Confusing new employment laws and the possibility of lucrative class action settlements may be fueling growth for employment law practices in California, several practitioners told Bloomberg Law.
“The legislature out here is prone to passing laws that are hyper-technical and hard to comply with,” according to John Polson, a member of the management committee at labor and employment law firm Fisher Phillips. This tends to create “more employment litigation for us to defend” and more need for advising clients, he told Bloomberg Law April 2.
Many jurisdictions have their own employment-related laws, distinct from state-level requirements. By January 2019, for example, California will have at least 24 different jurisdictions—municipalities or counties—with their own minimum wage requirements for private employers, according to the State and Local Law Chart Builders database on Bloomberg Law’s Labor & Employment Practice Center. New Mexico has the second most sub-state jurisdictions with different wage floor requirements, at five, according to Bloomberg Law data.
The state’s employment law encompasses “more laws, more money, and more lawyers,” Joe Beachboard, a managing director at Ogletree Deakins, told Bloomberg Law April 2. “People really want a California lawyer to handle a California matter” because “the laws are so different and the risks are so great,” he said.
California Dreamin’ for Plaintiffs
Multi-million dollar settlements and high damage awards in the state also can attract more lawyers and litigation.
“Damages in California under our state statutes tend to be higher than anywhere else in the country,” Beachboard said. “The reward factor leads to more lawyers doing this kind of work on the plaintiffs’ side,” which in turn “drives more litigation.”
In March, Lyft and its drivers told a federal judge the $27 million settlement payout in a wage case is proceeding on schedule. That case was filed in 2013 in the U.S. District Court for the Northern District of California to a $27 million settlement. In 2016, a judge in the same federal court rejected a $100 million settlement between Uber and its drivers because the amount was too small.
Legal consultants confirm the upturn in business. “We definitely can confirm that employment law is a huge market” in California, Jamy Sullivan, executive director of legal staffing and consulting firm Robert Half Legal, told Bloomberg Law April 2. “We haven’t seen a ton of new offices, but adding attorneys to their team, we’ve definitely seen that growth,” especially for small and midsize firms, Sullivan said.
“Employment practice in general is growing faster in California than in most places,” Polson of Fisher Phillips said. “It’s the hot spot in our firm” right now.
“We definitely need to grow to keep up with the workflow that we have,” so “we are expanding” in all five California offices, Polson said. The firm doubled its office size in Los Angeles and increased the physical space in the Irvine, Calif., office by 50 percent to accommodate an additional 18 attorney offices, he said.
By the end of April, Fisher Phillips will have added about 10 lawyers in California so far in 2018, Polson said. The firm has about 95 lawyers in the nation’s most populous state and expects to grow to more than 100 by the end of the year, he said.
Class Actions Fueling Business
“The class action practice in California is really growing for us,” Polson said. “That’s being fueled by court decisions that essentially change the rules after the fact on employers.”
New wage-and-hour laws focused on employees who are paid by commission or piece rate also are prompting a lot of queries from clients, Polson said.
For example, California considers commissions to be wages for purposes of the state’s wage-payment rules and must be paid at least semi-monthly, according to Bloomberg Law’s Labor and Employment Practice Center.
Class action litigation also is helping to spur growth for labor and employment firm Seyfarth Shaw. “We’re seeing a never-ending growth pattern” in California, partner Gerald Maatman told Bloomberg Law. Maatman has led the defense teams for many of Seyfarth’s largest California cases.
“Our class action docket continues to expand,” Maatman said. Recent statistics on class actions filed in California aren’t available because the state hasn’t reported the number since 2009, he said, but he’s noticed “there are more and more every year” as he reviews dockets for Seyfarth’s annual Workplace Class Action Report.
Other sources of business for employment lawyers are California’s new salary history ban, which prohibits employers from asking job applicants about their prior salaries, and employers’ fear of sexual harassment claims, Maatman said.
War for Talent
As a result, “the war for talent is as acute on the ground in California for labor and employment lawyers as I’ve seen it in the last 20 years,” Maatman said.
One sign of the increased importance of California to Seyfarth’s overall business is its recent selection of a San Francisco partner as the national chair of its labor and employment department. Previously, partners from the East Coast or the firm’s Chicago headquarters led that department, Maatman said.
Workplace law firm Constangy, Brooks, Smith & Prophete also is growing quickly in California, Ken Sulzer told Bloomberg Law. Sulzer heads the firm’s California practice.
“The firm clients really fueled the growth,” he said. “They wanted to use Constangy in California if we had a substantial practice here” because of the intricacy of the state’s employment laws.
Constangy opened its first California office with three lawyers just over two years ago. It now has 30 lawyers in three offices, Sulzer said. Its Los Angeles office has grown to 22 lawyers since February 2016, its San Francisco office has grown to six lawyers since it opened at the start of 2017, and its Orange County office, with two lawyers, opened in January 2018.
“We will continue to grow,” Sulzer said. Constangy is “looking for more lawyers and will add more in each of our offices in the next two to three months.”
Seeing Rapid Growth
Beachboard, of labor and employment law firm Ogletree, said his firm has grown rapidly in California. It opened its first California office in Los Angeles in 2003 and now has more than 130 attorneys in six offices throughout the state.
“California now constitutes about 16 percent of our firm revenues,” Beachboard said.
Ogletree is “happy with where we are” and plans to “grow within those offices” rather than open new offices in California, Beachboard said.
Other firms also are strengthening their employment law presence in California.
McDermott Will & Emery’s new employment practice group will have a strong West Coast presence, the firm announced April 3, with several class action litigators joining its offices in San Francisco, San Diego, and Los Angeles.
Baker McKenzie recently opened an office in Los Angeles with a labor and employment lawyer as a founding partner. The firm now has three offices in California, with 40 lawyers that practice labor and employment or executive compensation law, Barbara Klementz, Baker McKenzie’s California managing partner, told Bloomberg Law April 3.
Lawyers predict the demand for employment lawyers in California will continue. “It’s incredibly difficult to comply with all the California labor and employment laws and commit the resources to do so and still run a profitable enterprise,” Sulzer said. The more difficult the task, the more clients need their lawyers.