A great leap abroad for Squire Sanders

By Alexandra Schwappach
Daily Journal Staff Writer

Squire Sanders no longer wants to be known as “that Cleveland-based firm.” That’s why, for the past several years, the firm has embarked on an international bender. After absorbing a San Francisco intellectual property and technology firm last decade to plant its West Coast flag, Squire deepened its global presence even further. It acquired smaller outlets around the world and eventually doubled in size by way of a merger with a European outlet in 2011.

Now the firm of more than 1,300 lawyers is striving to refocus its attention on North America, including its three California locations in the northern portion of the state and Los Angeles and even weighing a union with Washington, D.C.-based Patton Boggs LLP. But like many similar firms, Squire faces aggressive competition, a cutthroat recruiting environment and challenges in branding. Successful expansion has been more difficult than ever, even in a globalizing legal atmosphere, and maintaining growth in individual offices comes with its own challenges for a firm.

Squire first established its West Coast presence in early 2000 when it absorbed the California, Tokyo and Beijing offices of San Francisco-based Graham & James LLP, a firm that struggled to survive after the Asian economic recession of the 1990s. As a result of the acquisition, the firm’s West Coast practices have focused on cross-border work between California and the Pacific Rim, primarily Japan and China.

“Growth in the West Coast was not just a regional West Coast play,” said Michael W. Kelly, managing partner of Squire’s Northern California offices. “It was really a Pacific play.”

In 2012 former Hunton & Williams LLP partner Chris M. Amantea stepped in as new managing partner of Squire’s L.A. office and was tasked – along with Kelly – in growing the firm’s California offices. That year the firm added Matteo G. Daste and Thomas E. Gaynor as of counsels – the two are now partners – and Robyn L. Helmlinger as partner in San Francisco. Intellectual property attorney Ivan Rothman also joined the firm as of counsel.

The following year the firm added a trio of attorneys from Dorsey & Whitney LLP in Palo Alto and special counsel Richard W. Horton who divides his time between Palo Alto and the firm’s offices in Sydney, Australia.

Kelly said the hottest growing practice area for the firm in Palo Alto and San Francisco has typically been intellectual property and patent prosecution. The headcount between the firm’s two Northern California offices is 50 lawyers including 18 partners.Growth in Los Angeles for the past couple years has been somewhat sparse by comparison. Since 2012 Squire has added one of counsel in Los Angeles. That office now has 28 lawyers including eight partners and two of counsels.

In a big transaction last year, Thomas T. Liu of the firm’s Los Angeles office counseled Taiwan’s Eva Airways in setting up a flagship pilot academy at Sacramento’s Mather Airport that is scheduled to be up and running later this year.

“One principle that we apply when we are looking at growing is to grow in ways that integrate well with the entire firm platform,” Kelly said. “We want to give someone joining us the ability to grow in ways that other firms don’t have.”

Squire Sanders faces what many legal experts say is significant competition from other big international firms that focus more on local North American offices. It’s difficult to dislodge partners from firms such as Jones Day, K&L Gates LLP and Reed Smith LLP, said Los Angeles legal recruiter Sandy Lechtick.

An issue with growing globally for Squire Sanders, and for other firms looking to do the same, Lechtick said, is that local partners sometimes don’t see the benefit of the expansion.

“A local partner in California might say, ‘So the firm is expanding internationally – What does that do for me?'” Lechtick said.

Legal recruiter Larry Watanabe said Squire hasn’t been aggressive enough in its recruiting efforts in California. “It’s very difficult to recruit here,” he said. “You have to be in [the] forefront of peoples’ minds. It takes a very aggressive plan to grow and establish a foothold.”

Kelly said the firm doesn’t “just do a lateral deal for the sake of adding bodies in California.”

“When we look at opportunities we want to make sure that they are the right candidates that will fit in culturally and are going to be able to contribute to the platform as a whole.”

The firm is also committed to internal development, Kelly added, as reflected by recent promotions. Of the 13 attorneys that Squire Sanders promoted to partner this year, three of them were in California.

“If you bring in too many laterals it can get in the way of promotional opportunities,” he said. “We are loyal to our homegrown candidates as well.”

Both Kelly and Amantea said that new entrants into the Northern and Southern California legal market present a challenge in recruiting. Bigger firms entering those areas tend to offer overpriced compensation packages that entice laterals.

“Everyone is looking for partners,” Amantea said. “It’s a challenging lateral market.”

Part of Squire’s overall growth strategy is to hire groups of partners or to absorb small firms and boutiques instead of adding one or two lateral partners at a time, Kelly said.

“It’s harder to find the right group to bring into the firm, but the long term payoff is better,” he said. Most recently the firm has been in merger talks with Patton Boggs LLP, a public policy and lobbying firm that has experienced financial hardship the past few years. “Whether or not these talks lead to anything further, Patton Boggs is a spectacular firm with incredible reach, particularly inside the Beltway,” Squire’s global managing partner Stephen C. Mahon said.

Absorbing smaller outfits and groups has proved successful for Squire. In 2005 it combined with Florida-based Steel Hector & Davis LLP, adding offices in Santo Domingo and West Palm Beach, and six years later it absorbed the 80 lawyers of Perth, Australia-based Minter Ellison.The firm’s largest combination came in 2011 with UK-based Hammonds LLP, which added more than 500 attorneys to Squire’s ranks in regions such as Berlin, Madrid, Manchester, Paris, Brussels and London.

Historically, the firm’s West Coast offices connected expressly with the Asian Pacific market and the firm’s East Coast offices were linked to European countries. But part of Squire’s new strategy is to connect all offices across all markets and regions.

“What is good for [the] U.S. is what is good for the rest of the firm,” said Peter Crossley, Squire’s European managing partner who is based in London. “It benefits the whole entity.”

International growth is a somewhat less complicated venture for businesses like Squire that operate under a Swiss verein, a European legal structure in which an organization consists of various independent offices that do not share in profits or liability. The structure makes it easier for firms to grow extensively in the global market by allowing them to absorb other offices with little headache.

Some have criticized Swiss vereins since the legal industry started adopting the structure in the early 2000s – Baker & McKenzie was the first firm to test the method in 2004 – saying it does not encourage cohesion and raises questions about fee sharing.

“For law firms, the Swiss verein structure has only been around for a very few years,” Pasadena attorney and verein expert Edwin B. Reeser said. “I don’t think that’s anywhere near long enough for gestation to deliver whether it’s working or not.”

Regardless, the structure has been popular in the last few years – Hogan Lovells, DLA Piper, and Norton Rose Fulbright LLP are among the firms now running under a Swiss verein and most have upwards of 2,000 practicing attorneys. Most recently, Littler Mendelson PC announced toward the end of last year that it had teamed up with firms in Colombia and Costa Rica to form the verein Littler Global.

Squire Sanders’ legal entities under the Swiss structure are Squire Sanders (US) LLP, Squire Sanders (UK) LLP and Squire Sanders (AU).

Amantea said the Swiss verein structure is so seamless that it’s basically invisible. “If someone hadn’t told me when I joined the firm that it was under [a Swiss verein], I would have never realized it,” he said.

Integration between Squire’s offices depends largely on referrals. James J. Maiwurm, chair and global chief executive officer of Squire, said the system encourages its attorneys to “hunt and serve in packs” rather than focus on an individual piece of the pie.

“We have a compensation system that is designed to encourage behaviors we want,” he said. “A key element of that is making sure that everyone is rowing in the same direction.”

alexandra_schwappach@dailyjournal.com

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