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Inroads in Asia : Law Firms Wage Wide Turf Battle

The Real L.A. Law: Last in a Series

September 29, 1987|WILLIAM OVEREND | Times Staff Writer

In the lobby of the oldest law firm in Los Angeles hang a half-dozen silk-screen and woodblock prints by a leading Japanese artist--a sign of the legal world's growing interest in the treasures of the Orient.

A more obvious indication of that interest, however, was a recent trip to Japan by Warren Christopher, who returned with government approval to open a small branch office for O'Melveny & Myers in Tokyo.

The trip established O'Melveny as the first Los Angeles firm and one of only a few in the United States to crack the tightly controlled legal market of Asia's most powerful trade nation.

But there are many rivals close behind. Perhaps two dozen--including such local O'Melveny competitors as Gibson, Dunn & Crutcher and Paul, Hastings, Janofsky & Walker--plan to open their own offices in Tokyo within the year.

The Japanese business is increasingly important for most of them. In O'Melveny's case, legal work for Asian clients was 2% of the firm's business in 1985. By the end of last year, it had risen to 10% of O'Melveny's record $127-million gross income.

Two-Person Office

But O'Melveny's new Tokyo branch will be only a two-man office at first, little more than a beachhead. The firm's 381 other lawyers in Los Angeles and its larger branch offices in the United States are responsible for maintaining O'Melveny's position as a leading U.Sa firm and producing most of its revenue.

For O'Melveny and the other major Los Angeles firms, the pace is faster and the competition is tougher than ever before. The legal profession has placed a sharp new emphasis on growth, tough management practices and ever-growing profits. Nowhere is the competition more intense than in Los Angeles.

With the nation's top law firms crowding into the booming Los Angeles legal market, the city's leading firms are fighting not only to protect their home turf, but to expand their own operations in the new competitive age of the 1980s.

Thus, while Christopher was traveling to Tokyo, O'Melveny lawyers were busy on hundreds of other major legal projects, from a bitter fight between the Gallo brothers in California over wine and cheese to a complex British financing plan for a $4.6-billion construction project in London.

In the firm's 40-lawyer Century City office, a major project involves the 1988 Olympics in Seoul. In Newport Beach, a major priority for another 42 lawyers is the firm's growing business with the Irvine Co., long a dominant Orange County economic power.

In Washington, home of another 34 O'Melveny lawyers, the firm is defending the safety of Ford truck transmissions in one pending suit and arguing dozens of regulatory issues for other clients. In the 41-lawyer New York office, O'Melveny is expanding its national labor practice and working on a geothermal development project for California's Imperial Valley.

Overseeing the operations of O'Melveny's expanding legal empire is a formal management structure, headed by Christopher and a 10-member executive committee. At the same time, however, the various offices and the lawyers in them operate with enough autonomy for the firm to regard itself as a democracy--with Christopher merely the first among equals.

Richard M. (Rick) Jones, 37, hired by O'Melveny from the University of Texas 11 years ago, is now one of the firm's top municipal bond lawyers and leading recruiters. In describing how O'Melveny and most other major law firms operate, he begins by telling law students that lawyers generally are a difficult group for anybody to control.

"I compare us to a bunch of guys floating down a river on inner tubes," Jones said. "Imagine that all the inner tubes are loosely tied together by ropes. So we all have some freedom to go where we want to go, but, at the same time, we're all headed in the same general direction."

While O'Melveny's lawyers may be paddling their inner tubes in different directions, the firm's focus in the 1980s has clearly been toward tougher management and increased revenues--the same path taken by most of the leading national law firms.

Expansion to the trade markets of Asia is only part of the overall strategy for Christopher and other rival law firm leaders. The bulk of any major firm's business is still derived from the increasingly complex relationships with major corporate U.S. clients.

O'Melveny's growth from a two-man firm in 1885 to an international megafirm is partly a story of contrast between old and new. It is the difference between a $175 damage suit over a dead horse--founder Henry O'Melveny's first case--and a $13.8-million fee last year in the Baldwin United reorganization, one of the most complex bankruptcy cases in U.S. history.

Henry O'Melveny's legal earnings in his first two years of business were carefully detailed--about $10,000. Last year the firm's gross revenues were $127 million--an increase of $28 million in one year--making it the eighth richest law firm in the nation.

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