Pace of New Law Firm Offices Is Brisk

Despite the economic downturn in 2008, law firms have opened new offices at a brisk pace so far this year.

Dozens of law firms have planted flags on the West Coast, in the Midwest and the South, with a noticeable absence of expansion on the East Coast during the first half of 2008. Much of the growth has come from large, but not huge, law firms looking to fill in the gaps of their service coverage.

Although 2008 so far isn’t the year of massive merger announcements or megafirm ribbon-cuttings, law firms have continued to spread out at a healthy rate.

“You do it because it makes sense, regardless of the economy,” said Nancy Bertoglio, managing partner of Chicago’s Bell, Boyd & Lloyd. The 263-attorney law firm opened an office in San Diego earlier this year with six attorneys and seven technical specialists. The work focuses on life sciences and intellectual property matters.

Bell Boyd is one of several law firms expanding on the West Coast so far this year. Bryan Cave, with its largest office in St. Louis, opened a San Francisco location in March. The 847-attorney law firm already had California offices in Santa Monica and Irvine.

Also opening a San Francisco office was Ogletree, Deakins, Nash, Smoak & Stewart, a 392-attorney labor and employment law firm with roots in the Southeast.

Still another law firm branching out to the West Coast was Roseland, N.J.-based Lowenstein Sandler. In May, the 271-attorney firm announced it was opening a Palo Alto, Calif., office focusing on venture capital and technology.

Opening Seattle offices so far this year are San Francisco-based Gordon & Rees, with 307 attorneys firmwide, and Mountain View, Calif.-based Fenwick & West, with 223 attorneys total.

Much of this year’s expansion comes from regional or “superregional” law firms that have already established practices in New York and Washington, said Ward Bower, a consultant with Altman Weil. Although many firms are taking a “hunker down and wait” approach during the sluggish economy, he said, others are seeing opportunities to grab smaller firms and lateral groups.

Meanwhile, growth in Europe has slowed because of the U.S. dollar’s poor exchange rate, Bower said.

Kirkpatrick & Lockhart Preston Gates & Ellis‘ move into Paris was an exception. The 1,400-attorney law firm announced in January its debut there.

This year also has seen a noticeable lack of movement into the New York market. One rarity was 125-lawyer Mitchell Silberberg & Knupp, an entertainment and business law firm based in Los Angeles. In March, it announced the opening of a New York office.

Overall, however, New York moves have dwindled, considering that four years ago, many prominent firms — including Foley & Lardner; Howrey; Crowell & Moring; Jenner & Block; Sheppard, Mullin, Richter & Hampton; and Venable — did not have New York offices.

Many of the law firms that wanted New York practices already have established them, Bower said. For others, they may be waiting out the economic doldrums.

Results for the first quarter of 2008 indicated a weak but not defeated economy. The gross domestic product grew by 0.6 percent, a limp showing but nevertheless better than some economists predicted. However, builders spent nearly 27 percent less on construction projects, and consumer spending rose a tepid 1 percent.

COMBINATION OF REASONS

Law firms are opening new offices for a combination of reasons. In some cases, they’re following clients to snag more of their business, Bower said. In other cases, they are hoping to bolster flagging practices by venturing into new areas.

Chicago continues to be a popular new location for law firms. In April, New York’s Proskauer Rose opened an office with three partners from Chicago-based Mayer Brown. The practice focuses on corporate litigation with a particular emphasis on insurance litigation for policyholders.

Baker & Daniels, an Indianapolis firm with about 320 attorneys, earlier this month said it was opening a Chicago location as part of a plan to have more than 50 attorneys there.

Led by two attorneys from Schuyler Roche, the new office has seven attorneys. The focus is on corporate work and business litigation.

Also moving into Chicago this year is Husch Blackwell Sanders, the firm created by the January merger of St. Louis’ Husch & Eppenberger and Blackwell Sanders of Kansas City, Mo. A primary goal for the Chicago office is to expand its services to banking and insurance clients.

In addition, Boston’s Ropes & Gray, with 749 attorneys, opened an office in Chicago, with three partners from Mayer Brown. The group focuses on mergers and acquisitions, private equity and corporate and securities matters.

A 10- OR 20-YEAR PLAN

Another Chicago-bound firm this year is Gordon & Rees. The firm brought aboard three attorneys from Washington-based Ross, Dixon & Bell to make the move.

Opening a new office needs to be part of a “10- or 20-year plan,” said Arthur Makadon, chairman of Philadelphia’s Ballard Spahr Andrews & Ingersoll.

“You don’t invest for six months or a year,” Makadon said.

Earlier this month, the 500-attorney law firm announced the acquisition of 27-lawyer Needle & Rosenberg, an intellectual property and patent firm. The practice, more than the location, drove the deal, Makadon said.

“They could have been in Nome, Alaska,” he said. The firm in 2006 launched offices in Phoenix, Las Vegas and Bethesda, Md.

“I think 2008 is undoubtedly challenging, but also provides great opportunity,” he said.

Another hot spot so far this year has been Houston. Giant DLA Piper opened an office there in March, taking two partners from Washington firm Howrey and another from Akin Gump Strauss Hauer & Feld. The office primarily serves the energy sector.

In March, McDermott, Will & Emery staked a claim in Houston with three energy lawyers from Bracewell & Giuliani.