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With all its life sciences startups, San Diego looks like promising terrain for expansion. But as countless firms have found, building an office there is harder than it looks. There aren’t enough marquee partners — or clients — to go around. “There are 30 branch offices of AmLaw 100 firms in San Diego,” said J. Terence O’Malley, chairman of Gray Cary Ware & Freidenrich. “They hire lawyers from each other, and the total population of lawyers in those offices doesn’t grow by very much.” The cluster of research institutes surrounding UC-San Diego — including Salk, Burnham and Scripps — spawns plenty of new companies. But although the San Diego market withstood the dot-com crash and continues to grow, it is still a fraction of the size of the country’s largest life sciences hub, Silicon Valley. “It’s a great market with lots of opportunity, but there are too many firms for the amount of business,” said Frederick Muto, managing partner of Cooley Godward’s San Diego practice. “At some point people are going to wake up and realize it’s a deeply lawyered market,” he said, adding that a shakeout is inevitable. The area’s newest arrival is Wilson Sonsini Goodrich & Rosati, which announced last month it was opening an office in San Diego with five partners, three of them poached from Pillsbury Winthrop. Wilson Sonsini is planning to add as many as 12 additional lawyers to its San Diego practice in coming months, said firm spokeswoman Courtney Dorman, including at least one partner relocating from Palo Alto. The firm has an advantage over other newcomers, according to insiders, because it has strong name recognition, especially in venture capital circles, as well as existing clients in Southern California. “Wilson already has a lot of work in San Diego,” points out O’Malley. “So it’s good for lawyers who are living out of suitcases.” Recruiter Larry Watanabe, of San Diego-based Watanabe Nason & Seltzer, counts only 35 lawyers who are fully dedicated to life sciences in San Diego. “Each major firm has maybe three or four lawyers that are really deep in life sciences,” he said. “Some have no presence. They’ll say they have life science capability, but when I go through the depth of the community, it’s really surprising how little there is.” David Geerdes, managing partner of Heller Ehrman White & McAuliffe’s San Diego practice, agreed. “There’s a lot of attorneys who hold themselves out as practitioners in that area, but if you look at the CVs on their Web sites, they’re securities litigators or have a background that is totally different,” he said. Clients want lawyers who get it — a Ph.D. is sometimes seen as essential — and that narrows the field, said David Doyle, a patent litigator in Morrison & Foerster’s San Diego office who co-chairs the firm’s IP practice. “It leads to a whole other screening. They’re not willing to work with people who are not familiar with their industry and the science of it. It’s extremely important,” Doyle said. Several top California firms, including Cooley and Heller Ehrman, report only one or two attorneys in San Diego solely dedicated to life sciences. But head counts are imprecise, all the firms agreed, because most lawyers share work with colleagues in other fields. Gray Cary, for example, has one patent partner focusing exclusively on life sciences work. But four other San Diego partners spend 50 percent or more of their time on life science matters, while four more corporate partners do a “significant amount of work” in the field. An additional four litigators spend “some” time on life science clients, according to the firm. Given the small talent pool, firms “should be making terrific efforts to hold onto the talent they have,” said Bobbie McMorrow of Santa Ynez, Calif.-based consulting firm McMorrow Savarese. In fact, competition for laterals has been revving up for more than a decade. Gray Cary has had roots in San Diego since 1927, and Pillsbury Winthrop acquired a San Diego office when it merged with Lillick & McHose in 1991. Palo Alto-based Cooley Godward arrived in 1992, Heller Ehrman came in 1998, and Morrison & Foerster followed a year later. More firms have flocked to the region in the past few years, according to Watanabe. Firms like L.A.’s Quinn Emanuel Urquhart Oliver & Hedges have opened offices, while national firms like Foley & Lardner have stepped into the market through mergers. After Pennie & Edmonds opened an office, it was acquired by Jones Day. Clifford Chance took a chunk of the San Diego practice from now-defunct Brobeck, Phleger & Harrison. And McDermott, Will & Emery acquired Campbell & Flores late last year, bringing it one biotech prosecution partner. Some of the firms that have been in San Diego since the 1990s have opened second offices in northern San Diego County, to be nearer to UC-San Diego in La Jolla and the research facilities that ring it. “At the beginning of 1997, there were three [firms] in North County,” said Muto. “Now there are 16.” Watanabe said Cooley has the largest corporate life sciences practice in San Diego, followed by Heller Ehrman, Morrison & Foerster, Gray Cary and Pillsbury Winthrop. MoFo and Gray Cary have strong biotech patent prosecution practices, he added. Cooley has seen 13 IPOs come out of its San Diego office this year. Last year, it had none, said Muto, who noted that his clients “range from companies that are attempting to develop a vaccine for cancers to companies developing — food additives and perfumes.” Even with that range, the region’s promise has limits. “We are very busy, but we want more clients,” says MoFo’s Doyle, “and Wilson wants them and Pillsbury wants them and Cooley wants them.” Chart: Signs of Life

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