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Denver-based Brownstein Hyatt Farber Schreck announced this week that it will open a new office in Reno, Nev. In some respects, the news is atypical. The number of law firm office openings has slowed significantly along with the economy, particularly for new domestic locations.
In other ways, Brownstein is representative of the relatively small number of firms still expanding in the United States right now: midsize and based outside of major financial centers such as New York and Chicago.
"We think there are a lot of great opportunities to grow in this market," said Bruce James, Brownstein Hyatt's managing partner. "There are certain practices and opportunities that are opening to midsize or regional firms that aren't attractive to the large firms."
Brownstein has 235 attorneys and ranked No. 180 on The National Law Journal's 2008 list of the 250 largest firms in the United States. The addition of Reno brings its office total to 12. The firm snagged Joshua Hicks, former chief of staff to Nevada Gov. Jim Gibbons, to head the new office, which James expects eventually to house between five and eight attorneys.
While law firms have largely shied away from expansion in recent months, growth hasn't stalled entirely. According to Hildebrandt International's most recent MergerWatch report, which was released on Oct. 1, 20 new law firm offices opened during the third quarter of 2009 compared to 60 during third quarter of 2008. Of those new offices, 11 were in the United States and nine were overseas. By comparison, the same period in 2008 saw 25 office openings in the United States and 35 abroad.
Large firms mostly account for the recent international expansion, but generally it's the smaller and midsize firms that are growing domestically, said Hildebrandt consultant Lisa Smith. That's not just a byproduct of the tough economic times.
"If you look at the larger firms, many of them will say they already have their domestic platforms in hand and that they are already in their key markets. Those firms are more focused on the global side."
For example, Los Angeles-based Gibson, Dunn & Crutcher opened an office in Sao Paulo, Brazil; Chicago-based Kirkland & Ellis is expanding with a new Shanghai office; and Houston-based Baker Botts launched an office in Abu Dhabi, United Arab Emirates.
Those overseas openings haven't kept pace with the international growth during the previous year, in part because of the uncertainty of the economy.
"People are more cautious about their global investments right now," Smith said.
Some midsize and regional firms believe that now is the right time to invest in domestic growth. Generally speaking, those firms weren't hit as hard by the recession because they are not heavily focused on capital markets and corporate work. Some are seeing increased demand by clients seeking lower billing rates. Finally, the shakeup in the legal industry has made snagging good lawyers easier than in the past.
All of those developments were factors in Barnes & Thornburg's decision to open four new U.S. offices so far this year, said managing partner Alan Levin. The Indianapolis-based firm has 427 attorneys and has added locations in Atlanta; Columbus, Ohio; Minneapolis, Minn.; and Wilmington, Del., representing the most aggressive expansion in the firm's history.
Barnes & Thornburg developed a plan several years ago to move beyond its Midwestern base and stuck to that plan despite the recession, Levin said.
For one thing, the firm is getting the opportunity to pitch its services to cost-conscious clients that previously wouldn't consider Barnes & Thornburg, Levin said. Secondly, it's been easier to recruit good attorneys looking for better practice diversity and business platforms; those concerned that their present firms are insufficiently diversified are on the lookout for better options.
"There is an awful lot of talent available. We've been able to pick up some good people," Levin said.
In other recent domestic office openings, San Francisco-based Littler Mendelson opened an office in Albuquerque, N.M.; Nelson Levine de Luca & Horst opened an office in Denver; Barroway Topaz Kessler Meltzer & Check of Radnor, Pa., opened a San Francisco office; Phoenix-based Lewis & Roca opened a Silicon Valley office; and Lathrop & Gage of Kansas City, Mo., opened an office in Chicago.
