Irvine’s Knobbe Martens Olson & Bear LLP is vying to be Orange County’s biggest law firm. But it already can lay claim to local bragging rights.
Knobbe, which does patent, trademark, copyright and trade secrets law, is the county’s No. 2 firm by lawyers, behind Costa Mesa-
based Rutan & Tucker LLP.
Yet Knobbe is the only firm based in OC that can claim to be national, by way of its offices outside the state and clients across the country and beyond.
“We are one of the largest intellectual property firms in the U.S. and hands down the largest headquartered in Southern California,” managing partner Steven Nataupsky said. “Knobbe Martens is unique in light of its local competitors.”
Clients
Clients include Broadcom Corp. and Masimo Corp., both of Irvine, Ranbaxy Pharmaceuticals Inc. of Princeton, N.J., the National Institutes of Health in Bethesda, Md., South Korea’s Samsung Corp. and the local arms of Japan’s Yamaha Corp. and Toshiba Corp.
Rutan & Tucker, Newport Beach’s Stradling Yocca Carlson & Rauth and other locally based firms do most of their work in Southern California.
Knobbe has about 140 lawyers in Irvine and an additional 50 at offices in Los Angeles, San Diego, San Francisco, Seattle, Washington, D.C., and Riverside.
The firm opened its Seattle office in February to be near client Amazon.com Inc.
The Washington, D.C., office opened in November to bring Knobbe closer to East Coast and European clients as well as the U.S. Patent and Trademark and Copyright offices.
Knobbe is growing here, too. The firm, which largely hires law school graduates, has signed on 30 associate-level lawyers who are set to start working in the fall.
At that time, Knobbe stands to have more than 160 OC lawyers, which could dislodge Rutan from its coveted spot as OC’s biggest law firm with about 158 local lawyers now.
The firm competes with national and global intellectual property firms such as Washington, D.C.-based Finnegan Henderson Farabow Garrett & Dunner LLP, San Francisco’s Townsend and Townsend and Crew LLP and Boston’s Fish & Richardson PC.
Knobbe is a boutique intellectual property firm in an industry that has seen plenty of consolidation.
“We get a lot of offers to merge with other firms, but it’s not for us,” Nataupsky said. “We’re very happy with the group we have here. We want to stick to our core values and grow internally.”
But few boutique firms can survive without combining or becoming part of a global competitor, said Bill Brennan, principal of Altman Weil Inc., a New York-based consultant that works with law firms.
“It’s getting increasingly difficult for boutique firms to survive,” he said. “Most are getting absorbed by global law firms because they want to have bigger platforms.”
Knobbe wants to stay independent to keep its close-knit culture intact, according to Nataupsky.
Unlike other firms that lure partner-level lawyers based on the business they can bring with them, Knobbe does little hiring from other firms.
“It’s not our culture,” Nataupsky said.
Recruits
Instead, the firm recruits from Hastings College of the Law, the University of California, Los Angeles, Stanford University and other schools. It then brings recruits into the Knobbe culture, where work is shared and there are no stars.
“They’re insular,” said Dan Hatch, a partner at San Rafael-based legal recruiting firm Major Lindsay & Africa LLP. “They’re known for not recruiting outsiders.”
The risk for Knobbe is that some lawyers who bring in a lot of work could feel slighted for having to share it with other lawyers.
Still, few leave Knobbe, even though the firm’s lawyers are coveted by bigger firms.
Knobbe did recruit lawyers to open its Seattle office, where it lured three partners from Seattle-based Christensen O’Connor Johnson & Kindness PLLC.
Even then, Knobbe had worked with the lawyers before.
“We brought in lawyers who knew us and understood what we were about,” said Knobbe partner Joseph Re, who joined the firm out of law school after finishing a clerkship.
The firm likes to hire recent graduates and groom them to think and work the Knobbe way, which stresses expertise, Re said.
Work is divvied up among lawyers best suited for it based on their specialties, he said.
“We work hard at keeping a peaceful working environment,” Re said. “When you have a law firm that only thinks about maximizing profits it can turn best friends into enemies.”
The 46-year-old firm prides itself on having a young staff with a good chunk of lawyers in their late 20s and 30s. The oldest partners are in their mid-50s.
“From management on down, we’re a very young firm,” Nataupsky said.
Among the firm’s name partners, Louis Knobbe and Don Martens are largely retired but still are “of counsel.” Knobbe comes to the office regularly to work with newly hired lawyers. Gordon Olson is retired. James Bear died in January at 66.
The founders, with engineering as well as law backgrounds, started the firm in 1962.
A number of lawyers stay with the firm for their entire careers, said Nataupsky, who joined out of law school.
Re sums it up this way: “Why would I leave a firm that I helped build?”
Technical Backgrounds
Besides law degrees, many of Knobbe’s lawyers have master’s and doctorate degrees in engineering, chemistry and other fields.
“They’re able to communicate very well with the smartest inventors in the world because they have similar backgrounds,” Nataupsky said. “Having expertise in other fields helps us better understand our clients and their work.”
Finding lawyers is a challenge, according to Nataupsky.
Knobbe competes with local and global firms for the best graduates. The competition has bumped up first-year associate salaries, which cuts into profits.
New Knobbe associates start at around $160,000 a year,on par with big firms in OC,with lawyers working about 1,650 hours a year, the same as in the 1960s, Nataupsky said.
Other firms can require first-year associates to work an average 2,000 hours a year.
“We want our lawyers to have a life,” Nataupsky said.
Knobbe also boasts of a short track to partnerships, which helps with retention, Nataupsky said.
Associates can make partner and get an ownership stake in the firm after five years.
“It usually takes lawyers 10 years to get to that level,” Nataupsky said. “We just don’t think we need that kind of time to see if someone is a great lawyer with wisdom.”
Knobbe has stuck with the intellectual property niche set by its founders.
“Intellectual property has consistently been a good field,” Nataupsky said. “The training and the education required for IP lawyers is higher so the rates are higher as a result.”
Knobbe has seen its share of ups and downs.
“The dot-com bubble and 9-11 affected us like everyone else,” Nataupsky said.
Medical device work picked up around the same time, helping to offset the downturn, he said.
“We cover a lot of areas that need help with intellectual property, so when one area slows down, we’ll have other areas that are expanding,” Nataupsky said.
Outlook
This year’s slowing economy could see work for Knobbe as companies look to protect their patents and other intellectual property, he said.
“When times are tight, people tend to defend their intellectual property more vigorously so that they can guard their market share,” Nataupsky said.
Other trends, including mergers and acquisitions, are boosting Knobbe.
“Companies and private equity firms have cash to spend and they’re investing in smaller companies and their ideas,” Nataupsky said. “Whenever there’s a merger or acquisition there needs to be good legal counsel on how to protect intellectual property.”
Like other local firms, Knobbe has grown along with OC’s evolution from its agricultural roots into a business hub with companies in real estate, technology, healthcare, apparel and other areas.
“We didn’t know what was going to happen to Orange County when we started,” cofounder Louis Knobbe said. “I don’t think anyone realized how big it would get and it would become a world center for the medical device industry and technology.”
Challenge
Part of Knobbe’s challenge is in expanding across the country, said Jerry Bame, senior coach and president of Professional Business Coaches Inc., a Fountain Valley-based consulting firm that works with lawyers and firms on management skills.
Some West Coast firms have a tough time adjusting to the more conservative yet fast-paced East Coast style, Bame said.
Knobbe looked into the Washington, D.C., area for years before opening an office there, said Bill Zimmerman, a Knobbe partner from Irvine who’s heading up the firm’s office there.
“Our expansion committee had to look at the opportunities there, the businesses and the potential for us to maintain our firm’s culture,” he said.
But competition is another story, said consultant Brennan of Altman Weil.
“Metropolitan cities are flooded with sophisticated, long-established law firms,” he said. “Newcomers need to go above and beyond when satisfying longtime clients and attracting new ones.”
Zimmerman said he and other OC transplants spend a good chunk of time networking with local businesspeople.
“We’re dedicated to our clients in these areas and we’re developing relationships with clients who we had never previously worked with,” Zimmerman said.
Knobbe’s partners are mum about their next move. The firm’s expansion committee is looking at possible offices in the U.S. and abroad, Nataupsky said.
“Opening offices in D.C. and Seattle was a very big step for us,” he said. “Now that we’ve gone through that we’re going to enjoy the fruits of that expansion for awhile.”
