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With real estate prices at half of what they were a few years ago, law firms in Silicon Valley are upgrading to better digs and stocking up on extra space for the future. The deals are attractive enough that some firms are even abandoning buildings with several years left on their leases. In September, Gibson, Dunn & Crutcher’s 30-attorney Silicon Valley outpost relocated into a newly remodeled building on Page Mill Road, though time remains on its existing lease. “The total package that we have here makes it possible for us to do this,” said Denis Salmon, the head of Gibson’s Silicon Valley office. Salmon would not disclose what the firm was paying per square foot for the new space but said that it was a savings compared to its previous space, which it intends to sublet. Gibson’s new lease is for 10 years and 40,000 square feet of space — or enough room for the outpost to double in size to 60 attorneys. In August, O’Melveny & Myers’ Silicon Valley office moved into space with similar elbowroom. While the 30-attorney office included a handful of new laterals from Brobeck, Phleger & Harrison, the firm signed up for enough space to accommodate up to 70 lawyers. According to real estate brokerage firm Cushman & Wakefield, rental rates in Silicon Valley have plummeted by 59 percent in the past three years. While the average monthly cost per square foot of space in Silicon Valley was $4.93 at the end of 2000, the price in the third quarter of 2003 was $2.02. In Palo Alto, the cost per square foot fell from $7.16 to $3.16 during the same time period. “It’s a happy coincidence that the real estate market was at a low point when we were out shopping,” said Gibson’s Salmon. But he stressed that the move was driven by the firm’s plans for expansion. Mayer, Brown, Rowe & Maw’s Silicon Valley office cites similar reasoning for its impending move. While the firm has only been in its current building since June 2001, the group is already in the final phase of securing a new space. “We knew when we got this space that we would outgrow it,” said Palo Alto Managing Partner C. Cabell Chinnis Jr. “It was always within our business plan to grow larger than the capacity of this building.” The need to relocate became especially acute this August when the office added two new attorneys from the now-defunct Altheimer & Gray. The recruits stretched the existing office space to its limits: Mayer, Brown’s support staffers are currently working out of one of the building’s conference rooms while a partner has set up shop in the other. And with plans to expand the office’s attorney headcount into the 20s within 18 months, continuing to work in the current space is impossible, Chinnis said. Of course, moving into a new space means that Mayer, Brown will have to sublet its current home in a market that’s glutted with vacant offices. But Chinnis believes the small size of the firm’s current space could make it easier to find a tenant. “I’m optimistic because I think this space represents a market niche where there’s not that much of a supply. But frankly, I’ll also say that the office is doing sufficiently well and this space is sufficiently small that the economic impact will be absorbable no matter what.”

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