Name of the Rose

San Diego's biotech cluster attracts hungry law firms, with mixed-results

Good article by Kellie Schmitt of The Recorder, posted to Law.com on June 11. "All's Not Sunny for San Diego Firms" provides an interesting look into a changing business ecosystem, from the standpoint of big corporate law firms.

Lawyers along with investment banks, advertising agencies, accountants, management consultants, and real estate brokers, form the core of the advanced services sector that provides the know-how to power modern enterprises.

In San Diego, law firms saw the rising of a biotech mecca. Parallels to Silicon Valley abound. Start-up activity is even concentrated in a place called Sorrento Valley. However, just as every business plan looks good on paper, law firms are finding stiff competition that makes San Diego not the Shangri-La they anticipated.

The region once had just two big law firms, but those firms have been absorbed by larger players. Big law firms from Los Angeles, to the north, moved in the 1980s and maintain large offices there now. Northern Californian firms, bringing the cache of Silicon Valley with them, also moved in. Plus other big players from across the country have sought to establish a foothold.

[Money quote by Frederick Muto, the partner in charge of the San Diego office of Cooley Godward Kronish, noting that competitors "see our success and say, 'There's the next Silicon Valley,' but there's only one Silicon Valley."]

One key problem includes a small pool of qualified talent. Apparently lawyers are jumping ship-to-ship-to-ship-ship, transferring from one firm to the next in a series of lateral hires, as the practice is known in the legal industry. Additionally, there are few large companies, and many small ventures--startups that can't afford the $500- to $600-an-hour billing rates of big law firms. And more big law firms are on the way, leading observers to predict a shake-out is eminent. GEO