Dana Dunwoody, partner in charge of the San Diego office of Sheppard Mullin, says the firm works ‘as a seamless whole.’ The local office Downtown has about 32 attorneys.

From Boston, Philadelphia, Washington, D.C., Los Angeles, San Francisco and lately Atlanta, they come to establish law offices in San Diego. But why? San Diego isn’t a state capital and we don’t play host to the Supreme Court or even the 9th Circuit. We’re not one of those plaintiff-friendly magnets for class action litigation, like Texarkana.

Maybe it is the nation’s third largest concentration of biotechs, and hi-tech players in software, telecom, and Internet spaces who survived the dotcom bust. The climate? Not bad. Perhaps it is the business infrastructure that comes with being the second largest city in California, the cross border trade, or a healthy supply of entrepreneurial clients in an economy where 95 percent of enterprises are classified as small business.

Whatever, they keep arriving with their regional, national and international business models. Once here they seek new opportunities for gathering clients and creating niche practice areas to serve emerging industries. The new national firm may have a central command, or may work as a collection of local offices. Its lawyers focus on deals in cities where they work or a few thousand miles away.

Take Sheppard Mullin, which has about 32 attorneys in its Downtown office, 48 in Del Mar Heights and 420 elsewhere, all administered, but not governed, from Los Angeles. “Our chairman Guy Halgren works out of the San Diego office, and we have an executive committee of people from around the country,” says Dana Dunwoody, the partner in charge of the San Diego office.

Team Sheppard includes offices in New York, D.C., and Shanghai. “Considering the size, the firm works as a seamless whole,” Dunwoody says. “It’s amazingly cohesive, we cross-refer work among the offices, and we assist various offices with their work.”

The firm’s top practice areas are litigation, real estate, corporate, bankruptcy, employment, a white-collar crime group and intellectual property. Dunwoody says the San Diego market presents an interesting challenge because of its diversity. “The biggest challenge is the uniqueness of the San Diego market,” he says. “A lot of the growth has been towards the north with bioscience and high-tech, whereas Downtown firms are less focused on IP and more focused on litigation and real estate, the brick and mortar.”

Sheppard recently signed a 20-year lease on its Downtown space and has extensive renovations on order. Its civic involvements include the San Diego Volunteer Lawyer Project, the Association of Business Trial Lawyers and the Downtown Partnership.

Larger firms have gotten a rap — deserved or otherwise — as impersonal factories with impossible hours and work forces prone to factionalism. The staff soap opera is covered by blogs such as www.abovethelaw.com. Everyone today is newly protective of the perception of their culture.

“We’re very careful to make sure we don’t ruin our culture,” says Dunwoody, who notes the firm limits its growth to a handful of attorneys at at time. “It’s more difficult to maintain firm personality,” he says, “when you say we’re going to go out and hire a 50-person law firm.”

John Phillips, managing partner of Fish & Richardson’s San Diego office, says the office is one of the busiest in Fish’s network, pushed lately by a spate of heavy litigation for Microsoft.

Coincidentally, that total would about equal the San Diego office of Fish & Richardson. Fish dates back to the 1870s in Boston, and dropped anchor on this shore in the late 1990s. Local managing partner John Phillips arrived here in 2001.

“We thought the days of the intellectual property boutique firm were numbered, so we opened Washington, and Silicon Valley, and Houston initially,” Phillips says. The San Diego office was staffed with a “core group of high-quality people in another law firm somewhere else, and we typically start the offices around them,” he says.

The San Diego office is one of the busiest in Fish’s network, pushed lately by a spate of heavy litigation for Microsoft. Phillips says Fish’s San Diego office is driven these days by telecom, computer, Internet and software, with less biotech.

Fish’s nonprofit support includes the Connect program, MIT Enterprise Forum, Tech Coast Angels, Celebration for Critters at the San Diego Zoo, and the San Diego Volunteer Lawyers program. Phillips also says he’s looking for partners who share the Fish business model, which emphasizes the client’s attachment to the firm, rather than the individual lawyer.

“The F&R model is more cooperative and less dog-eat-dog,” Phillips says. “So say you bring in a client and your compensation is reflected by how much billing that client generates, and so partners jealously guard clients and not get other partners involved. We turned that model on its head we decided that what we want is large institutional clients, who want to have Fish & Richardson, and not only one particular attorney. It makes sense for everybody, because the client has a number of contacts at the firm and it benefits the firm so if any one partner leaves, the client may or may not go with them because he’s already made so many other contacts at the firm.”

He cites a recent case where Fish billing attorneys for a large national software client were rewarded for “sharing credit and diluting your personal individual relationship for the benefit of the firm and getting others involved.”

About 100 of Allen Matkins’ lawyers specialize in real estate, but San Diego office managing partner Joe Davidson says the firm’s work is tied mostly to commercial projects, development work, land deals with builders, hotels, resorts, office buildings and commercial landlords.

Phillips says one of the biggest challenges facing the San Diego office these days is in balancing the different types of clients. “Some clients have a hands-on approach and don’t want you to do work unless they’ve authorized it,” Phillips explains. “Others want you to be more proactive, and want you to tell them what needs to be done, which could cost more but is beneficial in the long run.”

Real estate drives the bus at Allen Matkins, a California firm with fewer than 50 lawyers in San Diego of about 250. About 100 of Allen Matkins’ lawyers specialize in real estate, but local office managing partner Joe Davidson says the firm’s work is tied mostly to commercial projects, development work, land deals with builders, hotels, resort, office buildings and commercial landlords.

“What makes us unique from a managing and rainmaking and administration standpoint is that every office has a say in things and San Diego is a big player in the firm,” Davidson says. The firm’s local involvements include the Inner City Games, the Phoenix House, and pro bono work for indigent clients.

Davidson senses the biggest challenge for not only Allen Matkins but all law firms is defining who they are and then making it work not knowing who else will jump in a given market. “We try to be relationship-based, to work with the smaller firms like we did when we were 75 lawyers 15 years ago,” Davidson says. “But we’re constantly getting calls to get acquired, to be bigger, so are we a middle market regional firm or are we something other than that? That’s the biggest challenge.”

Mike Whitton, partner with Ross, Dixon & Bell, which is merging with Troutman Sanders, will take a seat on the expanded firm’s executive committee. ‘It was a great opportunity for both firms,’ he says of the merger.

The latest to make the leap to our sandy shores is Atlanta-based Troutman Sanders, which is picking up locally headquartered Ross, Dixon & Bell with about 100 attorneys to create a 750-attorney firm. Troutman says the deal will combine its corporate, finance, litigation, real estate and public policy practices with Ross, Dixon & Bell’s insurance, professional liability and commercial litigation practices. Ross, Dixon & Bell attorneys will gain access to Troutman Sanders’ established presence in Atlanta, New York, Raleigh, Virginia, London and Asia, while the San Diego office will give it a larger footprint out West with clients like Tucson Electric, PacifiCorp, New Mexico Power and the California Independent System Operator.

“It was a great opportunity for both firms,” says local partner Mike Whitton, who also will take a seat on the expanded Troutman Sanders executive committee. “We have complementary practice areas, which is great because we were getting pressure from our clients to assist in areas we weren’t able to unless we merged.”

If consolidation continues, local firms will have to decide whether to become buyers or sellers, and regional firms too will be faced with acquire or be acquired decisions.

“The business is increasingly competitive,” says Sheppard’s Dunwoody. “And what you need is an edge, and that edge has got to be excellence of reputation or unique capability, or to be able to deliver more, more efficiently and faster. You might have an hourly rate that’s 30 percent higher than a smaller competitor, but if you’re 30 percent more efficient you can still develop a better product for the client than firms that say they can charge less.”

— Richard Acello