There’s a new and growing region in the tech sector poised to spawn a second California-based legal services ecosystem. For those firms with a national reach that may have missed the boat on courting clients during the first tech boom in Silicon Valley, including the more traditional “Wall Street” players, the opportunity to get in on the action might be difficult to resist.
Over the past seven years, Silicon Beach – the region generally known to comprise the coastal strip that spans the north-south distance between LAX and the Santa Monica Mountains – has become home to a slew of innovative companies. A range of factors appear to be spurring this Silicon Valley defection: its capping construction on new office space; talent burnout and competition; tax and reduced rent incentives being offered by the city of Los Angeles (and its environs); and a lower cost of living. The region is now considered the 3rd biggest tech hub in the country (behind only Silicon Valley and New York City, and ahead of Austin and the Route 128 corridor), boasting more than 500 companies, including Snap, Inc, Hulu, The Honest Company, Whisper, Nasty Gal and Buzzfeed. According to a recent study by marketing agency Mediakix, which analyzed 177 companies headquartered in Los Angeles County, the area’s tech industry has an aggregate estimated value in excess of more than $155B.
Since 2012, Cooley, Orrick, Fenwick, and, just last month, Goodwin, have all planted their flags there. This would appear to give these Silicon Beach pioneers a clear advantage, at least an initial one, as, unlike Silicon Valley, where established tech-focused law firms have long been cultivating lawyers in the emerging companies’ space, the major indigenous law firms in Los Angeles aren’t known for practices tailored to that client base. With tech startups in immediate need of specialized legal talent to handle the myriad rules and regulations associated with technology today, populating a name-brand satellite office in that region with well-seasoned transactional attorneys seems to offer the promise of cultivating a thriving tech practice that can grow with the region just as those practices did in Silicon Valley when it was still a mid-stage market a decade ago.
We have several more predictions that arise from the growth of tech-oriented legal needs in Silicon Beach:
- The Los Angeles market is ripe for the kind of entertainment lawyer that can meet more holistic needs, including privacy and data security, IT issues and consumer regulations. With the increasing blur of the line between technology company and content company, there appears to be a market for the growth of a “hybrid” practice that integrates an expertise in tech with an expertise in entertainment and media, already native to the Los Angeles market.
- As more AmLaw100 firms pack LA offices with tech transactions and deal lawyers, talent rivalries will heat up and lawyers in traditional power centers like New York, Silicon Valley and Boston – all well-staffed with EC/VC specialists – will be lured to new places.
- The shifts in California may presage the emergence of more robust legal markets in several other “hip,” lower-cost cities similarly poised to spawn a market of emerging companies that seek to solidify a relationship with local counsel.
- From “Silicon Slopes” (Utah’s Salt Lake City, Provo and Odgen), which has given rise to at least five companies valued at more than $1 billion and is only a 2 hour flight from the eponymous Californian valley, to Silicon Desert (Phoenix, Arizona), which offers the combination of low living costs and high numbers of students, colleges and universities, and is currently home to 41 of Inc.’s 5000 companies (including Tuft & Needle, Carvana and GoDaddy), and to Silicon Hills (Austin, Texas), where a growing number of startups and tech companies are popping up in the rolling hills of Austin’s west side, there’s an opening for the elite firms without existing ties to Silicon Valley to make a mark by opening outposts where a practice can latch-on at an earlier stage of client access.
Times are changing, and when traditional power centers shift, you can be sure that BigLaw will follow.
Richard Zakin leads the partner placement group at JWM, having more than 10 years of experience in the industry placing partners and groups of partners (and even playing the lead role in potential and completed law firm mergers). Before joining the search industry, he practiced as a real estate attorney at Skadden and Morrison & Foerster and as a real estate partner with Bryan Cave and Dorsey. He is a graduate of Dartmouth College and Columbia Law School (where he also received a Masters in Journalism degree.)