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Does Big Law’s Boston Expansion Have Anything to Do with GE?

Jan. 20, 2016, 2:02 PM

In our latest Big Law Business podcast episode , we posed the question of whether the shift of General Electric’s headquarters, from Connecticut to Boston, could prompt law firms to beef up their presence in the region.

After all, Sidley Austin, one legal advisor to GE, just announced plans to triple its size in Boston , and Wilson Sonsini similarly announced an opening there. Both releases came within days of GE’s media rollout.

After tracking down several leaders of large law firms and the recently-retired general counsel of GE, Brackett Denniston, our reporting turned up that the big law firm office openings are not directly connected.

“The (GE) move is unrelated to our expansion in Boston,” Carter Phillips, chair of Sidley Austin, told us in an email. “It is hard to tell how the move will affect law firms because it is going to take some time for the move to take place.”

Another managing partner of a large law firm who did not want to be identified because of his firm’s relationship with GE didn’t expect Big Law to be affected, but speculated that local law firms in Connecticut and Boston could be.

“When employment law issues that come up, they will be in Massachusetts, not Connecticut,” said the managing partner.

Denniston, meanwhile, said that the geographic region of a law firm has little to do with GE’s decision to hire: “The company’s law firms haven’t changed and they don’t depend on where the company is — they pick the best law firm for the best purpose; it isn’t a kind of local game.”

Instead, Denniston said he imagined that what brought Big Law to Boston is that the city has become “techier.”

According to a recent Bloomberg data report on the most innovative states, Massachussetts ranked No. 1, with the Boston area’s Route 128 eking out a victory over Silicon Valley.

Chief economist Nariman Behravesh at IHS, Inc. told Bloomberg News that MIT graduates have produced around 400 startups over the past few decades, contributing to an emergence of technology companies and innovation.

Denniston explained how Boston has gained prominence in the business community:

A lot of firms looked down their nose at Boston for years. Some didn’t, and they did pretty well. I think some are saying this is the market you have to be in now. I’m hearing about a bunch of others. (Denniston declined to elaborate on other companies moving to Boston)

Our process started in June. They looked at 50 cities and we created an internal committee, headed by Ann Klee , one of my direct reports. They winnowed them to a few and then decided over the last month, among a few: New York, Providence, Boston and Charlotte, I think. And Boston ended up being the winner because it’s techy.

Denniston added some personal sentiments about GE’s decision, which he said “made me happy":

That’s always where my center of gravity has been. It’s where I practiced law. That’s where I was in government. That’s where I still have a house. And that is where my children were raised. It’s home.

For now, other law firms like Sidley and Wilson Sonsini appear to want to make Boston their home, too. Even though those moves weren’t necessarily correlated with GE, that doesn’t mean other law firms won’t take note: Law firm consultant Peter Zeughauser said GE’s decision could encourage others to expand operations in Boston.

He said: “It is a major market that is generally under-represented by Big Law” and noted that being located in the same city as a major client offers benefits, such as ease of access in meeting clients and taking them to lunch.

Andrew Glincher, CEO of the large Boston-based Nixon Peabody, said that he’s not concerned by the movement: “I didn’t think they were that big (in Boston)... You are always going to have competition.”

So there you have it. It seems we gave you a red herring in our podcast — assuming the above comments are true. Stay tuned to our next one bysubscribing on iTunes and be sure to let us know if you have any comments on our coverage.

Bloomberg BNA correspondent Martha Kessler contributed reporting to this article.

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