Large law firms are flocking to Austin, Texas, lured by tech companies such as Tesla Inc., Apple Inc., and Oracle Inc., and the realization that lawyers want to live there.
In 2021 alone, large firms Kirkland & Ellis, Quinn Emanuel, Urquhart & Sullivan, and O’Melveny & Myers announced Austin office openings, as did Silicon Valley tech firm Gunderson Dettmer. Eight others have opened offices in the city since 2018.
“It’s a fantastic place for not only recruiting talented lawyers—and people can have a great quality of life—but it’s also a place where a lot of our clients are moving,” said Kim Hicks, a partner in Kirkland’s Austin office.
The Austin moves show Big Law’s speed in successfully marrying lawyers’ need for life changes with the latest Texas business trend. Tech companies have been leaving California’s Silicon Valley, seeking cheaper costs, lower taxes and shorter commutes.
Just as lawyers followed the energy industry to Houston, and the first tranche of technology companies to Dallas, they’re now chasing the latest tech wave to Austin.
“Law firms look at the numbers,” said John Butler, faculty director of Jon Brumley Texas Venture Labs at the University of Texas McCombs School of Business. “For every company that moves, you’ll need great law firms.”
Tesla Model Y
Tesla plans to start making its Model Y crossover in a plant in Austin by year end. Apple workers are expected to start moving into a new city campus next year. Oracle in 2020 moved its headquarters to Austin from Redwood City, Calif. Amazon.com Inc. last year said it was hiring of 800 engineers in the city.
Along with Kirkland, Quinn, and O’Melveny, other firms that have opened offices in Austin since 2018 include Perkins Coie, Orrick, Spencer Fane, Foley & Lardner, Reed Smith, Shearman & Sterling, Duane Morris and Clark Hill.
Firms are primarily looking to use Austin’s lifestyle as a recruiting tool for legal talent, according to a large law firm leader with an Austin outpost and two Texas legal recruiters who spoke on the condition of anonymity. Unless a big client wants a firm to have a presence in Austin, there otherwise isn’t enough business to justify the move, they said.
The latest influx of law firms comes as many corporate associates enjoy a level of bargaining power rarely before seen, thanks to booming demand and a tight recruiting market. Big Law firms have responded by doling out cash through bonuses and salary increases, while also allowing some lawyers to dictate where they want to work.
Austin frequently shows up on magazines’ “best places to live” lists, with its cultural attractions, lively downtown, and growing business base. For lawyers fed up with big-city traffic, or who want to exploit their firms’ willingness to let them work from anywhere, Austin is an attractive destination.
‘Perfect Playground’
After living and working in New York for almost 20 years, Kirkland intellectual property litigation partner Jeannie Heffernan said she was “thrilled” to move in July to Austin, “a smaller city with great diversity in backgrounds and viewpoints, and a varied food, music and art scene.”
“And it’s surrounded by water, hills, forests and hiking trails,” Heffernan added, “making it the perfect playground for my family.”
Even before her move, Heffernan’s professional network was primarily in Texas, she said. She practiced in federal district courts there and had many clients located in the state.
But the number of clients willing to pay Big Law rates is smaller than in Texas’ largest cities, said Becky Diffen, a partner at Norton Rose Fulbright, which opened its Austin office in 1978.
“If you can provide people an opportunity to live in a place like Austin and do the work with the clients that you have built up, it’s a great win-win,” Diffen said. “If firms think that they’re going to be able to come in and do the same thing they did in Dallas and Houston, they’re sorely mistaken.”
‘Huge Demand’
Quinn Emanuel, which opened an office in Austin in January, has already worked several cases in IP and patents, as well as litigation for energy clients, said John Bash, a firm partner based in the city.
“In terms of the patent docket, and in terms of all the different established and emerging companies located in Austin—or locating campuses in Austin—there’s going to be a huge demand for the absolute top tier elite legal services,” Bash said.
He also acknowledged that, “Frankly, a lot of folks want to live in Austin.”
Kirkland has always had clients in Austin, though the firm served them from Dallas and Houston before opening an office in the city in January, Hicks said.
“Why not take advantage of being able to hire excellent attorneys in the Austin legal market and grow our presence here,” she said. “We have a lot of connections where people are saying, ‘Hey, I’m leaving California, I’m leaving New York.’ A lot of them are landing, if they land in Texas, in the Austin area.”
A core Kirkland practice is private equity, and as more public companies land in Austin, that work will expand, Hicks said. The firm advised Austin-based Social Solutions, a software company serving non-profits, in an agreement announced Aug. 4 to be acquired by private equity firm Apax Partners.
Venture Capital
As home to the University of Texas at Austin, the city offers more legal work related to emerging companies and venture capital than Dallas, said Lisa Smith, who heads the Washington office of legal consulting firm Fairfax Associates.
“As those companies grow, it’s IPOs,” she said.
Two Austin-based companies, F45 Training Holdings Inc., which provides fitness classes, and legal technology company CS Disco Inc. both completed initial public offerings last month.
Another draw for Austin is geography, Smith said. Texas has multiple business centers, and to be effective, many firms decide they need multiple offices, such as one in Dallas and another in Austin.
“Whether there’s enough high-end work for all the firms that would like to be there is a bigger question,” Smith said. “I’m sure there’s going to be some over-saturation at some point, and so not everybody’s going to survive.”
To contact the reporter on this story: Nushin Huq in Houston at correspondents@bloomberglaw.com
To contact the editor on this story: Chris Opfer at copfer@bloomberglaw.com; John Hughes in Washington at jhughes@bloombergindustry.com
