California’s thriving media, biomedical, and technology industries, as well as its Pacific Rim location, beautiful beaches and mountains, and relaxed lifestyle all make the Golden State a particularly attractive destination for law firm expansion. Despite the most recent census showing slower population growth in California, the state still represents a huge portion of the American economy. If California were its own country, its economy would rank the fifth largest in the world.
According to a Wells Fargo Legal Specialty Group survey released in November 2021, the legal industry is booming nationally. But the West Coast is seeing even greater demand due to the concentration of tech clients driving deal activity. Demand for legal services in the region increased 12%, well above the national average of nearly 7%.
To capitalize on this demand, several national and international law firms opened offices in the Golden State in 2021, and more firms added new offices to their existing presence here. Most of this expansion is intended to serve the needs of existing clients; the firms are not just relying on prospective business.
New York-based Paul, Weiss, Rifkind, Wharton & Garrison established an outpost in San Francisco with partners from Orrick, Kirkland & Ellis, and Morrison & Foerster. Cleary Gottlieb Steen & Hamilton launched two new offices in California this year, one in San Francisco and one in Palo Alto with a partner from WilmerHale plus four partners and six associates relocated from its other locations. Buffalo, NY-based Goldberg Segalla opened in San Francisco, building upon the offices it established in Los Angeles and Orange County in 2018. Debevoise & Plimpton LLP relocated four partners and 10 associates from the East Coast to open its first California office in San Francisco.
Ohio-based Vorys Sater Seymour and Pease LLP, New York’s Ellenoff Grossman & Schole LLP, and Boston-based Riemer & Braunstein all launched their first California outposts in Orange County, just south of Los Angeles.
In addition to the new entrants, out-of-state law firms with existing offices in California also expanded their reach within the Golden State. Husch Blackwell launched new offices in Los Angeles and San Francisco after hiring a 21-lawyer litigation team from Dentons. Corporate immigration firm Berry Appleman & Leiden LLP founded a second Northern California office, this time in the Silicon Valley city of Santa Clara. Jenner & Block opened in San Francisco, its second California office. In December, Ropes & Gray opened a new Los Angeles location, expanding its California presence beyond its existing offices in San Francisco and Silicon Valley.
Willkie Farr opened in LA with three partners from Venable LLP. Vinson & Elkins launched a second Golden State office with six lawyers poached from Wilson Sonsini in Los Angeles. Holland & Knight expanded its California presence to Orange County with the acquisition of the boutique Enterprise Counsel Group. (It then merged with the national firm of Thomson & Knight, further growing its footprint outside of California.) Blank Rome also founded its second California office, this time in Orange County, stealing partners from Troutman Pepper, but has yet to establish a physical presence there. Nationwide employment law firm Jackson Lewis P.C. established its seventh California office with a new location in the Inland Empire city of Riverside, east of Los Angeles.
The British Invasion
British law firms also made their presence known in the Golden State. Freshfields Bruckhaus Deringer LLP opened its first California office in Silicon Valley in 2020 and added several attorneys from Arnold & Porter and Morrison & Foerster LLP in 2021. Allen & Overy arrived with a splash, acquiring a large group of attorneys from Akin Gump and eight partners from White & Case LLP, thus opening offices in Silicon Valley and San Francisco.
It’s Hot, Hot, Hot!
The influx of these law firms to California and their further expansion within the state added fuel to the already hot lateral market. The year saw almost cutthroat competition for associates and an increase in lateral partner hires and group movement among law firms.
While some new entrants seeded their new offices with imported talent from their other locations, most firms actively recruited laterals with intimate knowledge of the region, client relationships, and a deep understanding of how business works on the ground here. For example, BakerHostetler added four McGuireWoods LLP employment attorneys to its Los Angeles and San Francisco offices. Winston & Strawn LLP acquired the local 18-lawyer boutique Scheper Kim & Harris LLP plus picked up three more attorneys from other law firms in Los Angeles.
In a roundabout way, the pandemic facilitated this rapid increase of partner movement and law firm expansion. The shift to virtual interviewing allowed firms to talk to far more potential lateral partners than they might have been able to reach in the past. The relative ease of scheduling interviews with groups of lawyers from diverse locations vastly speeded up the recruitment process.
The increased movement of partners also benefitted female lawyers in that approximately 38% of lateral partners who moved in Northern California in 2021 were women, up from 32% in 2018. Many of the market’s newcomers emphasized diversity when hiring their office founders and leaders. For example, Paul Weiss hired Melinda Haag the former U.S. attorney for the Northern District of California from Orrick where she was global chair of litigation and Cleary Gottlieb nabbed WilmerHale’s partner-in-charge and antitrust leader, Heather Nyong’o.
The pandemic-driven downturn in the office real estate market gave law firms the opportunity to reassess their physical footprint and make adjustments in highly competitive and expensive markets such as Los Angeles, Silicon Valley, and San Francisco. Despite the pandemic work-from-home trend, firms such as Baker McKenzie and Snell & Wilmer moved to larger office spaces to accommodate their recent growth and allow for even more. In addition, some firms seized the moment to relocate or expand to new markets with a reduced real estate investment in their new locales. When establishing a presence, acquiring physical space is important to demonstrate a commitment to that market, sending a message to existing and potential clients as well as to potential lateral hires.
There’s no sign of this rush to the Golden State abating in 2022. Who will be next to stake a claim?