Out-of-town law firms target Boston for growth
Meanwhile, some Hub firms seeking to expand overseas
While Boston’s established law firms are focusing on expanding overseas, national and international practices are targeting New England’s largest city for growth.
At a time when Boston firms are looking outside of the city’s saturated legal market for growth, an increasing number of outside firms are eyeing Boston in what has been an otherwise turbulent year for a legal profession hit by falling revenues and job losses.
Because of the recession, some of Boston’s most prestigious law firms have frozen salaries, slashed bonuses, and cut positions in the past year. But market insiders say the down economy actually has made it easier for outside firms to lure lawyers from established Boston firms and make inroads into the city’s lucrative finance, biotech, and health care industries.
“Boston has been a bit of a target for the national firms over the last couple of years,’’ said Michael Rynowecer, president of the legal consultancy BTI Consulting Group, who puts Boston’s appeal down to the presence of “legally intensive’’ industries, including financial services, private equity, education, and biotechnology. “If you are not in Boston, you would want to be.’’
Two Philadelphia law firms have expanded in Boston lately, picking up some lawyers from local firms. One of them, Pepper Hamilton, a midsize firm with some 500 attorneys and offices in 11 locations around the country, has hired five new partners in 2009, mostly from local firms.
And in June, Philadelphia-based Morgan Lewis significantly bulked up its presence in the city by poaching 13 lawyers, including five partners, from Boston stalwart Bingham McCutchen. Before that, Morgan Lewis, the nation’s 12th-largest law firm, with revenue of $1.12 billion in 2008, had retained a small, two-partner office in Boston.
The rapid Boston growth by the firm, whose corporate clients include investment banks JPMorgan Chase and Merrill Lynch, is all the more surprising given that it laid off 55 attorneys and 161 staff across the country just three months earlier, citing the poor economic climate.
“Morgan Lewis has industry concentrations in areas like financial services and life sciences. These industries have thrived in Boston, and it made strategic sense for us to expand here when the right opportunity came along,’’ said Jonathan Bernstein, a business and finance partner at the firm’s Boston office.
East Coast law firms are not the only ones beefing up their Boston presence. Nelson Mullins Riley & Scarborough of South Carolina in June hired nine Boston-based lawyers from the now defunct Wolf Block, which collapsed in March in the face of financial difficulties.
And the latest expansion into Boston came last month when a West Coast outfit, Cooley Goward Kronish, moved into new, larger premises in the Back Bay, promising significant growth. The firm’s Boston office has nearly tripled in size since opening at the Prudential Tower in the summer of 2007 and now has 29 attorneys.
“We believe Boston presents a tremendous opportunity for Cooley,’’ said Christian Plaza, the partner in charge of the Boston office of Cooley, which is known for its strength in private equity, particularly in the technology sector. “The Boston market ranks second only to Silicon Valley in terms of venture capital investment, and our goal is to be as dominant here as we are in the Valley and in other key markets across the country.’’
The growing interest in Boston takes place against a background of falling profitability and job losses for the country’s largest firms. Among the five largest firms headquartered in Massachusetts, there have been nearly 300 layoffs in 2009.
“There’s a saying: ‘You attack while others retreat.’ They are seeing opportunity while other firms are being more conservative,’’ said BTI’s Rynowecer.
And the Boston-headquartered firms that are growing are targeting national and international expansion - leaving room for outside firms to grow in the city’s legal market. In October, Ropes & Gray, one of the largest firms in Boston, with some 500 lawyers in the city, launched a flagship office in London, hiring two star finance lawyers to build the practice. Ropes & Gray, one of the oldest legal organizations in the city, serves large local companies like private equity powerhouse Bain Capital.
The firm laid off 106 staff in 2009, according to AboveTheLaw.com, a widely read legal blog.
Meanwhile, Bingham McCutchen has made much of its progress in Asia, particularly Japan. Of the 15 hires made by the firm in 2009, five have been overseas and not one has been in Boston, its historic home.
The corporate law firm laid of 39 employees in 2009, including 16 lawyers, according to AboveTheLaw.com.
“The Boston-headquartered firms have been expanding nationally and internationally - their focus is not Boston,’’ said Brion Bickerton, a recruiter at the legal search firm Major Lindsay & Africa.
“I’m not sure that amongst those top firms they have picked up more than one or two partners between them in 2009,’’ he said.