Henry Weissman, with Munger, Tolles & Olson. (handout)
Munger, Tolles & Olson’s financials dipped for the second straight year in 2016.
The Los Angeles-based firm’s gross revenue fell 10.2 percent, to $234.5 million, while revenue per lawyer declined 6.6 percent, to a little more than $1.2 million. Profits per partner plummeted 14.7 percent, to $1.59 million. The declines come after Munger Tolles had an impressive 2014, a year in which the firm posted double-digit gains in several key metrics.
Munger Tolles financial committee chair Henry Weissmann said that the firm resolved several large matters in late 2015, and the first half of 2016 was slower by comparison. Attorney hours increased in the second half of the year. A drop in head count from 202 lawyers to 194—which Weissmann said was due to attrition, not layoffs—also contributed to the gross revenue slide.
“For a firm of our size, it’s not that surprising to see a dip following the conclusion of a couple of big matters,” Weissmann said. “[The head count decline] was not surprising to us either, because we had unusually low attrition in the years before 2016.”
Munger Tolles’ gross revenue dropped by 1.9 percent in 2015, which co-managing partner Brad Brian said at the time had been expected after a revenue spike the previous year. Notable matters that Munger Tolles worked on in the second half of last year included winning a summary judgment for the Pasadena, California-based Norton Simon Museum of Art in a decade-long suit involving the ownership of a 16th century Dutch painting of “Adam” and “Eve” by Lucas Cranach the Elder.
The firm also represented the University of California in a number of cases related to its sexual harassment policies, including a federal discrimination suit brought by former Berkeley School of Law dean Sujit Choudhry, which he dropped in November.
Earlier in the year, the firm represented a coalition of Airbnb Inc., LinkedIn Corp., Twitter Inc. and a dozen other technology companies in supporting Apple Inc. in a dispute with the FBI over unlocking a mass shooting suspect’s iPhone, a case the group claimed would undermine the principles of privacy and security on which the Internet is based.
On the transactional side, Munger Tolles represented independent members of the board of directors at DreamWorks Animation SKG Inc. last year on the company’s $3.8 billion sale to Comcast Corp.’s NBCUniversal Inc. In May 2016, Munger Tolles took the lead for MGM Resorts International on its $900 million acquisition of a stake in Borgata Hotel Casino & Spa in Atlantic City, New Jersey.
Despite the decrease in head count, the firm made some notable lateral hires in 2016. Munger Tolles made a big bet by opening an office in Washington, D.C., after hiring former U.S. Solicitor General Donald Verrilli Jr., who brought with him two other litigation partners. Weissmann said Munger Tolles is keen on expanding its newest office. Verrilli is now part of a team from the firm representing Airbnb in a federal suit against the City of San Francisco.
“I personally have been spending a lot of time in D.C.,” Weissmann said. “We’re establishing ourselves there and are really excited about what that means.”
Another former federal prosecutor, Mark Yohalem, re-joined Munger Tolles’ Los Angeles office in October after seven years in the city’s U.S. attorney’s office. Weissmann said the firm, which outside of Los Angeles has offices in San Francisco and Washington, D.C., does not plan on opening any new offices in 2017. Munger Tolles will continue to grow deliberately, he said, in California and the nation’s capital.
“In Los Angeles and San Francisco we will continue to be very selective in our hiring, but as amazing people come to us we will hire,” added Weissmann. “We’re not a firm that goes out and tries to buy practice groups.”