California Largest Law Firms Survey Finds High Attorney Turnover

California Largest Law Firms Survey Finds High Attorney Turnover

California Largest Law Firms Survey by the California Lawyer Magazine:

The most notable changes in the past year at firms with the biggest presence in California involved mergers and hiring. One major reshuffling has reshaped Morgan, Lewis & Bockius, a mainstay of our annual California 50 list of the state’s largest firms (see chart below). And a merger that took effect just after the June 30 reporting cutoff for the list could add international powerhouse Dentons for the first time next year.

Last November, Morgan Lewis took on 47 partners and 58 associates in California from Bingham McCutchen, which is in dissolution. Morgan Lewis now has 350 lawyers in California, including a new twelve-attorney office in Santa Monica. The move gave a big boost to the litigation groups in the firm’s patent, trade secrets, white collar, and commercial practices.

“IP is an area where we already have an incredible team, but that’s always an area where we’re looking to grow,” says Molly Moriarty Lane, co-managing partner of Morgan Lewis’s San Francisco office. “We’re trying to digest what we have now, and then [we’ll be] looking for opportunities to add strategically.”

On July 1, Dentons merged with McKenna Long & Aldridge. The firm says it now has 190 lawyers and professional staff in California but declined to break out the attorney count. Dentons added McKenna’s San Diego and Orange County offices, and its co-CEO for the United States, Jeffrey Haidet, says the firm plans to further expand its public policy, litigation, and transactional practices in California.

“California and New York remain the two hottest places in the country for firms that want to grow and expand,” says principal Ward Bower with consulting firm Altman Weil.

But it’s a national trend: The first half of 2015 brought 48 law firm deals in the United States, according to Altman Weil. That’s the highest midyear tally since the firm started counting mergers nine years ago.

Although many firms may be wary of joining forces, Bower says, that won’t stop prospective shoppers: “I think we can expect to see continued activity.”

Other California 50 firms grew significantly without mergers, including Knobbe, Martens, Olson & Bear; Laughlin, Falbo, Levy & Moresi; Manning & Kass, Ellrod, Ramirez, Trester; and Munger, Tolles & Olson.

Knobbe Martens managing partner Steven J. Nataupsky says the firm’s clients are emerging “strongly” from the Great Recession. The firm added 27 attorneys in California and plans to add a total of 30 more across all seven of its offices this fall, Nataupsky says. More than half will be based in Orange County.

Numbers for the hiring of associates varied widely, but the share of first-years joining California 50 firms declined from 51.8 percent of all associates hired in 2013–14 to 43.7 percent this year. (The figures include only the 46 firms that provided detailed data on new hires.)

Our survey also found high turnover nationally and in California: 26.8 percent of all U.S. associates working at California 50 firms—and 26.5 percent of those in California—were new hires.

“There’s plenty of lateral activity in California,” says Bower, adding that this has been true for years and is likely to continue.

Natasha Innocenti, a partner with the legal-recruiting firm Major, Lindsey & Africa in San Francisco and Palo Alto, says she’s seeing a lot of lateral movement among corporate transactional partners, especially lawyers seeking to join firms with the largest transactional departments. Firms on the California 50 took on 830 lateral partners nationwide, including 206 in California, according to our survey. “They want strong associate support; they want strong ancillary services … they want a footprint that supports their client work,” she says.

Innocenti says there was extra activity among capital markets and M&A attorneys in California. “Competition for corporate talent in San Francisco is high,” she says. “[It’s] a very frothy market.”

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