Calif. Powerhouses Thrive Despite Deals Dip, Office Return
Law360, August 18, 2023
By Jack Karp
The firms named as Law360's 2023 California Powerhouses scored billion-dollar settlements in large class actions, won victories against drug companies that contributed to the opioid epidemic, and managed significant deals, including Elon Musk's purchase of Twitter, even as the state's legal market shifted and attorneys returned to the office.
Six law firms stood out for their success in the Golden State over the past year. Robbins Geller Rudman & Dowd LLP, Orrick Herrington & Sutcliffe LLP, Gibson Dunn & Crutcher LLP, Lieff Cabraser Heimann & Bernstein LLP, Wilson Sonsini Goodrich & Rosati PC and Cooley LLP all earned themselves spots in Law360's annual Regional Powerhouses series.
Robbins Geller, with its 162 California-based attorneys, steered the largest antitrust class action settlement at more than $5 billion in litigation over Visa Inc. and Mastercard Inc.'s interchange fees on credit card transactions. The firm also won multiple victories on behalf of the city of San Francisco in litigation aimed at holding drug manufacturers and distributors accountable for their roles in fueling the nation's opioid crisis.
Lieff Cabraser represented San Francisco in opioid litigation as well, helping the city settle with defendants Teva Pharmaceuticals Ltd. and Allergan/AbbVie Inc. for $54 million. The firm also helped craft four global settlements with Juul Labs Inc. and Altria Group Inc. over their marketing of tobacco vape products in litigation that includes close to 10,000 cases.
Many of these cases have primarily played out in San Francisco and the Bay Area, where the firm is located, according to managing partner Steven E. Fineman.
"We've had a strong showing there, and we've been practicing there a long time," Fineman told Law360. "So I think we have a certain amount of credibility with the bench, not just in Northern California, but also in L.A. and other parts of California."
Orrick's 372 California-based attorneys, meanwhile, successfully defended the NCAA in a $50 million wrongful death action in Los Angeles Superior Court over liability claims for concussions in college football. The firm also advised fintech company Stripe on its $6.5 billion Series I financing round, the largest single private financing ever, and K5 Global in its investment in the $1.7 billion financing of Elon Musk's SpaceX.
Gibson Dunn was similarly successful in defending TikTok in a trademark infringement suit in the Central District of California, and Apple Inc. against a Ninth Circuit appeal of the company's victory over Epic Games Inc.'s antitrust claims. And the firm, with 532 lawyers in the Golden State, won the only successful challenge to California's A.B. 5, which expanded the scope of the so-called ABC test for worker classification, on behalf of Uber Technologies Inc. and Postmates Inc.
Palo Alto-based Wilson Sonsini earned its spot on the list of California Powerhouses by advising Twitter, now doing business as X, on Elon Musk's $44 billion bid to buy the company, winning litigation to enforce the deal when Musk tried to back out. The firm also secured wins for Google in multiple cases over the tech company's liability for terrorist groups' internet posts — cases that found their way to the U.S. Supreme Court in February.
And Cooley helped guide Turning Point Therapeutics Inc. in its $4.1 billion sale to Bristol Myers Squibb Co. as well as One Medical in its $3.9 billion sale to Amazon.com Inc. Cooley's 511 California attorneys also successfully defended the Kardashians in a jury trial over Blac Chyna's $100 million defamation claim, and won another victory for Kim Kardashian when a California federal judge nixed a putative class action claiming she and other celebrity defendants misled investors about cryptocurrency firm EthereumMax.
A Legal Market in Flux
All these firms managed to succeed in a California legal market that legal recruiters say has been dynamic but also inconsistent for different practice areas over the past year.
Litigation, labor and employment, and intellectual property have all remained strong practice areas or grown even stronger, according to legal recruiters.
About 23% of the state's market has been litigation while about 17% of it has been focused on intellectual property, according to Andrea Hartwell of California legal recruiting firm Swan Legal.
"Almost a quarter of the market has been litigation, which is pretty significant both in terms of needs and in terms of associate lateral moves," Hartwell said. "That's an interesting uptick."
But transactional work has slowed significantly, recruiters say.
That's in part because many firms overhired in practice areas such as mergers and acquisitions, emerging companies, capital markets, banking and real estate in 2021, according to recruiters.
"And now when the work is slow, there's nothing for them to do, and we're seeing some of the layoffs that are occurring," explained Amber Handman of Los Angeles-based SeltzerFontaine LLC.
Handman has been working with several California real estate associates, for instance, "and for the past few months, there has barely been a job that we could apply to," she said.
Junior associates have been more impacted by this slowdown than mid-level or senior associates, according to Hartwell.
In recent years, junior associates could find new jobs "very easily" if they wanted to make a move, Hartwell said. "That is not the case now."
Golden State attorneys and their firms whose client bases are largely made up of technology companies are especially vulnerable since technology has been hit hard by layoffs and decreased demand, according to Kate Reder Sheikh, a partner in Major Lindsey & Africa's associate practice group in San Francisco.
This past year has been the most "vulnerable" she's seen the California legal market, said Reder Sheikh, who has been recruiting in the Bay Area for six years.
"The firms that really sort of pinned their futures on emerging companies or capital markets or M&A, I think they have found this year to be much, much more of a pinch," she said.
Returning to the Office
One of the biggest challenges firms in California faced this year was navigating their attorneys' return to working in the office, recruiters say.
Developing and maintaining a firm culture when many lawyers were hired remotely during the pandemic is one hurdle firms have faced, according to Hartwell.
Another is that some attorneys don't necessarily want to come back to the office, according to Handman.
Firms are paying massive amounts of money for rent, and many of them feel there are real advantages to having their attorneys in the office, Handman said. But many attorneys want flexibility and feel that they and their firms have been successful during 31⁄2 years of remote work.
"And maybe how some firms are addressing that and how some attorneys feel about that are not the same," she pointed out.
In fact, Hartwell says, she has noticed that some attorneys don't want to stay at their firms after returning to the office because their experience working at the firm in person is different from what they experienced while working remotely.
So hybrid situations may be the best solution, according to Handman.
And suppose a firm is going to mandate that its attorneys come into the office. In that case, those firms have to ensure that time in the office is meaningful through efforts such as organizing trainings or continuing legal education courses and scheduling in-person mentoring, Handman said.
"If you're going to force people to go in, you need to provide opportunities to connect," she added.
Expanding Into AI and Seizing Talent
Despite these challenges, there have been significant opportunities for firms in the Golden State over the past year, and those opportunities will likely continue next year, according to recruiters.
One of those opportunities is the possibility of moving into new practice areas, most notably artificial intelligence, according to Hartwell.
"This specialty is upon us," Hartwell said, likening it to the explosion in data privacy as a practice area a few years ago.
The slowdown in transactional practice areas has also created opportunities, particularly for Mid-Law firms and prestige boutiques, according to Reder Sheikh.
Layoffs mean there are a lot of "really hungry" associates who are very eager to move, Reder Sheikh explained. And those associates are much more likely to look at smaller and boutique firms now than they might have been a year ago.
"There's been a lot of activity as far as firms seizing talent," Hartwell echoed. "Quite a few of our clients that are not in the AmLaw 50 have seen this as a really great opportunity to seize talent." In fact, attracting and retaining talent should be California firms' No. 1 priority for the coming year, according to Handman.
That means firms need to offer attorneys flexibility, focus on employees' mental health, provide training and mentoring, and offer a clear path to advancement, Handman added.
But firms and attorneys should be prepared for the process of finding and hiring new lawyers to take longer than it used to, according to Hartwell.
The pandemic has led candidates looking for jobs and law firms looking for attorneys to exercise a higher level of scrutiny when conducting their searches, Hartwell said, making the hiring timeline longer.
"People have gone through such a shift in how they work that they want to make sure they're going to be at a place that's going to meet their short-term and their long-term goals," Hartwell added.
--Editing by Kristen Becker.
https://www.law360.com/pulse/articles/1710755/calif-powerhouses-thrive-despite-deals-dip-office-return