Article by Kelli Fiore.
Looking back at the past 7 months, one cannot help but notice the vast number of firm merger conversations and office expansions around the world, but in particular in the United States.
According to the ALM report “Barbarians at the Gate”, since 2001 over 1400 new offices have been opened across the globe by the NLJ 250 (largest 250 firms by headcount). Rather staggeringly, the report shows that 50% of the office openings were done by only 28 firms. The city with the highest amount of office openings in that time period was San Francisco with 47, but only just behind was Houston at 46. Dallas had quite a strong growth as well with 29. According to an article in the American Lawyer which reviewed the report, frequent openings occurred in Los Angeles, San Francisco, Chicago and Houston, with Houston, San Diego, Denver, and Austin seeing the number of office openings in those cities double. Other notable office opening destinations included Boston, Charlotte, New York, and Florida. The report goes on to say that openings are not always a sign of strength or success, just as closings are not always a sign of failure. The report suggests careful planning and strategizing for any firm thinking of opening an office, with the American Lawyer article backing that up, as well as mentioning that the office openings are often client driven.
For a snapshot of just how frequent such openings have been in 2018 alone, let’s take a look at some across the US.
Back in March 2018, Shearman & Sterling opened an office in Austin, TX with a group of 8 lawyers from Andrews Kurth – this was the first foray into the Texas market for the big law firm, but they have plans to open in Houston soon. A few days after the Shearman announcement, Barnes & Thornburg opened a San Diego office with a hire from Cooley. While Barnes & Thornburg already have an LA office, this marked the second California office for the Indiana based firm. New Orleans is not often discussed in the major musings on law in the US, but Gordon Rees opened an office there in June. Ordinarily, this might not seem notable, but it’s Gordon Rees’s 51st office opening – and their 4th one this year alone. With these office openings, Gordon Rees has brought on 40 lawyers in 2018. On July 10th, Holland & Knight grabbed 12 lawyers from Reed Smith to open their new Philadelphia office, the first opening since Ice Miller entered the market over a year ago, and bringing Holland & Knight’s office total up to 25.
Four firms, four locations, four office openings – and those were just a few examples from the last 5 months. One of the most targeted areas has been, and still is, Texas, according to a recent article in the Texas Lawyer. The article mentions that Houston and Dallas have seen a great deal of interest from firms over the last 17 years with Houston seeing a rise of 135% in the number of firms setting up shop there. The article goes on to mention several firms that have recently opened in the state: Spencer Fane, Katten Muchin, Orrick, Shearman, and White & Case. The article was published July 5th and mentioned the possibility of Kirkland & Ellis opening up in Dallas; this came to fruition on July 11th with Kirkland’s announcement.
Texan openings have been propelled by the ever-increasing importance within the energy legal market, largely centered in Houston, and the competitive emerging tech market in Austin – both heavily client driven. In other geographic areas, some office openings are part of a concerted strategic growth plan agreed upon by the executive committee(s) of the firm(s), others have been opportunistic.
Opening an office is not an easy task, particularly without a “boots on the ground” element already in place. While many firm’s attempt to tackle the expansion on their own, one of the best resources are recruiting firms. Recruiting firms have been instrumental in opening some of these offices by bringing a partner or group to the table. Practice group and client synergies both play a key role in exploring these migrations.
Firms who are prospecting an office opening will often utilize a search firm to gather intel on a specific geographic market and explore what opportunities exist within that market. Recruiters are uniquely positioned to give out, or obtain, such information with their extensive lists of contacts, and can offer options that will be well suited to the firm. Working with an established recruiter who knows the market can not only lead to a successful office opening, but a smoother transition for those involved. Many of the articles referenced above featured commentary from recruiters in the local areas, and nationally, regarding the office openings and the reasons behind them.
Firms take note: conversations cost nothing– going into a market unprepared can cost everything.
As an additional note to the amount of office openings in 2018 so far, mergers should not to be ignored or dismissed as they greatly impact those openings and closings, but that subject is for another time.
For more information on office openings in new markets, or to find out more about our global search/placement capabilities, please contact:
Director, San Francisco and Silicon Valley
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