BUSINESS PULSE : ORANGE COUNTY ISSUES & ATTITUDES : Professional Services: Bullish Outlook

The professionals who service corporate growth in Orange County have nurtured and cultivated the county’s changing business landscape over the past 10 years, contributing to its growth and causing their own ranks to swell.

Bankers, lawyers, accountants, stockbrokers and other service professionals expect the county’s business market to continue expanding during the next decade, and they’re ready to reap the rewards.

Their bullish expectations appear to explain why professional services executives who participated in The Times executive outlook survey felt far more positive about doing business in Orange County than their counterparts in other industries.

For example, 54% of surveyed retail and service executives said the county is becoming a more attractive place to do business, contrasted with only 18% of manufacturers. And more than any other group, service executives rate local business conditions as excellent.

Those findings underscore the evolution of Orange County’s economy.

The county is increasingly dependent on corporate, sales and distribution activities, and less on manufacturing, said James Doti, dean of the Chapman College School of Business in Orange. That means more work for business professionals.

The nation’s major accounting firms, law firms, insurance companies and stockbrokerages already have offices in the county. And at least 30 venture capital companies have set up shop in recent years to promote new growth.

“We have such an infrastructure of services built up that any business in any industry would not think twice about coming here, at least for professional services reasons,” said Gary D. Johnson, managing partner of the Costa Mesa office of Arthur Young & Co., a worldwide accounting firm.

The increasing complexity of Orange County business means that more information--the lifeblood provided by the professional services industry--will be needed in the future, said Jack A. Fromm, a partner and manager of the Laguna Hills office of Crowell, Weedon & Co., a Los Angeles securities firm.

“Try to read a company’s prospectus. They’re printed for the professional, not the guy investing,” Fromm said. “How much knowledge can the layman have about the simple world, for me, of buying and selling stocks?”

That complexity has companies turning to lawyers, accountants, stockbrokers, insurance agents and others whenever questions arise about details of even relatively routine transactions, he said.

“People amass a little money, and they’re afraid to do anything with it unless they have the advice of a financial planner,” Fromm said. “Everybody’s in the deal business, and nobody can do anything without checking with a professional.”

Accounting firms, law firms and other professional companies make up about 25% of the more than 80,000 businesses operating in Orange County, according to Contacts Influential, a marketing service. In the past 10 years, the number of professional services firms has risen 132%, outpacing the 119% increase in the total number of businesses operating in the county.

And the services sector expects that growth to continue unabated. “I don’t think there’s anything anyone can do that will stop growth,” said Roger Tompkins, regional vice president for State Farm Insurance.

But he said he is worried that the slow-growth initiative on the June ballot could come close. “Growth fuels more business development than people are aware of,” he said.

The increase in corporate activity in Orange County in the past decade certainly has fueled professional services. Statistics from Contacts Influential, the State Bar of California and the California Bankers Assn. reveal that:

* The number of banks doing business in Orange County more than doubled during the 10 years ended June, 1986, while the total number of branches increased 53%. More importantly, the amount of deposits in those branches more than tripled to $14.2 billion--the fastest deposit growth of any major county in the state. Orange County is third in total bank deposits, behind the Los Angeles and San Francisco money centers.

* The number of law firms in the county had nearly tripled through the end of 1987, to 2,401 firms from 965 firms in 1978. The population of active lawyers doubled in 10 years to 7,483 by the end of March--a rate outpacing the statewide increase of 67%. Only San Diego, whose lawyer population tripled to 7,162, had a higher rate among the state’s larger counties.

* Accounting firms tripled in number to 1,271 this year from 485 a decade ago.

* Securities and commodities brokers and their related services companies experienced a fivefold increase, to 735 firms this year from 129 a decade ago.

* While the total number of companies offering life, health, fire, title and other insurance services rose only 55%, to 113 from 73 a decade ago, the total number of insurance agents and brokers more than doubled to 2,056 this year.

Other professional companies, such as advertising and business consulting firms, also showed big increases.

The professional services boom may provide significant benefits for Orange County business.

“Competition is going to get a lot more fierce,” said Jeffrey Kilpatrick, president of Newport Securities, a Costa Mesa brokerage. “It’s true now. Some of the law firms are already competing more on price.”

And slow growth aside, some executives believe that the boom will be followed by a certain amount of backsliding as the long-running economic expansion of the 1980s plays itself out.

“People forget the deflation we had in the early 1980s when upper-end real estate dropped up to 25%,” banker Inglee said. “I’m seeing some earmarks of that deflation already.”