California Powerhouses Lead Hot Legal Market Facing Slowdown

Law360, August 1, 2022

By Dorothy Atkins

Law360's 2022 California Powerhouses have steered multibillion-dollar deals, defended technology and pharmaceutical clients against high-stakes litigation, and secured nine-figure trial wins amid a recently booming Golden State legal market that has abruptly slowed in the face of recession fears, according to experts.

As part of its annual Regional Powerhouses series, Law360 is recognizing a group of law firms in the Golden State that stood out over the past year for their exceptional achievements. The regional powerhouses are Wilson Sonsini Goodrich & Rosati PC, Skadden Arps Slate Meagher & Flom LLP, Orrick Herrington & Sutcliffe LLP, O'Melveny & Myers LLP, Hueston Hennigan LLP, Greenberg Traurig LLP and Covington & Burling LLP.
These firms range in size from Hueston Hennigan, clocking in at 72 attorneys in California who focus on high-stakes litigation, to Wilson Sonsini, which has 556 attorneys across its practices in the Golden State. The five others have between 122 and 413 California-based lawyers.

Regardless of size, each firm has secured significant legal victories for their clients in the past year, on top of helping guide headline-grabbing transactions.

Hueston Hennigan obtained a whopping $175 million trademark award plus a 5% ongoing royalty for Monster and co-claimant Orange Bang against Bang energy drink maker Vital Pharmaceuticals Inc., and Wilson Sonsini advised clients on multibillion-dollar transactions, including Twitter in Elon Musk's since-reneged $44 billion acquisition bid.

Skadden advised video gaming company Activision Blizzard in handling its pending $68.7 billion acquisition by Microsoft, while Orrick secured a significant patent litigation win for Sonos against Google.

O'Melveny represented Johnson & Johnson in beating public nuisance claims over the opioid epidemic, and Covington represented Facebook in defeating a high-stakes putative nationwide advertiser class action over allegedly bogus accounts. Among Greenberg Traurig's many recent legal victories, it made headlines as it represented pop singer Britney Spears in ending the 13-year conservatorship controlling her personal and professional affairs.

California's Legal Boom Spurred an Associates Market

Delia Swan, founder of Swan Legal Search, and Chief Operating Officer Jenny Swan Meyer, told Law360 that the California legal market in 2021 and early 2022 was as hot as ever, with law firms seeking Golden State attorneys who specialize in real estate, mergers and acquisitions, and corporate and litigation practices, as well as many others.

As the demand for California attorneys grew, Meyer said associates gained the upper hand in choosing which firms to consider, and those associates are not solely choosing based on compensation packages, which typically start at $215,000 annually.

"I think it's an associates market," Meyer said. "They have a lot of power when they are looking at all of the different firms."

Since the pandemic reached America's shores in the spring of 2020, associates have been selecting their future employers based in part on law firms' culture and diversity, equity and inclusion, or DEI, initiatives, according to Meyer.

Swan added that culture and law firm DEI initiatives have always been factors that lawyers have considered in their job hunts, but those factors have taken priority in the past year.

"This generation has a lot more interest in doing good," she said. "They want more meaning and purpose in their work and not just the bottom line. I think we're seeing that quite a bit."

Margot Jackson, an Orange County-based managing director of in-house counsel recruiting at Major Lindsey & Africa, said her firm has also seen the demand for California attorneys grow in 2021 and early 2022. But many qualified attorneys have already made career moves recently, making it more difficult to fill newly opened positions, she said.

"Frankly, it's hard to find candidates, and that's because so many lawyers have moved in the past 12 to 18 months," Jackson said.

She added that many junior-level attorneys have been pursuing legal jobs that allow them to work from home at least part time, if not full time.

"Companies that have taken a hybrid approach to hiring have had a big leg up," Jackson said. "A lot of our clients have said, 'Hey this role — especially at junior level — can be remote.' It allows our clients to really expand the pool [of applicants]."

Jackson's firm has also noticed an increase in demand for legal recruiting services, she said.

"I think from our perspectives, because the labor market is so tight, companies that hadn't previously gone to [recruiting firms] are now choosing to go, because the in-house acquisition teams just don't have specialized expertise," she said.

California's Legal Market Slows Amid Recession Fears

Larry Watanabe, another longtime California-based recruiter, told Law360 that since roughly February, when Russia invaded Ukraine, he's seen the state's legal market slow down considerably, particularly in corporate practices, mergers and acquisitions, and general corporate governance practices.

"I think the last year and the first half of this year was very, very busy," he said. "Things started to really drop off in February and March, especially when Ukraine and Russia went to war. That in and of itself caused a lot of problems."

Watanabe said he believes the recent legal market slowdown in the Golden State reflects the effects of the war, inflation and the recent sell-off in the stock market, which closed in bear market territory in June.

"Geographically the markets in California are strong, but again, it was a fraction of what it was, prior to the meltdown over the past four or five months in particular," he said.

Watanabe says in the year ahead, he expects the demand for corporate and transactions attorneys to continue to drop, while he anticipates there will be a strong demand from law firms for attorneys who specialize in securities, antitrust, white collar and litigation practices.

"Anything litigation-oriented going forward is going to be a strong suit for firms," he said. "The market has shifted dramatically in the last 90 days, and I think it's going to continue to shift."

BigLaw Is Tackling Big Civil Rights Work

Aside from securing big-ticket litigation wins, many of the California Powerhouses this year have landed significant victories in immigration-related pro bono work, while others have beefed up their white collar and investigations practices to advise corporate clients on how to ensure their policies comply with civil rights laws.

Skadden attorneys contributed nearly 10,000 hours of pro bono service working on more than 250 matters, including partnering with co-counsel ACLU Foundation of Southern California to reach a class action settlement with the U.S. Department of Justice under which judges will consider immigrants' financial circumstances before setting a bond amount.

Orrick represented immigrant rights groups in bringing the first class-action lawsuit challenging the Trump administration's "Remain in Mexico" policy based on arguments that it discriminates against the disabled.

And Greenberg Traurig made ongoing efforts to help citizens of war-ravaged countries obtain refugee status, with one California attorney obtaining safe passage for an Afghan journalist after the Taliban seized power last year. Greenberg Traurig is also working with Ukrainian refugees, according to the firm.

Pro bono work aside, Covington has also recently built up its white collar and investigations practice to take on high-profile discrimination and misconduct investigations, institutional culture risk assessments, and civil rights audits, and it has represented clients facing public and regulatory scrutiny, including Seattle Children's Hospital, Uber, Starbucks and Tyson Foods.

--Editing by Adam LoBelia.

https://www.law360.com/pulse/california-pulse/articles/1509564/calif-powerhouses-lead-hot-legal-market-facing-slowdown