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The largest Los Angeles law firms might be singing a happier tune than their Northern California brethren when it comes to revenues and profits for 2002. Still, the song isn’t likely to hit many high notes. While the fiscal year doesn’t end for many of the top Southern California firms until Jan. 31, partners and consultants are estimating only modest growth at three of the four largest L.A. firms. L.A.-based Gibson, Dunn & Crutcher, for example, anticipates a 6 percent increase in revenue, putting the firm’s gross at $569 million for the year. That’s a step up from the $537 million the firm generated in 2001 but nowhere near the 14 percent increase that year’s revenues represented over 2000. Gibson’s profits picture is similar. The firm anticipates a 5 percent increase in per-partner profits, putting the average individual take at $1.77 million, up from the $1.11 million in profits-per-partner that the firm logged in 2001. “It clearly exceeded budget,” said Charles Woodhouse, Gibson’s executive director. “Given the environment, I think people are fairly pleased with how the year has ended up.” Other L.A. players like O’Melveny & Myers and Paul, Hastings, Janofsky & Walker are expected to report similar results. Steve Barrett, who used to manage law firms but is now an independent consultant in Rancho Palos Verdes, Calif., said what L.A. firms have going for them is broader geographic reach, a wider variety of practice groups, and more stable clients. “All of them are fundamentally committed to being diverse, full-service law firms in the true sense of the word,” Barrett said. “It gave the big firms more of a cushion in the downturn.” For example, Paul Hastings has large labor and employment and real estate practices in Los Angeles, two things that continue to generate revenue for the firm through the downturn, he said. Barrett also pointed to O’Melveny’s entertainment practice as a saving grace in a downturn. Plus, each of the larger L.A. firms is about half litigation, he said. But that’s not to say the firms haven’t felt the pinch from the past year’s continued economic retrenchment — it’s just not likely to be as painful as it was for tech-heavy Bay Area firms. “In a normal year, they ought to be able to autopilot to 15 percent growth,” Barrett said, but even the largest companies have had to scale back in the past year. The exception to the lackluster expectations of the region’s firms may be Latham & Watkins. Partners wouldn’t divulge any estimates until the firm releases data later this month, but they said they were expecting a big bump in revenues. “It’s going to be a year in which we’ve exceeded the prior year,” said Peter Kerman, managing partner of Latham’s Menlo Park, Calif., office. In 2001, the firm generated $769.5 million in revenue and logged $1 million in profits-per-partner. “It’s the white-hot areas, like litigation, insolvency and environmental, offsetting the areas like capital markets,” which have shown a steep decline. Kerman added that because the firm carefully monitored its expenses, “from a profitability standpoint, it’s going to be a another good year.”

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