Biglaw, California, Silicon Valley, Skaddenfreude, Staff Layoffs

Skadden Takes Its Heart from San Francisco -- and Closes Its S.F. Office

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Late last week, word started to leak out that Skadden Arps plans to close its San Francisco office, by the end of June 2011. A meeting was held on Friday where the closure was announced to the office. The S.F. office is essentially being folded into the firm’s Silicon Valley outpost.

Some of the initial reactions expressed concern. “Unclear with respect to job security,” said one source. “My cynical side wonders if this isn’t layoffs in disguise,” said another.

But further examination of the situation suggests that this is, as some might say, no big deal….

The most important (and reassuring) fact: all Skadden lawyers in the San Francisco office were offered the opportunity to join the Palo Alto office. SKADDEN SF SECURE.

According to the Daily Journal (subscription), four counsel and 17 associates must decide whether to make the move. The four SASMF partners currently in SF — Raoul Kennedy, Jose Allen, James Lyons, and Timothy Miller — are all joining the Palo Alto office.

Less fortunate: the staff. As Kenton King, managing partner for Skadden’s two Bay Area offices, told Sara Randazzo of the Daily Journal, there will be some staff layoffs once the move is finalized next June. The extent of these layoffs remains unknown.

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The move does seem logical. From the Daily Journal:

“At this point it makes a lot of sense to combine the two and house everybody under one roof,” King said, adding that Palo Alto currently has three times the number of partners and twice as many associates as San Francisco. “Ultimately there are some cost savings involved, but frankly we would do this even if it cost us some money.”

The move points to a bigger question of how important it is for law firms to have a presence in San Francisco as well as Silicon Valley. “A lot of clients have talked to us over the years about, do we need to be in both places?” said Gary Davis, a consultant with Patterson Davis Consulting in San Francisco. “More and more, the economy in the Bay Area has become more homogenous… You may want an office in each location for recruiting purposes, but it’s not the given that it’s as completely necessary as it might have been in the past.”

A few other firms have made similar moves in recent years. In 2009, Dewey & LeBoeuf tiptoed out of San Francisco, citing a desire at the time to create critical mass in East Palo Alto, and White & Case pulled out of San Francisco in 2006 to focus on its technology practices in Palo Alto.

San Diego-based recruiter Larry Watanabe said the move makes economical sense, especially for a firm with as strong a reputation as Skadden, since maintaining extra offices is expensive and overhead costs can run up to $300,000 per partner.

And all the cool kids — e.g., Facebook, Google, etc. — are in Silicon Valley rather than San Francisco these days anyway. SV > SF.

We’ve reprinted below an email sent out earlier today by Laurel Henschel, Skadden’s chief administrative officer, announcing the office consolidation to support staff. If you have any additional insight into the San Francisco office closing that you’d like to share, please feel free to drop us a line. Thanks.

SKADDEN ARPS — MEMORANDUM — BAY AREA OFFICES

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From: Laurel E Henschel (NYC)
Sent: Tuesday, December 07, 2010 12:04 PM
To: Support Non-Atty USA DL; Support Non Atty – Europe DL; Supt Non-Atty Asia-Pac DL
Cc: Eric J Friedman (NYC)
Subject: Bay Area Offices

We will be consolidating our two Bay Area offices into our Palo Alto location. The two offices have been operating on an integrated basis, but our corporate team has been able to work together more effectively since we consolidated the Bay Area corporate practice into Palo Alto a few years ago. We are confident that moving our Bay Area litigation capabilities under one roof will have the same positive impact on both our lawyers and clients.

We intend to keep a small work space in San Francisco that can be used for trial preparation and meetings. We expect the integration to be completed by the end of June 2011.

Skadden Will Leave San Francisco [Daily Journal (subscription)]
Skadden to Close its San Francisco Office [The Recorder]
Skadden to Exit Bay Area for Silicon Valley, Shift San Francisco Lawyers to Palo Alto Office [ABA Journal]

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