SAN FRANCISCO —The beachside corridor stretching from Venice to Santa Monica now houses hot startups such as Snapchat, incubators like Amplify L.A., cobbled-together campuses for both Google and Microsoft and, of course, lawyers. “There’s been a huge explosion here,” said David Sands, the cochairman of Sheppard, Mullin, Richter & Hampton’s corporate practice group, who splits his time between the Los Angeles, Orange County and Century City offices.
Silicon Valley firms are taking different approaches to securing a piece of this mushrooming market. Nearly two years ago, Cooley made a splash by diving into Santa Monica, the epicenter of L.A.’s burgeoning startup scene. But Wilson Sonsini Goodrich & Rosati and Fenwick & West have decided, at least so far, that they can service Silicon Beach clients without putting lawyers on the ground.
That may change. But for now, that’s given Cooley a head start: Its team of local attorneys, focused on media, entertainment and venture capital and commercial litigation, has expanded from four to 25 and a handful of its clients, including Docstoc, Cargomatic, Dollar Shave Club and PaeDae, are seen as some of the hottest venture-backed companies in the city.
A year ago this month, Wilson Sonsini planted a flag in downtown Los Angeles to lure five intellectual property litigators from Sidley Austin. Though the firm now has 18 attorneys stationed at the post, Wilson Sonsini leaders say they are focused on litigation, energy and infrastructure finance; the firm’s corporate group continues to service the city’s emerging tech scene from its Palo Alto headquarters.
Fenwick has considered dipping a toe into the L.A. market, but for the time being, it’s servicing its SoCal clients from afar. A handful of attorneys have built a network in the city’s startup community by visiting on a regular basis. “We think we’re doing really well down there doing what we’re doing,” said Mountain View-based corporate partner William Schreiber.
CATCHING THE WAVE
In July 2012, Cooley set up shop with four partners poached from the local offices of Gibson, Dunn & Crutcher, DLA Piper and entertainment law firm Morris Yorn Barnes Levine Krintzman Rubenstein & Kohn. The firm’s goal was to position itself closer to potential and existing tech and digital media clients, which had been serviced from San Diego and the Bay Area. Earlier this year, William Donovan joined from DLA Piper to head the office’s litigation practice.
A seasoned, emerging-companies attorney in L.A. said Cooley’s arrival turned heads. “It caused a lot of people to take a look,” he said.
Thomas Hopkins, partner-in-charge of Cooley’s L.A. office and a former partner at Sheppard Mullin, said, “If you’re really going to be impactful, in the areas we think are targets—we want to be one of the top providers of legal services for technology, new media and other clients in the innovation economy—it’s hard to do that if you’re not on the ground.”
Since 2012, the firm’s L.A. attorneys have represented DreamWorks Animation, Engrade, Green Dot Corp., LegalZoom, Machinima, ShoeDazzle, StyleHaul, The Honest Co., Upfront Ventures, Docstoc, Cargomatic, Dollar Shave Club and PaeDae.
Though servicing clients from afar is possible—his colleague Eric Jensen represents Venice Beach-based Snapchat from Silicon Valley—Hopkins doesn’t think the firm would have the momentum it does if it weren’t “physically present in the market,” he said.
But Fenwick says it’s gaining ground with an incremental approach. After “tripping into all these interesting companies” in L.A., Schreiber volunteered to spearhead a firm initiative to focus on the hot startup and tech scene. He and Fenwick lawyers Mark Stevens, William Bromfield, Samuel Angus and Cynthia Clarfield Hess, who cochairs the firm’s startups and venture-capital group, regularly head south for firm-sponsored dinners with clients, prospects and startup community members. They have also found success partnering with startup incubators Amplify L.A. and Science. Schreiber, who usually has about 15 to 20 clients in the greater L.A. area at once, said he has traveled to L.A. every six weeks for the last four years. “I’ve never had a client say I want to see you more,” he said, adding that he sees several of his clients in Southern California more often than his clients in the Valley.
In addition to companies Green Wave Reality, a manager for home energy, and BitVault, provider of security for bitcoins, Fenwick represents scores of consumer-facing companies so often associated with L.A.’s startup scene, such as online retailer Nasty Gal, health food and drink company Urban Remedy, gaming console maker OUYA, and digital gaming companies SGN Games and Riot Games. Schreiber said the companies down south “are every bit as interesting and potentially as world changing” as those in the Valley.
Then there’s the “talent-driven decision” behind Wilson Sonsini’s L.A. office. The firm looked in the Bay Area and on the East Coast for intellecutal property litigators to meet client demand, but “happened to find the right team in L.A.,” said Doug Clark, comanaging partner of the firm. In February, the five former Sidley litigators were joined by energy and infrastructure finance partners Sean Moran and Michael Joyce, bringing the office’s partner head count to seven.
“We have always and continue to be focused on the tech industry everywhere, including L.A.,” Clark said. While the local attorneys represent companies such as Aruba Networks, Hewlett-Packard and F5 Network in litigation matters, much of the emerging-company work (such as advising startups Inktank Storage and Entangled Media in their early-stage funding) is sourced and managed by partners from the Silicon Valley and San Diego offices, where the firm has strong corporate teams.
Clark said Wilson Sonsini plans to build on the existing practices in L.A., while keeping an eye out for talent in complementary areas. “There’s no checklist of practices that we’re going to add on a specific schedule,” he said.
Though Wilson Sonsini says it’s focused on building the IP litigation, energy and infrastructure finance teams, law firm consultant Peter Zeughauser suspects a growing presence in the local tech scene is inevitable.
“Wilson comes into the L.A. area, they’re going to get their fair share of emerging-company work,” Zeughauser said. “They draw work from all over the world literally. Their brand is very strong.”
Although Sheppard Mullin’s Sands represents the occasional enterprise software company, such as Santa Monica-based ServiceMesh in its $300 million acquisition by CSC last year, a “large part” of his firm’s clients are what he calls “media-tech” companies, such as Sony, IAC and Yahoo, as well as consumer-tech startups like social-commerce site BeachMint and new and used-car pricing site TrueCar. “We’ve all focused on the emerging market for a long time,” he said.
Sands said Sheppard Mullin benefits from its deep roots in what he called a “stable” legal market. “People in this community don’t really know firms from out of town,” he said. “There’s definitely an interloper view; the [local] financial advisers, bankers, accountants have very long-standing relationships with local law firms and that’s where they tend to push their business.”
Daniel Burnham, cochairman of Latham & Watkins’ emerging-companies practice, who has been practicing in L.A. for 15 years, agreed that a bias toward local resources is building. “There’s a sense that something cool’s happening here and you’ve got to nurture that,” he said. While a lot of L.A.-based startups are serviced by Valley lawyers, “I think that’s changing,” he said.
But Zeughauser said the out-of-towners have an advantage: “There are no local firms that have strong emerging-company brands, and that’s really the market in Silicon Beach.”
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