As California’s legal market saw an uptick in gross revenue and demand last year, with a half-dozen firms with Bay Area roots landing on the Am Law 100, a rebound in the Los Angeles market and a surging economy helped the Golden State fill Am Law 200 coffers.
At least a dozen firms, the bulk of them based in Southern California, secured spots on the Second Hundred list this year. But no firm was higher than Gordon Rees Scully Mansukhani, which has been on a nationwide expansion spree in recent months. The firm, whose roots are in San Francisco, rose to No. 104 on the Second Hundred rankings after reaping $331.2 million in gross revenue last year, up 11.7 percent from 2016.
“California is largely driven by growth and profitability in the tech space, and a lot of the firms are right in the tail of that growth,” said Gordon Rees managing partner Dion Cominos, adding that other industries such as construction, infrastructure and health care bolster the bottom lines of local firms.
California, if it were an independent country, would now have the world’s fifth-largest economy, so there is often no single contributing factor that influences every firm, save for the fact that as the West Coast goes, so does the national economy.
Other California firms making the Second Hundred this year are Manatt, Phelps & Phillips (106); Loeb & Loeb (107); Munger, Tolles & Olson (127); Knobbe, Martens, Olson & Bear (133); Irell & Manella (156); Allen Matkins Leck Gamble Mallory & Natsis (160); Buchalter (175); Procopio, Cory, Hargreaves & Savitch (189); Jeffer Mangels Butler & Mitchell (193); and Rutan & Tucker (198).
Among those firms, six climbed in the rankings. Gordon Rees, the only one based outside Southern California, topped all of them. Sedgwick, a San Francisco-based Am Law 200 firm that dissolved this past January, has disappeared from the list. (Sedgwick was one of 10 firms with California roots that made the Am Law 200 in 2017.)
“I think the economy in California overall has strengthened, and as a result not only are we seeing the boom in Northern California, but it is also translating into Southern California,” said Avis Caravello, who has run her own San Francisco-based legal recruiting firm for the past 30 years.
As the Los Angeles legal market has gradually recovered from the financial crisis, Caravello said firms in the region have watched their financial growth pick up, which in turn helps attract more talent with competitive mid-market rates.
“I think there is an increase and growing demand for rate relief in certain practice areas,” Caravello said. “That kind of mid-market work and mid-market rate is in many ways reflective of the strength of some of the indigenous Los Angeles firms.”
Los Angeles-based Buchalter made a return to the list this year thanks to its $133 million in gross revenue in 2017.
“We felt there is a place in the market for a strong regional law firm,” said Buchalter president and CEO Adam Bass, adding that his firm has also benefited from its rate-driven revenue growth and increased head count. “We think that we offer competitive rates. We offer a value proposition for our clients in the rate structure that is fair and competitive—and substantially lower than a lot of the national competitors.”
Furthermore, the growing technology scene in the so-called Silicon Beach neighborhood has also shifted the economic tides of Los Angeles, attracting more clients and lawyers to the area.
“Los Angeles is the focus of the entertainment industry and the booming area called Silicon Beach. Those two areas, in particular, are the one that we saw growth in,” said Sandra Seville-Jones, who serves as co-managing partner of Munger Tolles, which saw its revenue rise slightly last year, to $236.3 million.
Jeffer Mangels and Rutan & Tucker both slipped a bit financially last year. Rutan & Tucker managing partner William Meehan said 2017 was a disappointment for his Orange County-based firm, only due to its “exceptionally good” 2016. But he’s optimistic about the firm’s prospects this year.
“With the economy being strong, the need for lawyers remains strong,“ said Meehan, adding that Rutan & Tucker has seen an uptick in demand for transactional, finance, intellectual property and litigation work. “We hope things continue to trend in a positive direction.“