Law Firms See Hiring Gains; Uptick in M&A, Patent Work
Orange County Business Journal
By Jessica C. Lee
January 14, 2008
A boost in mergers and acquisitions, securities work, patents and deals fueled hiring at Orange County’s largest law firms in the past year.
The 50 largest law firms based or operating here saw a 6% gain in lawyers for a total of 2,117 attorneys, according to this week’s Business Journal list, which ranks firms by the number of local lawyers.
The gain was on par with that of a year earlier, when the largest firms here grew lawyers at a 5% clip. It’s the fifth straight year of gains for law firms either based here or with local offices.
Managing partners said growth in litigation and transactional work related to mergers and acquisitions, securities, patents and other issues have pushed them to hire more lawyers.
Firms expect the growth to continue in 2008 with general corporate representation, mergers and acquisitions, securities work and litigation, intellectual property, labor and employment and public law practices continuing to see a steady stream of work.
Bankruptcy work could also become a hot practice area for firms this year, Newmeyer said.
All of me county’s top 10 law firms added lawyers, though one was basically flat with only one new hire.
In all, mere were 34 gainers, 13 decliners and duce mat saw no change.
The current mess from the subprime mortgage crisis has many law firms bracing for the challenges and opportunities that may arise this year.
Law firms that specialize in real estate, construction and mortgage work could see a slowdown, said John O’Hara, partner at No. 13 Newmeyer & Dillion LLP. The bright side: They also could see a boost in general corporate representation and litigation, he said.
Newmeyer grew 14% to 50 local lawyers.
The firm expects the dragging real estate market to boost business with an upswing in lawsuits.
Newmeyer, which also has an office in Walnut Creek, counts Irvine-based homebuilder Standard Pacific Corp., Atlanta’s Home Depot Inc. and Newport Beach-based savings and loan operator Downey Financial ‘Corp. as clients.
It expects what it says are lower billing fees to attract companies that are shopping around for less expensive legal work, O’Hara said.
“We’ve already had a lot of inquiries and we’re attracting new clients so the firm should be pretty busy this year,” O’Hara said.
The firm plans to hire an additional 25 to 30 lawyers during the next few years so it will be able to take on more transaction and litigation work, O’Hara said.
This year, Newmeyer plans to bring in four to eight more lawyers and additional staff, he said.
Among those expected to join is a partner from a local law firm and a lawyer from a national development company, O’Hara said. He declined to give names.
Newmeyer recently signed a lease to add 10,000 square feet to its headquarters. It plans to start working on the space next year after existing tenants leave in spring, O’Hara said.
Once complete, the firm will have a 53,000-square-foot office in Newport Beach. The additional space will be used to create more offices for lawyers and a few conference rooms, he said.
Other firms with heavy real estate practices such as No. 1 Rutan & Tucker LLP in Costa Mesa expect clients to restructure their business plans to accommodate changes in the market.
The firm’s litigation practice could get a boost as some companies face lawsuits, according to managing partner Michael Hornak.
“A lot of people wonder how the credit crisis will affect law firms with real estate practices, but I think it’s safe to say mat there should still be a healthy amount of work,” he said. “As businesses adjust to the changes in me market, their actions always require legal counsel, which helps our profession stay strong.”
Rutan & Tucker has held onto the coveted No. 1 spot for several years now. It grew its local attorneys 6% to 156 and counts 161 firm wide. The firm could see a similar story next year.
Rutan plans to add more lawyers to its intellectual property practice, Hornak said. The firm plans to bring in a group of lawyers from a small OC firm that specializes in intellectual property. That firm-which Hornak declined to name-will close its office this year, he said.
“We need to grow our intellectual property practice because our clients are demanding it,” Hornak said.
A timeline for when the lawyers will join Rutan hasn’t been set, according to Hornak.
Other practices such as securities litigation, tax work, labor and employment and public law have been good for the firm, Hornak said.
Clients include Lake Forest-based ARB Inc. and First American Tide Insurance Co. of Santa Ana, a unit of First American Corp.
Rutan, which also has an office in Palo Alto, added 12,000 square feet of office space at its headquarters this past year. The firm now leases 112,000 square feet of space in OC.
No. 2 Irvine’s Knobbe Martens Olson & Bear LLP also is making a growth push with the recent hiring of lawyers in OC and the opening of an East Coast office.
The firm has hired some 30 lawyers at its Irvine office, who are set to start in the fall, according to managing partner Steven Nataupsky.
Knobbe now has 142 local lawyers and should have close to 160 attorneys once the new associates start. That could help Knobbe bump Rutan from its No. 1 spot
A good chunk of die firm’s new hires were summer interns, Nataupsky said.
Late last year, the firm opened an office in Washington, D.C, so it can be closer to clients there and the U.S. Patent and Trademark and Copyright offices
and European clients.
The firm focuses on intellectual property, patent, trademark, copyright and trade secrets law-areas that have helped it carve a niche.
Having a branch near government offices will boost efficiency for the firm while it’s working on time sensitive cases involving trademark and patent
issues, Nataupsky said.
“It will make things a lot more convenient for everyone,” Nataupsky said. “We have a significant number of clients who are based on the East Coast and opening an office in Washington, D.C, is a logical option for us.”
The firm also has offices in Riverside, San Diego, San Luis Obispo and San Francisco.
Nataupsky, whose clients include Irvine-based Masimo Corp. and Princeton, N.J.-based Ranbaxy Pharmaceuticals Inc., expects me intellectual property
practice to remain strong throughout 2008.
“When times are tight people tend to defend their intellectual property more vigorously so that they can guard their market share,” Nataupsky said.
Mergers and acquisitions growth this year could really boost Knobbe’s intellectual property practice, Nataupsky said.
“Companies and private equity firms have cash to spend and they’re investing in smaller companies and their ideas. Whenever there’s a merger or acquisition there needs to be good legal counsel on how to protect intellectual property,” Nataupsky said.
Mergers and acquisitions are also expected to boost work at No. 3 Stradling Yocca Carlson & Rauth in Newport Beach, which slightly grew its OC attorneys 1% to 109 lawyers and 120 attorneys firm wide.
Stradling, which primarily serves small to midsize companies in technology, healthcare, consumer products and restaurants, kept busy in the past year with acquisitions, financing, initial public offerings and patent cases.
Headline grabbing deals included the sale of a majority stake in Irvine-based Yard House Restaurants LLC to TSG Consumer Partners, a San Francisco private equity firm. TSG bought a 70% stake in the company estimated at $200 million.
The firm also helped with Irvine medical device maker IntraLase Corp.’s 2007 sale to Santa Ana’s Advanced Medical Optics for $808 million.
In October, the firm helped North Carolina-based TranSlInc, a medical device company focused on developing minimally invasive surgeries for treatment of low back pain, stage an $82.5 million initial public offering.
The following month, Stradling worked on a $100 million financing deal for Specific Media Inc., an Irvine-based online advertising firm, from Francisco
Partners, a technology-focused private equity firm based in Menlo Park. The funding was easily the county’s largest last year.
“We had a banner year. We’re going after more work like that” said Michael Flynn, executive committee chair.
Securities litigation is another hot area for the firm, Flynn said.
This year, me firm plans to add seven or more mid- and senior-level associates to its securities litigation practice to work on class action
lawsuits, probes into misdated stock options and lawsuits that arise when companies are acquired.
Closing out the top five law firms on the list were No. 4 Los Angeles-based Latham & Wauans LLP’s Costa Mesa office wim 90 lawyers and No. 5 Los
Angeles-based O’Melveny & Myers LLP’s Newport Beach office with 79 attorneys.
Both firms saw gains as a result of increased work in class action lawsuits, mergers and acquisitions and intellectual property.
“We’ve seen a lot of M&A activity surrounding what has been a volatile year,” said Brett Williamson, managing partner of O’Melveny’s Newport Beach office. “That creates opportunities for stronger companies to look for acquisition opportunities and allows us to handle those transactions.”
No. 6 Gibson, Dunn & Cratcher LLP’s Irvine office saw a boost in intellectual property litigation and securities work.
The Los Angeles-based firm, which grew its local lawyers 10% to 76, moved into an 80,000-square-foot office at Maguire Properties Inc.’s Park Place campus
in Irvine.
“We love the new office. We’ve already built out 100 lawyer offices and we have room to build more offices and we hope to do so,” said Jeff Thomas, partner in charge of Gibson’s Irvine office.
No. 7 Snell & Wilmer LLP in Costa Mesa had 69 lawyers, an 8% jump from the 64 attorneys it counted the year before.
Newcomers to the firm include Wayne Gross, former chief of the U.S. Attorney’s Office in Santa Ana. Gross is anchoring the Phoenix-based firm’s new white collar criminal defense practice in OC
“We’re very excited to have Wayne with the firm,” said William O’Hare, managing partner. “His experience as a federal prosecutor will help companies here understand what they can do to avoid being the subject of an investigation or how to cope with one.”
In the past year, Snell saw a boost in transactional work, securities work, intellectual property and civil litigation, O’Hare said.
Litigation in land use cases, business transactions and administrative matters kept No. 8 Jackson DeMarco Tidus Peterson Peckenpaugh in Irvine busy last year, according to Ruth Mijuskovic, president of the firm.
“We anticipate even more activity for this practice group in 2008,” Mijuskovic said.
Jackson DeMarco had 68 lawyers, a 17% jump from the 58 attorneys it counted the year before.
Last year, Jackson took on nearly all of Newport Beach-based Castle, Petersen & Krause LLP. That helped the firm bump up a spot.
Castle, Petersen & Krause’s three name partners and 10 other lawyers joined Jackson DeMarco.
Jackson DeMarco recently took more than 10,000 square feet of space at its 34,000-square-foot office near John Wayne Airport.
Rounding out the top 10 law firms were No. 9 Los Angeles-based Allen Matkins Leek Gamble Mallory & Natsis LLP’s Irvine office and No. 10 Los Angeles-based
Lewis Brisbois Bisgaard & Smith LLP’s Costa Mesa office.
Allen Matkins counted 63 lawyers, a 5% increase from the 60 attorneys it counted the previous year.
Lewis Brisbois grew its OC headcount 17% to 54 attorneys. The year before, the firm had 46 lawyers in OC.
One of the big percentage gainers on the list was No. 39 Boston-based Bingham McCutchen LLP’s Costa Mesa office. The firm counted 23 attorneys, up 28% from the 18 lawyers it counted the previous year.
Bingham grew in 2002 with one of the larger legal deals in recent years. Boston’s Bingham Dana LLP, a 500-lawyer firm, combined with McCutchen, Doyle, Brown & Emerson LLP, a 320-attorney firm with offices in San Francisco, among other cities. In 2003, Bingham took on L.A.’s Riordan & McKinzie, a 60-lawyer corporate firm that included the Costa Mesa office.
The firm has been recruiting ever since.
In 2006, the firm nabbed seven lawyers from Stradling Yocca Carlson & Rauth. In November, it landed a former partner at Stradling, Robert Funsten, to head up its new West Coast healthcare practice.
“We’re planning to add more,” said James Loss, managing partner of Bingham’s Costa Mesa office. “Bingham is determined to leave its footprint in Orange County.”
Santa Ana’s Callahan & Blaine was among the decliners. The firm, which handles complex business litigation cases and catastrophic injury cases, fell from No. 28 to No. 44.
The firm’s attorney headcount declined 25%, or seven lawyers, to a total of 21.
Managing partner Daniel Callahan said that while the firm has lost attorneys during the past year, it is actively looking for more lawyers with strong litigation skills.
“We’re always looking to grow,” Callahan said. “We’re actively looking for skilled lawyers with five to seven years of experience handling complex business or personal injury cases.”
The list had only one newcomer: Los Angeles-based Manatt Phelps & Phillips LLP’s Costa Mesa office, which grew local practice 11 % to 20 lawyers.
Real estate transactions, venture capital financing deals and transactions related to the healthcare industry and mortgage industry have kept the firm’s OC office busy in the past year.
Administrative partner Ellen Marshall said the firm expects to see a boost in work related to bankruptcies and business restructuring.
“We’re trying to find ways to help our clients get through the ups and downs in the market right now,” Marshall said.
Closing out the list was No. 49 La Follette, Johnson, DeHaas, Fesler & Ames with 19 lawyers and No. 50 Wesierski & Zurek LLP in Irvine with 18 attorneys.
Firms bumped off this year’s list included Best Best & Krieger LLP in Irvine, Theodora, Oringher, Miller & Richman in Costa Mesa and Samuels, Green Steel &
Adams LLP in Irvine.