Editor’s Note: This post is a short history of how Los Angeles’ spread out legal industry developed. The column comes one week before the Big Law Business Summit in Los Angeles.
By Jim Rishwain and Ricky Lin, Pillsbury Winthrop Shaw Pittman
In relative terms, Los Angeles is a young city. Much of its growth and development has occurred in the past 100 years with the 1930’s being a period of especially rapid growth. Los Angeles is unique from New York, San Francisco, Seattle, and the other major coastal cities in the sense that Los Angeles developed toward the water as opposed to inland from the water. This type of outward development has resulted in Los Angeles becoming a sprawling, decentralized city with multiple unique business communities located throughout the City. While this type of development succeeded in rapidly growing the population of Los Angeles, it has hindered the development of Los Angeles from being a significant market for public companies and financial institutions alike. This dearth of public companies and financial institutions would seem to make Los Angeles an unnatural location for law firms, but the opposite holds true. In fact, the formation of some of the largest, most profitable, and most renowned law firms in the country are intertwined with the history of the Los Angeles legal industry.
The Downtown area has historically served as the hub of the Los Angeles legal industry. With its proximity to both the financial district and the civic center, Downtown was the ideal location for law firms to establish offices. It was not until the emergence of Century City as a preeminent business district in the late 1970’s that Los Angeles experienced the first real shift in its legal industry. As a result, for the past 35 years, Downtown and Century City have remained the primary locations for big law firm practices in Los Angeles. However, with the rapid development of Playa Vista and Silicon Beach combined with the booming Los Angeles tech market, it appears likely that the Los Angeles legal industry will soon experience another shift.
Establishment of Downtown as the Center of the Los Angeles Legal Industry
Downtown is the direct descendent of a Spanish pueblo set up along the Los Angeles River in the late eighteenth century. As Los Angeles developed into a modern city, city planners devised a system of streets, railways, and highways stemming out of Downtown to connect it with the oil, petroleum trading, and agricultural industries established miles away, with Downtown continuing to serve as the civic center of the City.
However, during the nascent stages of city development, the landscape of industries in Los Angeles combined with rapid migration westward in the pursuit of land led to numerous settlements outside of Downtown. By the time formal city planning was initialized and an official zoning code was established in the early part of the nineteenth century, Los Angeles was already a sprawling metropolis starkly distinct from the major cities of the East Coast. As such, the early civic planners made a concerted effort to encourage this type of decentralized development in order to avoid urban density and to beautify local communities by restricting building height in Downtown, working to minimize citywide traffic congestion, promoting the development of single family homes, and connecting communities with an extensive railway system which later became the modern highway system.
Despite the decentralized development, Downtown maintained its role as the primary financial district and civic center of the City and also became the home of the majority of big law firm practices in the area. As Los Angeles continued developing, nearly 40 unique working communities were established across over five hundred square miles. In order to connect these communities, the City expanded its network of highways. However, the population of the City continued to increase at a rapid rate, and, despite the goal of the city planners to create a city with minimal traffic congestion, traffic congestion became the norm. This resulted in residents electing to work near their residential communities – the majority of which were located beyond Downtown. This was also evident in the legal industry as lawyers and law firms began setting up small offices in working communities such as Burbank, Glendale, and Pasadena. However, big law firms migrating to or forming in Los Angeles continued to select Downtown as their office location.
This remained the case until the 1960’s when a large plot of land on the west side of Los Angeles was developed into a business district to support the entertainment industry. The ultimate success of this development forced big law firms, for the first time, to begin considering office locations outside of Downtown.
Emergence of Century City and the Shift of the Legal Industry
In the late 1950’s, the widespread adoption of the television sent numerous movie studios into financial distress due to soaring production costs and a dwindling audience. Among these studios was Twentieth Century Fox, which happened to own a large piece of prime property west of Downtown that it was using as a back lot. Studio executives decided that selling off this property for business and commercial development was the only viable option to save the studio from its financial situation, and thus, the seeds for the development of Century City had been planted.
Twentieth Century Fox sold the back lot property to developers in 1960 with a portion of the property leased back for its own use. A plan consisting of carefully arranged and modernly designed office, retail, and residential structures, described by TIME magazine as a “modern Acropolis”, was devised for the development of Century City. However, the neighboring property owners and community quickly protested the planned development over concerns of urban overcrowding. In order to appease civic planners, the Century City plan included wide boulevards, pedestrian bridges, and landscaped plazas, parks, and streets aimed to create a sense of airiness and openness for the community. Once plans were approved, a period of booming development in Century City was launched and would continue through the mid-1970s.
When the period of booming development was complete, Century City was the home to numerous entertainment companies, including ABC Entertainment, Inc. and Twentieth Century Fox, as well as entertainment agencies, such as Creative Artists Agency and ICM Partners. The availability of new office space and the success of the Century Plaza Hotel in attracting visitors to the area resulted in the development of a prominent business district in Los Angeles located 10 miles outside of Downtown.
The creation of this second prominent business district resulted in the first major shift in the Los Angeles legal industry. As Century City became a major hub for the Los Angeles entertainment industry, many big law firms began to either establish or relocate offices to Century City. The end result of this shift was the existence of two major big law firm markets in Los Angeles – one in Downtown and one in Century City – with the practices located in each market geared toward serving the types of industry clustered in their geographic region. However, by the early 1990’s, a new industry was bubbling nationwide and the development of this industry would result in the creation of a third major business district in Los Angeles.
Silicon Beach and the Future of the Los Angeles Legal Landscape
As much as the adoption of the automobile shaped the development of Los Angeles, the widespread increase in internet access in the 1990’s spurred the creation of the modern tech industry. As more and more people began to have access to the internet, a multitude of companies were created to provide information, services, and products for them via this medium. With the Downtown and Century City real estate markets lacking the types of creative office space that these companies desired, they had to look elsewhere for office space to serve their needs – and these early companies found their space in Santa Monica.
During this first tech boom, the city of Santa Monica worked with companies to convert a large number of traditional office space into creative work space to best serve the needs of a tech business. In addition, Santa Monica made the decision to install its own broadband network offering city businesses competitive pricing when compared to national broadband providers, which attracted even more tech companies into the city. While, much of this office space was vacated when the dot-com bubble was bust in 2001, the foundation for Santa Monica and its surrounding areas to become Silicon Beach had been laid.
As the tech industry recovered from the dot-com bust in the late 2000’s, the next wave of tech companies began to enter or re-enter the Los Angeles market. Initially, many companies set up offices in Santa Monica, due to the availability of built-out creative office space, citywide broadband, and proximity to the beach. However, many of these office spaces stopped meeting the needs of these companies as they continued to grow. Sensing opportunity, Los Angeles, which has long struggled to be a relevant option for companies seeking office space, made great efforts in incentivizing tech companies to move out of Santa Monica and into Los Angeles. More important than these incentives was the availability of land in the Playa Vista area of Los Angeles, which offered the tech companies the ability to develop campus complexes like the ones located in Northern California.
Prior to this development, Playa Vista was a largely undeveloped tract of land located just south of Santa Monica and just north of the Los Angeles International Airport near the Ballona Wetlands. Past development efforts in Playa Vista had failed due to the opposition of many nearby residents over fears of traffic congestion and destruction of the wetlands. So to avoid a case of history repeating itself, Los Angeles worked with developers to plan out a community that would meet the needs to the burgeoning tech industry, while minimizing traffic congestion and protecting portions of the wetlands. Once approved, Playa Vista was rapidly developed and become a major hub of the Los Angeles tech industry with companies such as Google, Microsoft, and Facebook setting up campuses in the area. Additionally, the efforts of the City have seen companies such as Yahoo! and Riot Games relocate from Santa Monica into Los Angeles. As a result, the primary hub for the tech industry has expanded past Santa Monica into Los Angeles and extends as far south as Marina del Rey and as far west as Culver City, in the area known as Silicon Beach.
In addition to branch offices of major tech companies, numerous incubators and start-up companies have also chosen to establish their companies in Silicon Beach due to the comparative cost of the area in comparison to Silicon Valley in Northern California. This new influx of companies has also led to more venture capitalists having a presence in the Los Angeles market. As recently as 3 years ago, critics of the Los Angeles tech industry stated that it would never be a major player in the tech market without the formation of a billion dollar company in the region. Since that time, companies such as Snapchat, the Honest Company, and Dollar Shave Club have all been formed within Silicon Beach and have received billion dollar valuations.
This growth in the Los Angeles tech market has already resulted in numerous law firms setting up offices within Silicon Beach. Based on the historical trend of the legal industry in Los Angeles mirroring the establishment of prominent business districts in the city, in the near future many big law firms will either relocate or set-up offices in Silicon Beach. This will result in the second major large scale shift of the Los Angeles legal industry and leave Los Angeles unique among all markets with three major legal industry centers within a 15 mile radius.