Even with the slowdown in deal demand, law firms still plan to expand this year in New York, California and Washington, D.C. And the wave of firms in Miami may not be over.
Miami was the second most popular choice for Big Law respondents when asked which regions they were targeting for workforce growth or office openings in 2022, and it was the only “tier two” legal market. among the top five responses, according to a recent ALM survey. (The survey ranked markets by tier based on billing rates, total number of lawyers, law firms present, and lawyer compensation.)
ALM Intelligence and LawVision’s second-quarter survey, which polled the 500 largest companies in the United States, found that 38% of respondents had their sights set on Miami. Only the greater New York area, with 43% of respondents, was selected more frequently.
These markets were followed by some of the usual suspects: Southern California (Los Angeles, San Diego, Orange County), Northern California (San Francisco and Silicon Valley) and Washington, DC, each had 29% of survey respondents targeting membership growth. . The next slice included Texas, Charlotte, Raleigh and Boston at 19%, followed by Philadelphia and Chicago at 10% each.
South Florida has already attracted a wave of law firms. Kirkland & Ellis, Winston & Strawn, King & Spalding, Sidley Austin and Quinn Emanuel Urquhart & Sullivan all opened offices in Miami roughly last year. The region has attracted law firms due to a growing base of technology and financial clients, amid a growing population.
“Because people are moving there and some of the private equity decision makers are moving to Florida, companies basically follow their clients to South Florida,” said Lisa Smith, principal at Fairfax Associates.
Smith added that Miami may still have an uptrend because, relative to major markets at least, it’s relatively untapped.
For example, Washington, D.C. — trailing Miami in the survey as this year’s employee growth target — is already the second-busiest legal market in the United States based on the number of lawyers in firms. , according to the latest NLJ 500 ranking. , with already more than 14,000 lawyers in NLJ 500 firms and 224 offices in this segment. Meanwhile, Los Angeles is the fourth highest, with more than 7,200 attorneys and 154 offices in the NLJ 500.
Miami could be ahead of California and DC because most companies are already in those markets, Smith said. “They may still need to expand, and there are far fewer businesses in Miami. And if they are not already there, there may be a compelling reason for the customer [to expand there],” she added.
Florida is already beating most other major markets in revenue and demand in 2022. According to analysis by Wells Fargo Legal Specialty Group, Florida business revenue grew 12% in the first six months of the year. year, the highest of all calculated regions and double the national average of 6%.
Demand also rose 3.5% in Florida, “well above” the national average, which was essentially flat at 0.2% for the first half of the year, Wells Fargo said. Florida was also the only region to see an increase in net income, with growth of 8% against an average decline of 9.5% for all companies.
By comparison, New York-based law firms reported 4% revenue growth, along with a 3% drop in demand and a 12.5% drop in net income, “reflecting slowing transactional activity, particularly in capital markets,” the Wells Fargo analysts wrote.
California posted ‘reasonable’ revenue and demand growth, posting gains of 7.5% and 1.5%, respectively, ‘but suffered from strong spending growth, driving down revenue’ , the analysts wrote. The group surveyed more than 120 companies, and the regional variation reflects the weighted results of companies headquartered in those respective regions.
Other markets mentioned by companies in the ALM/LawVision survey include secondary and emerging markets, including Denver, Indianapolis, Las Vegas, Nashville and Phoenix. The value proposition for large companies in these cities includes reduced costs and the attraction of new opportunities.
One of the hottest secondary markets last year, Salt Lake City, was not among the top responses in the ALM/LawVision survey. That doesn’t necessarily mean the market’s momentum is stopping – Holland & Hart just announced several additions in Salt Lake City this week, for example.
But some industry watchers earlier this year questioned whether economic volatility might limit some general office openings, and longtime Salt Lake City business executives suggested there was an “experimental” flavor. to the rush of 2021.
For his part, Holland & Hart’s tax practice leader, Steve Young, said population and economic growth in the Mountain West region has been explosive and is generally expected to continue in that direction in the future.
“I just think it’s a well-kept secret that people are finding out, that it’s a great place to live and work,” he said in an interview this week. But he also wondered if the changing national economic situation would quell the legal gold rush in Salt Lake City, at least somewhat.
“I am very curious, [with] the economy moving a bit nationally, if that will impact the huge rush to open offices in Salt Lake,” he said. “And I think it might well.”