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Construction is wrapping up on the brand-new building that Pillsbury Winthrop’s Silicon Valley lawyers are slated to move into this December. In addition to discovering new furniture and other amenities, the firm’s attorneys will notice they have extra space — a lot of extra space. The 82,000-square-foot building in Palo Alto’s Stanford Research Park is designed to house 160 lawyers — roughly double the 85 lawyers that Pillsbury currently has in the Valley. The firm signed a 10-year lease for the space in October 2001, with the expectation that the battered technology sector would eventually recover. Twenty-two months later, with the nation’s unemployment rate at 6.4 percent and few signs of an imminent rebound, Pillsbury’s commitment to the tech industry risks turning into an expensive liability. And in a year in which real estate bets have helped fell once-prominent firms like Brobeck, Phleger & Harrison and Arter & Hadden, Pillsbury’s extra space may seem like a bad omen. Partners say the firm and the Silicon Valley office is diversified and strong enough to ride out the tech downturn. “We’ve had continued growth every year,” said William Abrams, the co-chair of the firm’s global intellectual property practice. “We’re heavily into the tech area, but also into other people who are diversified. And our tech clients have been strong.” Abrams defended the extra space in the new building. “You can’t go into a space with 85 lawyers and have space for 87 lawyers,” he said, “so we thought this was the logical amount to plan for.” The firm’s Silicon Valley office has grown in the past year by eight partners. The firm picked up a pair of litigators from the now-defunct Skjerven Morrill. In March, Pillsbury’s Silicon Valley office hired Tom Thomas, the former co-chair of Oppenheimer Wolff & Donnelly’s nanotechnology practice, and in April, Cooley Godward business partner Deborah Ludewig came on board. One partner in Silicon Valley said the office’s corporate practice had exceeded the expectations it had set for this time of the year. “Do we have more space than we need? Sure. At a rent higher than we would like? Yeah. But there’s no sense of panic here,” said the partner, speaking on condition of anonymity. “We’re looking long term to expand.” In the short term however, Pillsbury will have to find a way to sublease a substantial amount of space in a market that’s already flooded with office space. According to real estate brokerage firm Cushman & Wakefield, the vacancy rate for subleased space in Stanford Research Park is 21.7 percent. In the fourth quarter of 2001, when Pillsbury signed the lease, the vacancy rate was 8.8 percent. Besides the unused space in Pillsbury’s new building, the firm also has to deal with the 50,000 square feet of space it’s occupying in Palo Alto on Hanover Street. Abrams said the firm was not concerned about the extra space. “We’re very comfortable with where we are right now in the process. “Stanford Research Park is a very special place,” Abrams said. “We made a decision to stay here rather than go somewhere else, and we’re really glad we did that. It’s important for us to be here.”

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