Edward Poll, The Daily Record Newswire
Despite the size of California and the number of lawyers practicing — somewhere between 10 and 15 percent of all legal personnel in the United States was the last number I heard — there is not a major corporate presence there. It’s really quite fascinating how few Fortune 500 companies there are in California.
Legal work without corporate work
If you recall when Bank of America bought out Security Pacific, it was a major deal, but they were both essentially southern California firms. The Bank of America was technically northern California, and Security Pacific was southern California, but Bank of America had a major presence in southern California. Now Bank of America has sold, and where is it based? The company is based out of North Carolina. So, although it is important in California, it is not headquartered there.
Los Angeles was on the verge of becoming a major city; but it lost the few corporate headquarters, and now is no longer a major city, in my perception. Rather, it’s a step down: it’s a major town. How Los Angeles will again get to the point of being on the verge of becoming a major city is an important question.
Regardless, I think that we can expect that the legal work we’ll see in California in the near future won’t be because of major corporate headquarters. Rather, legal work in California will emanate from small and midsized companies, particularly from specialties like biotechnology and medical science — and perhaps sports teams. After all, there aren’t very many cities in the country that have two major professional sports teams in the same league, but in Los Angeles, there are two baseball teams, and both are major ones. In addition, there are two National Basketball Association teams. The same is true in the Bay Area with two major league baseball teams and two National Football League teams, all of which are major sports franchises. And now you’ve got hockey teams. (And out of the last three years, Los Angeles, which is a desert, has won the Stanley Cup. That’s bizarre, to say the least.)
Growth considerations
There are only so many ways of growing. You can start from scratch, and grow that way. And if you’re very strong, perhaps even dominant, in a certain area, you’ve got to supplement this in order to grow. You’ve got to be able to provide new services for your existing clientele or new clientele for your existing services. When I read the papers, and I see somebody say, “It gives us a bigger platform,” that’s really what they’re talking about. They’re saying that they’re big where they are, but they need to obtain more expertise or get more potential services to serve the same clientele. Sometimes it works; sometimes it doesn’t.
In terms of California, when you take the marketplace into account, you need to have a presence in the industry that is so strong that if you’re combining the Los Angeles or California law firm with another firm, the other firm will look at the California marketplace as an expansion — the addition of another marketplace or practice area, if you will. The California firm, too, will be very interested in the other law firm because now the California firm can take its practice niche and perform more services for the same people as a result of having strength from the other firm.
History has proven that California firms can grow only so much without having their presence in other cities, in other practice areas. O’Melveny & Myers, for example, grew to Washington, D.C. Similarly, Manatt, Phelps & Phillips was a strong lobbyist first in the city of Los Angeles and then in the state of California. Then it became a strong lobbying firm in Washington, D.C. Now its New York office is one of the largest within its group, if not the largest. So, the firm was able to grow, providing the same services in different communities and at the same time not losing its clientele when its clientele grew to other areas.
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Edward Poll, J.D., M.B.A., CMC, is a law practice management thought leader and contributor to this publication. His website is at www.lawbiz.com.
