this year for the first time. Allen Matkins leaders attribute their success to a culture of loyalty that resonates with associates. “When we tell people that they have a chance to make partner, they really do,” managing partner Brian Leck says. Or as fourth-year associate Kevin Ehrhart puts it, “This is a career place, not a job place.” Not only do associates stick around, the partners do, too. All five of the name partners who founded the firm 23 years ago remain with Allen Matkins today. Recruiter L. William Nason says he has never seen a firm as cohesive. “Everybody likes to believe they are a consensus-driven firm,” Nason says. “These guys are consensus in caps.” NOT BIG ON BONUSES When most of the big firms raised compensation for first-year associates last year, Allen Matkins came only part way. Firms such as San Francisco-based Brobeck, Phleger & Harrison and San Francisco’s Pillsbury Winthrop set base pay for first years at $125,000 and added tiered bonus structures that rewarded associates for more and more billable hours, up to as much as $25,000 to $30,000 for 2,400 hours. Allen Matkins matched the $125,000 salary and offered a bonus of $10,000 for meeting the firm’s minimum requirement of 1,950 hours. That’s it. No additional reward at 2,150 hours or even 2,400. “Hours, bonuses. What do they really do?” Leck said. “They make partners a lot of money. And our partners made a decision. It’s worth it for us to not make as much money to have associates who are people who want to be here a long time, and are treated like people and not as production units.” Leck says the partners offered associates the chance to adopt a more elaborate bonus system, but virtually every associate voted to stay with the current system. “The firm doesn’t want to create something where there is internal competition,” said Peter Roth, a seventh-year associate who jumped from Los Angeles-based Paul, Hastings, Janofsky & Walker. “Anyone who’s worked at a big firm can understand how internal competition can tear apart morale,” said Roth, adding that he bears no ill will toward his former firm. The firm’s commitment to associates goes beyond money, says recruiter Nason. One time, he remembers, he tried to match a “big-time” lawyer with the firm. All the partners wanted him, but several associates had reservations. Nason says he had never seen it happen before, but “the associates nixed the deal.” If attrition rates are any indication, management’s approach is having an impact. Allen Matkins lost 10 percent of its associates in 2000 and just 6 percent in 1999 and 1998. According to a National Law Journal survey, the average rate among the nation’s top 250 law firms was 23 percent last year. GOOD TIMES, BAD TIMES The five name partners of Allen Matkins have been practicing together since 1970 while at Stephens, Jones, LaFever & Smith in Southern California. In 1977, a year before Stephens, Jones closed down, the five split off and opened Allen, Matkins. Today the firm has offices in San Diego, Orange County, Century City, downtown L.A. and San Francisco, and is in the process of opening a north San Diego office. The firm’s primary practice area is real estate and land use. Nearly half of the attorneys practice in those areas, with another 23 percent in business litigation. The other sizable group is corporate, which accounts for 11 percent of the attorneys. In recent months the firm brokered a deal for San Francisco-based Catellus Development Corp. in the sale of 190 acres in Fremont, Calif., to Cisco Systems Inc., and helped negotiate the purchase of the Arizona Biltmore Hotel in Phoenix. Last year, the firm took over representation of Embarcadero Towers in San Francisco. On the litigation front, Allen Matkins attorneys recently defended Lorillard Tobacco Co. in California tobacco litigation. And last year, the firm represented Japan’s Mitsui Construction Co. in a construction defect trial seven years after a hotel collapsed in Guam in an 8.1 magnitude earthquake. The San Francisco office, opened in 1997, boasts 40 lawyers. Former Wells Fargo GC Guy Rounsaville heads up the office with name partner Richard Mallory; former Bar Association of San Francisco president Lindbergh Porter Jr.; and Ronald Clausen, former chairman of Bronson, Bronson & McKinnon’s business department. The office bulked up its real estate practice last year with the acquisition of four partners from Washington, D.C.’s Beveridge & Diamond. The firm claims profits per partner of $490,000 for its fiscal year that ended June 30, 2000. That’s comparable to some bigger California firms, including Thelen Reid & Priest and Gray Cary Ware & Freidenrich. The focus on real estate caused problems when the market collapsed in the late 1980s. But between 1990 and 1995, when many firms were cutting ranks and freezing partnerships, Allen Matkins made 28 new partners. “A lot of people said, ‘You’re crazy!’ ” Leck recalls. But firm management didn’t think so. “There isn’t a requirement in life that every year you make more money or you are a failure,” recruiting partner John Gamble says. “We were in a cycle, and we wanted to keep our team together.” To stay profitable during the recession, the firm decided to grow and diversify. It boosted its other practice areas –� tax, bankruptcy and employment –� and added corporate work, its largest growth area in recent years. Allen Matkins emerged from the recession a stronger firm, partners say. The firm has started an emerging growth and technology practice, which now numbers 26 lawyers. The firm counts Global Crossing and B2B marketplace Global Net Exchange among its clients. Allen Matkins is handling a handful of IPOs, including those of teleconferencing company MultiLink Inc. and water purifier AquaCell Technologies Inc. TOO EASY TO MAKE PARTNER? Some associates do leave Allen Matkins, although one who did says it’s seldom to join another firm. “People weren’t leaving because they were miserable there. They left for opportunities elsewhere,” said this associate, a third-year who departed to work for a client in 1999. “In the late 1990s, real estate attorneys were in high demand. You would get two or three calls a week from recruiters.” This associate, who recently joined a competitor boutique, said Allen Matkins was a good place to work and “a great place to get training.” He said he left because Allen Matkins dominates the West Los Angeles leasing market and he didn’t see an opportunity to build a book of business without having to steal clients from his colleagues and mentors. “If I stay here,” he says he told himself, “I’ll be a service attorney.” In fact, he said, the firm has so much real estate-related business, “You can become a partner without a book of business.” Another former associate who worked in the downtown L.A. office said she found the firm too “clubby.” She said she had a hard time developing her real estate practice because partners did not offer her work. “Either you are hooked into the partners or not,” she said. Current associate Ehrhart acknowledges the criticism but doesn’t completely agree. “Critics have sometimes said the firm is fraternity-like,” he said. “It’s inaccurate in that we are not a white boys’ club. It’s accurate in that we are tight-knit.”

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