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San Diego may seem like a sun-drenched beach town, but the legal climate there is anything but relaxed. “There are too many lawyers and too many law firms for the amount of work,” said Jay de Groot, chairman of Morrison & Foerster’s San Diego corporate group. “There is going to be a major shakeout of firms over the next three years.” More than a dozen major firms have set up San Diego shops since the early 1990s, seeking a piece of the area’s vibrant technology and life sciences industries. But even as some attorneys predict consolidation, others see a new wave of out-of-town arrivals. “There are a limited number of life sciences companies in San Diego, and you have a lot of major law firms in town fighting for that client base,” said Larry Watanabe, a San Diego-based recruiter. “And they’re all poaching laterals from the same small pools of national firms.” San Diego was once a two-firm town: Luce, Forward, Hamilton & Scripps and what was then Gray Cary Ames & Frye. “That was kind of nice � we’d be on one side of the case, and they’d be on the other,” said Robert Bell, Luce Forward’s managing partner. “Now, the market is very competitive.” The 1980s saw the arrival firms like Latham & Watkins and Los Angeles’ Sheppard, Mullin, Richter & Hampton. They were followed by an influx of tech-heavy San Francisco Bay Area firms, like Cooley Godward, that came to take advantage of the burgeoning life sciences industry that was springing up in San Diego’s Sorrento Valley in the early 1990s. “Our timing was right � companies like Qualcomm and Amylin were just starting to go public,” said Frederick Muto, the partner in charge of the large San Diego office of what is now Cooley Godward Kronish. Brobeck, Phleger & Harrison planted its stake there, too, and when the firm imploded in 2003, dozens of its lawyers dispersed to staff branch offices for competitors like Paul, Hastings, Janofsky & Walker; Heller Ehrman; and Pillsbury Winthrop Shaw Pittman. Bell said Luce responded by expanding in other parts of the state and seeking to hold its regional niche by keeping rates low. Gray Cary, of course, was merged into the legal behemoth DLA Piper. “You have incredible fragmentation, everyone scurrying around to have some segment to call their own, and lots of competition,” Muto said. There are only a handful of home-grown companies like telecommunications giant Qualcomm Inc. that can support big-firm rates. That’s why firms such as Latham & Watkins, a formidable player with its 100-lawyer office there, often use their lawyers to service national clients in areas such as project finance. Rates for major firms tend to be at or slightly below rates in Los Angeles and the Bay Area, with most national firms charging an average $500 to $600 an hour, according to recruiter Watanabe. Cooley � a firm others frequently cite as a key competitor � has now built its office up to 90 attorneys. The firm says it has 200 clients there, about 80% of which are based in the region. That client list includes heavyweights such as Qualcomm, Amylin, Gen-Probe and Biosite. Other competitors “see our success and say, ‘There’s the next Silicon Valley,’ but there’s only one Silicon Valley,” he said. Instead, he equates San Diego more with Los Angeles, where there are a handful of dominant players. De Groot says it’s unlikely new arrivals, like Boston-based Mintz, Levin, Cohn, Ferris, Glovsky and Popeo or Goodwin Procter, can catch up to the established competition. He points to Wilson Sonsini Goodrich & Rosati, a firm that opened in San Diego three years ago. Even with its strong ties to Silicon Valley, it’s yet to become a competitor there, he said. Wilson’s Web site lists 40 lawyers in San Diego. “I am not sure how a Boston firm that doesn’t have one-third of the name recognition and can’t tout the same relationships with venture capital funds can expect to succeed,” he said. A shot from Boston Craig Hunsaker, the managing partner of Mintz, Levin’s San Diego office, doesn’t see it that way. A year after 500-lawyer Mintz Levin entered San Diego with a group of 11 Fish & Richardson attorneys, Hunsaker said, it’s grown to 23 attorneys. Like other players, Mintz Levin was interested in San Diego because of its high-tech, life sciences and emerging growth companies, practices they thought complementary to their venture connections in Boston, said Hunsaker, who was at Brobeck before Fish & Richardson. “As offices have matured, they’ve turned away from small startups, which leaves an opportunity for firms like Mintz Levin to grab lawyers who want to grab the high-tech startup base,” he said.

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