There’s Something in the Water: San Diego Is Once Again a Hot Market for National Law Firms

Introduction

San Diego has the popular image of an idyllic seaside university and beach town, protected by the U.S. Navy and nearby Marines. Yet, its siren song continues to lure some of the nation’s largest corporate law firms even as others have pulled up stakes and departed. What exactly is it the new arrivals see in San Diego, and how do new entrants succeed?

A Decade of Office Openings

In the past 10 years, San Diego has attracted corporate law firms as diverse as London powerhouse Eversheds Sutherland, Los Angeles-based Manatt Phelps & Phillips, and Glaser Weil, and national firms Polsinelli, Greenberg Traurig, Quarles & Brady, Fennemore & Craig, and more. The majority of these firms can claim moderate growth since establishing a foothold in San Diego. Snell & Wilmer, for example, has grown at a prudent rate, opening with two partners in 2020 and now housing 12 attorneys, all the while expanding the number of practices it offers the market. A few firms, like Los Angeles-based Buchalter, have experienced significant growth. Since establishing its San Diego office in 2018, Buchalter has grown from eight launching attorneys to an impressive 50 attorneys, representing a 525% growth spree. However, the departures of heavyweights like Gibson Dunn (2008), Goodwin Procter (2013), and McDermott Will & Emery (2016) serve as reminders that success is not guaranteed in San Diego.

Profiles of national firms’ expansion into San Diego over the past decade show it to be as much the result of opportunism as of strategic planning. Some firms were willing to move in with no roots and only a single lawyer or two, while others absorbed established multi-practice firms. Some firms come to make a play for those San Diego clients driving international innovations in biotechnology, energy infrastructure, financial technology, pharmaceuticals, and semiconductors by leading with an intellectual property- or technology-focused practice. Polsinelli, Greenberg Traurig, Quarles & Brady, and Fennemore are examples of this. Others, like Manatt, Nelson Mullins, Snell, come to provide the same platform of services and practices offered at the firm’s other offices.

Beyond an opening day press release, what should potential entrants to the coastal market consider before investing in boots on the ground? Making an initial splash is not enough to deliver success.

The highest-growth firms examined illustrate a two-part growth strategy to increase the firm’s chance of post-launch success: 1) Identify existing strengths/synergies to orient a play for targeted or ideal local clients, and 2) employ a sustained effort to add new local client services (laterals). Some firms have also chosen to explore first by establishing a “ghost office.”

Synergies With the San Diego Business Environment

San Diego is a splendid city in which to build and operate a business and grow one’s career. Its business climate is heavily influenced by its physical beauty, mild year-round climate, proximity to Mexico, and its ties to the Pacific Rim. San Diego is home to Fortune 1000 companies, numerous public companies, and privately-held companies of all sizes working to compete in a broad variety of industries.

Before entering the San Diego market, firms should assess how their practice strengths align with targeted clients, industries, and opportunities within the region. These might include the life sciences and biosciences, cybersecurity, energy infrastructure, finance, healthcare, international trade, military and defense, pharmaceuticals, semiconductors, tourism, and the university and higher education environment. Once launched, firms should aggressively pursue local talent in those strength areas.

Many of the openings we examined offered launching attorneys a larger platform with greater resources to benefit their existing clients. Those firms that continue to thrive capitalized on their expansion and initial announcement by deliberately selling their strengths to the market and have attracted San Diego business.

Invest in Laterals

Firms that have experienced the greatest growth in San Diego have added capacity beyond the practice areas with which they led, growing to meet the diverse needs of their local client base. Those considering adding a San Diego office should be prepared to invest in additional high-quality laterals immediately upon launch and on a continual basis.

If the firm hopes to build an office that does more than tread water or serves as a vacation outpost, it must have a roadmap to identifying and attracting partners whose practices complement and enhance the opening team. It’s better still if those partners have a connection to San Diego’s dominant industries. When assessing the viability of a lateral candidate whose addition would diversify the services offered, firms should focus on leveraging market potential through long-term expansion.

Explore First

For firms interested in testing the water before committing to a public launch, there is a more tentative approach. A number of firms have established a “ghost office” in San Diego to test the waters before launching a formal physical office. This allows them to evaluate the market’s viability without the expense of formally opening an office or establishing a public presence. These offices of convenience are a great way to identify and begin building relationships with important clients and potential recruits without committing substantial resources to the effort.

San Diego has attracted international, national, and regional firms, all hoping to make a splash. They have come for a myriad of reasons, and given the strength of the local industries, we expect more to come. If there is, in fact, something in San Diego’s water, firms that hope to dive in must develop a post-launch plan to attain and sustain true success.