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Law firm loses attorneys, feels brunt of competitive marketplace

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Wilson Sonsini Goodrich & Rosati opened its doors in Carmel Valley in May with three partners acquired from Pillsbury Winthrop, two senior executives from Kinzan Inc., and a partner from Wilson Sonsini's Palo Alto office.

Since then, six associates have left Pillsbury Winthrop to join Wilson Sonsini. All nine Pillsbury Winthrop attorneys specialize in the life sciences, including intellectual property counseling and litigation.

The acquisitions highlight the increasing competitiveness among corporate law firms to retain intellectual property lawyers. With the addition of Cleveland-based Jones Day in late April, San Diego now hosts more than 20 firms specializing in intellectual property and life sciences.

Sue Hodges, managing partner of Pillsbury Winthrop's two San Diego offices, said the losses certainly affected the firm's life sciences practice because there are simply less lawyers to do the work. Hodges said the three Pillsbury partners -- Jeff Guise, Alexandra Mahaney and Vicki Norton -- took some of their clients with them and agreed to share some clients. Pillsbury Winthrop is in the process of recruiting new attorneys.

"To say that it didn't affect us, I wouldn't say that -- of course it did," Hodges said. "But we had a vibrant life sciences practice before they came and will continue to."

Several of the nine attorneys came to Pillsbury Winthrop as a group in 2003 after Brobeck Phleger & Harrison imploded under financial duress.

The Wilson Sonsini associates are Russ Boggs, Michael Hostetler, Natalie Morgan, Lara Payne, Stefan Teichert and Stefanie Valentini.

The march of major law firms into San Diego has prompted some discussion about whether there is enough intellectual property work to go around, and qualified local attorneys to fill office space.

Larry Watanabe, a principal with San Diego-based legal search firm Watanabe Nason & Seltzer, predicts most of the recent additions will only find enough work to maintain small offices here compared to other large markets. For example, he said, firms looking to open an office in Los Angeles or San Francisco would typically plan to recruit about 50 attorneys to open and build the local practice. Many of the firms that have entered San Diego's market recently are nowhere near that level.

The list includes Cleveland-based Jones Day, which opened in April with one partner; Chicago-based McDermott Will & Emery, which has six attorneys and three partners, and Townsend and Townsend and Crew, which has three partners and three associates operating in San Diego.

"There is not a great enough depth of lawyers in those practice areas -- notably intellectual property (and) corporate -- that can compete at a national law firm level, to staff multiple offices of 50-plus lawyers in San Diego county," Watanabe said. "The talent pool doesn't exist."

Wilson Sonsini eventually plans to house about 50 attorneys in its new office space, which the firm is currently negotiating, according to Gari Cheever. He was among six partners who opened the San Diego office. Cheever was previously president and chief executive of Kinzan Inc., a San Diego-based Web services company. He said the firm has been approached about lateral transactions by a number of San Diego intellectual property attorneys since the opening. Wilson Sonsini has 17 attorneys permanently based here and six to eight working in San Diego on a part-time basis.

"What's going to end up happening is there is going to be a bunch of major law firms here with about 15 to 18 lawyers in their offices," Watanabe said. The situation forces those attorneys to rely heavily on firm clients based elsewhere in the United States or overseas.

Watanabe's company has offices in Los Angeles, San Francisco and Orange County and focuses heavily on partner-level acquisitions. The firm was involved in the opening of several major law practices here, including Paul Hastings Janofsky & Walker and Heller Ehrman White & McAuliffe.

Part of the problem, he said, is the relatively low billing rates many San Diego companies are willing to pay.

A senior associate at a major law firm can easily bill $300 an hour while a senior partner might charge $500 an hour.

"Those billing rates are not rates that are accepted by the run of the mill, private and even some of the smaller public San Diego companies," he said. As a result, attorneys may live and practice in San Diego, but they spend most of their time representing clients elsewhere and have little to do with San Diego businesses.

The buildup of major law firms is attracting new international clients to San Diego, according to Stephen Korniczky, an intellectual property litigator and the recruiting partner in the San Diego office of Paul Hastings Janofsky & Walker.

"My sense is there is plenty of business here. We're swamped," Korniczky said. Much of the work is coming from international companies that come to San Diego in search of "top talent," he said.

Korniczky, who moved to Paul Hastings after Brobeck dissolved last year, agreed the market for talented intellectual property lawyers is competitive, particularly among the top-tier attorneys who are regularly courted by competing firms.

"Top attorneys are always being recruited in San Diego," Korniczky said. "What's really going to attract those top attorneys is whether or not you can offer a stronger legal platform, a platform where you can provide your clients with a broader range of legal services and a platform that an attorney feels he or she can use to grow their individual practice."

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