February 9, 2009
SAN DIEGO BUSINESS JOURNAL
By Heather Chambers
SAN DIEGO – Amid all this economic uncertainty, one thing is certain: San Diego’s legal landscape is in the middle of a transformation.
A little more than a week ago, partners at the law firms of Bell, Boyd & Lloyd and K&L Gates voted to merge the firms in a deal that will establish K&L Gates’ presence in San Diego.
Top-ranked K&L Gates reported significant increases in year-over-year revenues and a jump in profits per partner, a key measure of a law firm’s health. K&L grossed $959.5 million, up 27 percent, last year. Its profits per partner were up almost 7 percent in 2008 to $855,000.
News of a Bell Boyd merger comes on the heels of other major announcements in recent months, most notably the dissolution of Heller Ehrman and job cuts at national firms that do business in San Diego, such as Morrison & Foerster and Cooley Godward Kronish.
Unlike in the past, credit agencies have begun requesting monthly updates from law firms to monitor partner defections, according to local legal recruiter Larry Watanabe.
“Law firms are no longer considered to be good credit risks,” he said.
The perception doesn’t bode well for firms, which typically rely on borrowing to make up for lagging client payments. But smaller law firms are poised to capture additional business despite the turmoil, according to Watanabe, because their services come at a discount compared with larger, national firms.