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Law Landscape

Orange County’s legal market has changed a lot in the past few years.

Some firms with local offices have closed their doors here, merged or downsized.

New firms have entered the fray. Others have embarked on growth strategies with hopes of one day dominating the county’s shrinking legal market.

The law business has always had its challenges.

Any lawyer will tell you that nabbing clients and luring talented attorneys with skills and a big book of business is no walk in the park.

But these days, legal experts say it’s become a lot tougher to crack the local market.

The county is what some might call an overcrowded legal market with more than 50 sizable law firms all vying for work.

In the past few decades, OC has evolved from its agricultural roots and become a hotbed for technology, healthcare, real estate and consumer products industries.

Homegrown firms such as Costa Mesa’s Rutan & Tucker LLP, Irvine-based Knobbe Martens Olson & Bear LLP and Stradling Yocca Carlson & Rauth of Newport Beach matured with many of the businesses here and have carved strong places in the market since.

Throughout the 1990s and early 2000s, OC saw a wave of law firms migrate to the area as many looked to drum up business from the vast array of fast growing companies here.

Among those to flock were Los Angeles-based firms including Latham & Watkins LLP, Gibson Dunn & Crutcher LLP, Paul Hastings Janofsky & Walker LLP and O’Melveny & Myers LLP.

Miami’s Greenberg Traurig LLP, Minneapolis-based Dorsey & Whitney LLP, Washington, D.C.-based Crowell & Moring LLP and Phoenix-based Snell & Wilmer LLP are other firms based elsewhere that have set up shop here.

Nowadays, fewer firms are opening up offices in OC, legal sources say, as many in the legal community believe that the local law market has reached its saturation point.

The county, which is predominantly made up of smaller to midsize companies, is probably not the most lucrative place for a newcomer, sources say.

Global law firms that have some of the best legal talent and offices all around the world aren’t known for having cheap rates, which makes their services unaffordable for a lion’s share of companies in OC.

The expensive law firms that have footholds on the local market got them by working for big public and international companies that require complex legal work and the resources of a large law firm.

They also do work here for clients outside the county, affording partners a chance to live here even if most of their work is elsewhere.

But with only a handful of billion dollar companies in the area, the pool of lucrative local work for some of the big players is shrinking.

Some firms have struggled as a result.

In June, the Irvine office of San Francisco-based Morrison & Foerster LLP closed its doors after a series of lawyers left to join other firms.

The firm, which counts more than 1,000 lawyers globally, has practices in all areas including complex business litigation, intellectual property, real estate, tax, white-collar criminal defense and other areas.

Its Irvine office counted some 50 lawyers in its heyday.

Sources speculate Morrison & Foerster left OC for a variety of reasons, including a lack of clients able to pay higher rates and competition from other firms that are making more of a commitment here.

Morrison & Foerster hasn’t been the only big firm to struggle here.

The Costa Mesa office of San Francisco-based Pillsbury Winthrop Shaw & Pittman LLP once counted 20 lawyers in OC, but after a series of departures in the past year is down to two local lawyers and three others who split their time here and elsewhere.

Despite rumors of it closing shop, Pillsbury remains committed to OC, managing partner Craig Barbarosh said.

The office, which has a deep bench in bankruptcy work, is very busy these days, he said.


Consolidations

The industry has seen a few consolidations.

St. Louis-based Bryan Cave LLP, which has an office in Irvine, combined with Atlanta-based Powell Goldstein LLP.

The firm will be called Bryan Cave-Powell Goldstein for two years in Atlanta and simply Bryan Cave elsewhere.

The move helps Powell gain an international footprint and build a presence on the West Coast and OC, according to Ren Hayhurst, who manages Bryan Cave’s Irvine office.

“The merger will give Powell attorneys a chance to practice in Orange County,” Hayhurst said.

Atlanta law firm Troutman Sanders LLP has joined with Washington, D.C.’s Ross Dixon & Bell LLP, which also has an Irvine office.

Ross Dixon will change its name to Troutman & Sanders.

The deal combines Troutman’s corporate, finance, litigation, real estate and public policy practices with Ross Dixon’s insurance, professional liability and commercial litigation practices.

Troutman also obtains a presence on the West Coast and OC.

The deal should help Ross Dixon’s local lawyers build a practice internationally through the global offices they will now have access to, Irvine managing partner Robert Pozin said.

“We’ve always had a national litigation practice, but when we combine with Troutman Sanders, we just have a broader reach,” he said.

It’s unclear if we’ll see more consolidations play out in OC, Pozin said.

“The conditions have to be right,” he said. “It has to be a good fit.”

Some firms are beefing up their local offices to hopefully gain on rivals.

Cleveland-based Jones Day, the No. 14 law firm in the county by lawyers, has nearly doubled its headcount in Irvine to some 49 lawyers in the past year, managing partner Richard Grabowski said.

“We’ve seen some competitors leave the market entirely. Some are shadows of their former selves but that doesn’t account for our success,” Grabowski said.

The firm is looking to generate work from the plethora of midsize companies here, he said.


Effort to Grow

Newer firms to the area are making an effort to grow here.

Pepper Hamilton LLP of Philadelphia opened an office in Irvine in 2005 because of its middle market niche, according to local managing partner Sharon Klein.

Pepper Hamilton has 10 lawyers in OC and 500 firmwide.

The firm could add more lawyers, she said.

San Diego-based Luce Forward, which counts about 200 lawyers firmwide, opened an office in Irvine in 2007 by luring away partner John Murphy from the Irvine office of Los Angeles-based Nossaman LLP to build a presence in OC.

“Luce asked me to spearhead an OC office and I found the opportunity extremely exciting,” Murphy said.

Establishing a presence in OC for any firm has its challenges, Murphy said.

It ultimately comes down to attracting the right people, he said.

Luce Forward has since grown to 13 lawyers and plans to have 17 lawyers by this time next year, Murphy said.

The economic downturn will no doubt have an impact on firms of all sizes, he said.

Competition to attract clients is getting steeper as many companies, big and small, shop around for legal services as they look to cut costs amid weak economic conditions, he said.

“The groups of lawyers with the strongest skill sets and the strongest client relationships are going to prosper regardless of the economic climate,” Murphy said.

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