U.S. Legal Giant to Shut Down L.A. Branch : Law: Baker & McKenzie is closing the office after five years of internal problems and failed hopes of a Pacific Rim boom.

Beset by internal problems and a weak economy, Chicago-based Baker & McKenzie--the nation’s largest law firm--said Friday that it will shut down its 38-attorney Los Angeles practice, ending a tumultuous foray into the city with one of the region’s largest law firm closures.

The shutdown comes five years after Baker & McKenzie, which boasts a worldwide network of 1,600 lawyers, entered what was then a fast-growing Los Angeles legal market by merging with the local firm Macdonald, Halsted & Laybourne.

Conflicting corporate cultures, the departure of longtime Macdonald partners and other problems began to undermine the merger almost from the beginning, local legal observers said.

“Despite the best efforts of all concerned, this arrangement has not worked out to the mutual satisfaction of the parties,” said a statement issued by Baker & McKenzie. The firm’s partners were in Berlin attending their annual meeting and were not available for comment.

Both the Baker and Macdonald firms had high hopes their merger would result in more Pacific Rim-related business--the lure, in part, that prompted more than 50 out-of-town firms to establish Los Angeles offices during the booming 1980s.

“We kept looking at Los Angeles as it emerged in recent years as a dynamic market in so many ways, particularly in relation to the Pacific Basin,” Robert W. Cox, chairman of Baker & McKenzie, said in 1988.

But soon after the merger, it became apparent that many of Macdonald’s talented but locally focused staff of 70 attorneys found it hard to live with Baker & McKenzie’s worldwide emphasis and corporate style. Baker & McKenzie bred even more resentment among the local staff after taking greater control of the poorly performing Los Angeles office, according to informed legal observers.

Despite its problems, Baker & McKenzie had recently planned to make a $10-million loan to turn the local office around, according to the Los Angeles Daily Journal newspaper. But Baker’s executive committee apparently decided to let the local office close following the decision of Malissa McKeith, head of the Los Angeles office’s environmental practice, to leave for a rival firm.

McKeith, who still answered her phone at Baker & McKenzie on Friday, declined to comment.

The internal problems at Baker & McKenzie certainly did not help the firm cope with the deep regional economic slump, which has seen local and out-of-town firms lay off attorneys and shut down offices.

The difficulties for law firms are “probably going to continue happening for another year or so before it starts getting better,” said law firm consultant Mary Steiner.

Pacific Rim-oriented business also failed to meet expectations.

“I’m not so sure that Los Angeles is any more the gateway to the Pacific Rim than New York,” said Ronald S. Beard, managing partner of Gibson Dunn & Crutcher, Los Angeles’ largest law firm. “Given what we can do by phone and fax, it’s a very small world.”