Californian firms lose out to US rivals
11 July 2005
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12 January 2004
California's top law firms appear to be falling behind their US competitors after most of the state's top firms slid down the US rankings in terms of gross revenue.
Analysis of the latest AMLaw 100 figures revealed that eight of the 13 Californian firms ranked in the country's top 100 failed to match the increase in gross revenue enjoyed by firms in other parts of the country.
Overall, gross revenue at California's 13 top-ranked firms rose just 8.3 per cent last year, compared with an average rise of 10 per cent across the top 100, causing most of the West Coast firms to drop between two and four rankings.
Palo Alto firm Wilson Sonsini Goodrich & Rosati suffered the worst decline, dropping eight spots to rank 54th after reporting a 1 per cent drop in gross revenue to $377.5m (£214.9m). Profit per equity partner (PEP) also dropped 2.8 per cent to $865,000 (£492,000), prompting the technology firm to overhaul its management team earlier in the year.
Fellow technology experts Cooley Godward and Gray Cary Ware & Friedenrich reported similarly poor results, with Cooley Godward's revenue remaining stagnant at $289m (£164.5m), despite hopes that the firm was beginning to rebound from the effects of the dotcom crash.
Cutting partner and lawyer numbers did, however, result in a 10.4 per cent increase in revenue per lawyer (RPL) to $690,000 (£393,000), and an 11.1 per cent increase in PEP to $850,000 (£484,000).
Gray Cary fared only slightly better, with a 1.9 per cent increase in revenue to $213m (£121.2m). However, the firm's merger with Piper Rudnick, which came into effect on 1 January, could see the firms report a combined revenue in the region of $793.5m (£455.9m) this financial year, pushing the combined firm up the ranks into the top 20 overall.
The combined firm's subsequent tie-up with UK firm DLA could see its total global revenue jump even further to a combined $1.36bn (£781.4m), although the firms' partnerships are not fully integrated.
Only Sheppard Mullin Richter & Hampton managed to rise up the top 100 rankings by any sizeable amount, surging up eight spots to 83rd place after enjoying a 15 per cent rise in gross revenue last year to reach $230m (£130.9m).
Sheppard Mullin attributed the rise to its strategy for growth, which has seen the firm expand from four to nine offices since 2001 and increase its lawyer numbers from 290 to 440 over the same period.
Latham & Watkins and Paul Hastings Janofsky & Walker were the only other West Coast firms to record increases in gross revenues above 10 per cent.
Paul Hastings reported a 13.4 per cent increase to reach $609m (£346.6m), while Latham, which although originating from Los Angeles now classes itself as an international firm, reported the largest increase after gross revenue rose 16.7 per cent to $1.206bn (£686.5m).
The rise meant that Latham continued to place first within the Californian firms and was able to edge out Cleveland firm Jones Day to take third spot in the overall US table for gross revenue.
San Francisco-based Orrick Herrington & Sutcliffe is the only other Californian firm to enjoy any other significant success during 2004 after PEP broke the $1bn (£575m) barrier for the first time.
However, while average PEP at the firm increased a staggering 17.2 per cent to reach $1.09bn (£620m), Orrick failed to convert this into a similar increase in revenue, causing the firm to drop four spots to 33 in the overall table.
It is also yet to be seen how the firm's recent spate of partnership hires, including mercilessly raiding San Francisco-based Heller Ehrman White & McSuliffe and the embattled Coudert Brothers, will affect PEP this year.