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The Five Year Plan: Selected out-of-town firms At the height of the tech boom, Washington, D.C.-based Kirkpatrick & Lockhart partner Richard Phillips was spending a lot of time visiting his kids in the Bay Area. Tired of being relegated to the guest bedroom, Phillips persuaded his firm to open a San Francisco office. The move made sense. Kirkpatrick had recently merged with a Beverly Hills-based boutique, and there was a second partner willing to relocate. “I took the [California] bar and I wasn’t the oldest guy,” recalls Phillips, a nationally recognized securities lawyer then in his 70s. “There were a lot of people there who looked long in the tooth.” In fact, Phillips and his firm had lots of company. The tech boom was drawing close looks from dozens of Am Law 100 firms eager to get a piece of the action. Some merged into the Bay Area market. But seven firms that came five years ago, including a few prestigious Wall Street firms, entered the market with a more organic strategy. And the offices they launched at the height of the boom have taken root. Kirkpatrick has 37 lawyers here now, and Jones Day, which came around the same time, has 61. Washington, D.C.’s Covington & Burling has 33. “We began by bringing lawyers, which we felt was important from a cultural perspective, and want to now fill out the office with folks with long-standing ties in the local community,” said James Snipes, head of Covington’s S.F. office. While all the firms have followed a roughly similar strategy, the execution has varied, depending on the firm’s existing clientele, its national ambitions and the relative attraction of its per-partner profits. It has long been the model for the strongest firms to send out their own and then cherry-pick talent in new markets, says legal consultant Peter Zeughauser. He points as examples to firms like Skadden, Arps, Slate, Meagher & Flom and Latham & Watkins, which began building their Bay Area offices in the late 1980s and early ’90s. Consultants say success is best gauged not by sheer numbers, but by the quality of the hires. “[These should be] laterals that are really moving the needle and pushing the firm forward,” said recruiter Avis Caravello. “They have to have some kind of positive fiscal impact on the firm.” Of the firms that arrived about five years ago, Cleveland-based Jones Day seems to have had the most success. It now has 61 lawyers in two Bay Area offices. Robert Clarkson, who once worked for Wilson Sonsini Goodrich & Rosati, estimates that 40 percent of the 22 local partners came from other Jones Day offices. Among them was R. Todd Johnson who, along with two associates, opened the firm’s Menlo Park office in October 2000. Johnson, originally from the firm’s D.C. office, said he initially had qualms about coming to the area. “So many firms at the time were dropping the ball for clients,” Johnson recalls. “I feared we wouldn’t be able to establish a reputation for services.” But Jones Day, now the third highest-grossing firm on the Am Law 100 list, was lured here by client Sequoia Capital, the venture capital firm that nurtured such tech giants as Yahoo Inc. and Cisco Systems Inc. Johnson worked for Sequoia for eight months before officially opening a Menlo Park office just a 9-iron shot from Sequoia’s building. When the downturn arrived, Jones Day had sufficient local credibility to attract top laterals — Robert Ford of Seyfarth Shaw; James Brelsford, who once managed Perkins Coie’s Bay Area offices; and Wilson Sonsini partners Clarkson and Daniel Mitz. The firm employed a similar strategy — working quietly for a year with legal recruiter Charles Fanning Jr. of Major, Hagen & Africa — before announcing the opening of its San Francisco office with the hire of litigator Robert Mittelstaedt and the group he brought from Pillsbury Winthrop. “We became very attractive for people at the top of their games in local firms,” Johnson said. While homegrown partners can carry the culture to a branch office, local lawyers have the relationships — developed through years of carpooling and taking their kids to soccer games — with local entrepreneurs, executives, venture capitalists and inventors. Johnson says those ties were especially important in building a local corporate practice. Lateral hiring is also the fastest way to grow — a fact Phillips recognized when he opened Kirkpatrick & Lockhart’s office. Phillips and another D.C. partner joined forces with two lateral Bay Area hires from the get-go. And before long, the office scored a group of attorneys — including partners Mark Davis, Edward Sangster, Peter Sheats and Robert Sherry — from San Francisco’s office of McKenna & Cuneo. “[Hiring first-years] is the second-worst bargain in the legal world in the United States,” says Phillips. “The first is hiring law students.” That sentiment notwithstanding, as the office grew the notion of first-years became more practical, says San Francisco administrative partner Deborah Bailey-Wells. A few years ago, Kirkpatrick began rolling smaller branch offices into the firm’s summer associate program as they reached about 25 or 30 attorneys. The San Francisco office just hosted its first two summer associates and is hoping for four next year. The firm nonetheless has big plans for itself in California — hoping to grow its presence from the current 80 attorneys to 500. looking for footprints The old-line New York firms are typically the most organic — choosing the slower route of inculcating culture by carefully grooming associates. These are firms that traditionally came for high-profile, high-margin work, such as M&A and private equity, says Major, Hagen & Africa’s Fanning. They are not necessarily working to open a full-service office. Sullivan & Cromwell, for example, has just 16 lawyers in Palo Alto, and has mostly avoided lateral hiring, even though its high profits per partner should make it an easy sell. “We are better off as a firm by having our partners be homegrown,” said John Savva, founding partner of the office. “I can tell you there was a great desire during the boom years for firms to grow their footprints rapidly,” Savva said. “It was less important for us to grow quickly and time the market expansion.” Caravello said Wall Street firms don’t face the same imperatives. “I don’t think that Shearman & Sterling necessarily suffers to the same extent if their office doesn’t grow than a firm that makes a huge investment to come out here and become a national firm,” she said. But Shearman, which first came to the Bay Area in 1979, did suffer in the boom. “We lost some partners to local firms,” recalls John Wilson. “Some of our partners were given seniority at local firms.” Since 2000, the firm has hired more laterals, including three last year. It now has 37 lawyers in Menlo Park and 30 in San Francisco. And Shearman learned a lesson. “What we are doing now is trying to become more local, trying to work with more local companies and venture capitalists,” Wilson said. The lesson wasn’t lost on Simpson Thacher & Bartlett or Davis Polk & Wardwell. While both rely on homegrown partners, they each brought in a handful of top laterals in Silicon Valley. And they looked beyond investment banking in building their offices. Simpson Thacher hired three laterals within a year of opening its Palo Alto outpost in September 1999 — William Hinman and Kevin Kennedy from Shearman & Sterling’s Bay Area offices and Stephen Fackler from Fenwick & West. “Steve Fackler had an expertise in employee benefits,” says Richard Capelouto, who manages the Palo Alto office. “This was an area where we were stretched.” At Davis Polk, which opened its Menlo Park office that same Labor Day weekend, the first important hire was Francis Currie — a high-profile poach from Wilson Sonsini. The firm also hired William Kelly, who arrived after six years at Silicon Graphics Inc. and who had previously practiced at Shearman & Sterling’s San Francisco office, and Steven Weiner, who was vice president for intellectual property and strategic planning at SRI International, a nonprofit R&D institute. “We believed from the absolute beginning that we couldn’t open here and be successful unless we had a partner who had worked in Silicon Valley for a long time,” recalls founding member Daniel Kelly. Ultimately, the slow and steady approach paid off. Davis Polk and Simpson Thacher count about 45 attorneys each in their offices. D.C.’s Covington & Burling, a big player in regulatory and government circles, also began in recent years to bring in laterals to facilitate growth. Locally, the firm has promoted two associates to partner and brought on three laterals in five years, bringing it from seven to 33 attorneys. Sometimes growth just falls in a firm’s lap. Dewey Ballantine, self-described as a firm from the Wall Street model but without the formality, went from three attorneys five years ago to 18 today. Most of that growth came with James Elacqua and 10 other IP partners from Brobeck, Phleger & Harrison. The opportunity to bring on such a group was perhaps a sign of the times. “Firms with the quality and talent of Brobeck don’t implode everyday,” Zeughauser said. Since then, the firm has done little hiring. “We are looking for people with the right practice to expand the office,” said Jeannine Yoo Sano, who manages the firm’s office in East Palo Alto. But there are lots of other firms looking too — more than two dozen Am Law 100 firms have arrived since 2000. Chicago-based Kirkland & Ellis has amassed 55 attorneys in the Bay Area in just under two years, relying on partners sent from other offices. “We did hire associates locally,” said Jeffrey Hammes, a member of the firmwide management committee who splits time between Chicago and San Francisco. Others are aggressively courting laterals. Since opening its doors in East Palo Alto in March, Greenberg Traurig has more than tripled its numbers here, growing from seven to 22 attorneys — almost entirely lateral hires, many of them senior associates at their former firms. “Some of us brought over business,” said Harold DeGraff, a shareholder with the office. “But frankly, it is more us going out and hustling.”

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