ALM Properties, Inc.
Page printed from: The Recorder
Select 'Print' in your browser menu to print this document.
Goodwin Procter Retools Amid Setback in SoCal
2013-07-12 03:20:27 PM
SAN FRANCISCO — Seven years after Goodwin Procter began an aggressive march in California, the firm's growth story in the state reads like a tale of two cities.
Goodwin opened up shop in Silicon Valley and San Diego in 2007, less than a year after the Boston-based firm broke into the California market with outposts in San Francisco and Century City. (The firm also opened a downtown Los Angeles office in '07.) The Silicon Valley office has since grown fivefold — numbering more than 50 lawyers, it is Goodwin's largest presence in the state and promises to figure even more prominently in the firm's future, current and former partners say.
The 18-lawyer San Diego office, by contrast, will soon be a thing of the past. Goodwin leaders announced late last month that the office will be shuttered Sept. 30, costing 10 attorneys and 12 staff their jobs. Others have been offered relocation.
Chairman Regina Pisa and managing partner Robert Insolia wrote in a firm memo obtained by The Recorder that the decision reflects a desire to "reallocate our investments to those markets in California that hold greater promise for us — Los Angeles, San Francisco and Silicon Valley."
Pisa and other firm leaders were not available for comment this past week.
"You've got to go where you've got your best shot," said University of San Diego Law School dean Stephen Ferruolo, who opened Goodwin's San Diego office and served as its first chair. "I think that's the decision they made."
It's a call few would have predicted when Goodwin leaders described their vision for California in those early days. They spoke of a strand of pearls, with offices spanning the length of the state, Ferruolo said. Goodwin strung the strand quickly, minting five outposts in less than two years. Poaching partners from indigenous powerhouses like Cooley and Latham & Watkins, Goodwin waged the most aggressive offensive in California of any out-of-town firm in recent memory, recruiters say.
Even the Valley, which has dashed the hopes of so many new entrants, did not trip up Goodwin. The market is a natural fit for Goodwin's strengths in technology and the life sciences, and their progress in the market outpaced management's expectations from the start, a former partner said.
But just as Goodwin's momentum was cresting, the recession stopped it in its tracks. After hiring a team of venture fund formation lawyers away from Wilson Sonsini Goodrich & Rosati in 2007, the firm went more than two years without welcoming a lateral partner in the Valley. As the economy rebounded, Goodwin relaunched a California Growth Initiative to demonstrate their commitment to the state once more. At that juncture, the paths of Silicon Valley and San Diego began to diverge, recruiters and former partners say. Having grabbed so much territory in the state, Goodwin had to decide where to press on in leaner times for Big Law.
"What came of that was investment in Silicon Valley above all," Ferruolo said.
A spokesman for Goodwin emphasized the firm's devotion to the state as a whole.
"While our business strategies in California have continued to evolve, we are more committed than ever to expanding our presence and scale across the state," he said in a statement.
Goodwin's plans for California did not initially call for an office in San Diego, a former partner said. But when Ferruolo and his group at now-defunct Heller Ehrman became available in 2007, the opportunistic firm pounced.
Goodwin envisioned a hub for transactional work in life sciences and biotechnology, Pisa and Insolia wrote in the memo. Ferruolo and his team specialized in the work. And San Diego, a key market for both sectors, was a popular destination for Big Law at the time. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, one of Goodwin's Boston brethren, had opened up in the city shortly before.
As elsewhere in California, Goodwin seemed to hit the ground running in San Diego — and tabled its plans when the recession set in. But unlike in the Valley, the firm couldn't manage to pick up where it left off when the economy improved.
Goodwin had a harder time recruiting in San Diego, with some prospective lateral partners questioning its commitment to the city after the pause, a former partner said. Although the firm has welcomed a number of litigators in San Diego in recent years, the corporate wing for which the office was launched steadily dwindled. Goodwin's website now shows just one corporate partner in the city.
And in retrospect, the recession may have been just the time to grow in San Diego, former partners said. The firm never quite reached critical mass in San Diego, but many competitors in the city stepped aside during the downturn, perhaps affording an opportunity to scoop up talent.
Still, many legal watchers say Goodwin's retrenchment in San Diego reveals more about the city than the firm. San Diego offers a more limited band of work than Silicon Valley, but it is a similarly crowded legal market.
"San Diego is far and away the most overlawyered city in California," legal recruiter Daren Wein said.
Although consolidation in the San Diego legal marketplace may have been inevitable, some wonder whether Goodwin had to be the firm to go.
"The firm model works in San Diego," said legal recruiter Larry Watanabe, who has opened offices in the city for Morrison & Foerster, K&L Gates, Mintz Levin, and Paul Hastings, among other firms. "They have the practice base."
The effects of the decision may reach beyond San Diego. Watanabe said the closure of the San Diego offices may impact practices that were strong in that market, such as IP litigation.
"Once a firm has done its job and gotten integrated ... eliminating a component can be disruptive," Watanabe said.
Lawyers in California are working to make sure that does not happen, a Goodwin partner in the state said.
San Diego was not the first link in the chain Goodwin scrapped. Goodwin once had two offices in Los Angeles, but it closed up shop in Century City in 2011 and moved the team to the outpost downtown. Now that the strand of five pearls has shrunk from opera-length to choker, some recruiters wonder whether further consolidation could be on the way. Goodwin has welcomed new talent in Silicon Valley and San Francisco in recent months, but it has not added any partners in Los Angeles so far this year.
Goodwin's cohesive team in San Diego is sad to be broken up, but they feel they have been treated well by the firm, Ferruolo said. And though they were surprised by the timing of the decision, the outcome was not inconceivable.
"Everybody was concerned that unless there was some growth, the future of the office was in question," Ferruolo said.
Although the Valley is now the first Goodwin outpost that comes to mind for most legal watchers, that office was the last to launch.
Firm leaders had their sights set on the Valley from the beginning, but they were waiting for the right group of founding lawyers, Pisa told The Recorder at the time.
The firm made its first foray into the market in 2007 with a team of Valley insiders, lured from the likes of Latham and Wilson. But unlike some out-of-town firms, Goodwin recognized that its work was not done with that first group, recruiter Wein said.
"You get through the first generation of hires, and it's the second and third generation of hires that get you over the hump," he said.
Recruiters say post-recession hires pushed the firm over the top. In 2010 corporate partners Anthony McCusker, Craig Schmitz and James Riley Jr. joined the firm from Gunderson Dettmer Stough Villeneuve Franklin & Hachigian. Goodwin had to work hard to woo the group. McCusker and Schmitz were set to join the firm a year earlier, only to have a change of heart shortly before their departure from Gunderson.
They have turned heads since taking the plunge. In one of their latest coups in the Valley, McCusker led a Goodwin team with partner Richard Kline that advised the underwriters in Gigamon's June IPO. McCusker, who now leads Goodwin's Silicon Valley office, could not be reached for comment.
"What they have been able to accomplish in Silicon Valley has been very impressive," Watanabe said.
The money Goodwin shelled out to woo its core Valley lawyers irked some on the East Coast, a source close to the firm said. But Goodwin's willingness to go above and beyond in the Valley is what has made it so successful there, current and former partners say.
From the first, it was clear that Goodwin's drive to penetrate the Valley rose to the very top of the firm, said William Davisson, who left Latham to become Goodwin's first corporate partner in the Valley. He recalled that firm leaders made regular trips from Boston to the Valley to lend a hand with pitches to clients and figure out where they could improve.
"They accrued a lot of frequent flier miles in the first couple of years," he said. "It was clearly the No. 1 focus of firm management."
They've assembled a team that's built to last, Davisson said. Many of Goodwin's key corporate lawyers in the Valley are in their late 30s and early 40s, with the most productive parts of their careers still ahead of them, he noted. Although they are already faring well against the Valley stalwarts, Davisson thinks they will match up even better over time.
"When you look at the next generation of lawyers and our team versus anybody else's team, I like my partners here," Davisson said. "That's why people come."
And at least to a Valley lawyer like Davisson, the decision to retreat in San Diego, though painful, is the right call for the firm's future in California.
"We want to grow, and that means focusing on what we do best, where we do best," he said.
Contact the reporter at firstname.lastname@example.org.