What? No billing of hours? No guarding your clients from fellow colleagues?
What kind of a law firm is this?
A very successful one.
Founded just three years ago, San Diego-based Crosbie Gliner Schiffman Southard & Swanson LLP is an innovative new type of law firm. Focusing on a lean, client-first approach, CGS3 is proving to be a legal powerhouse for commercial real estate clients throughout the country.
“We probably are the biggest real estate department in San Diego now,” said founding partner Sean Southard. “But we try not to let numbers and head-count be our identity. Our identity is really how we do it, not the numbers we do it with.”
CGS3 is a mix of the best of Big Law and boutique law, filling an important niche in the local commercial real estate market.
“I think the Big Law model doesn’t work for a lot of clients,” said Evelyn Heidelberg, one of the firm’s newest partners, who is heading the new land-use and environmental-resources practice group. “There’s market demand for the leaner, smaller, specialized law firms.”
The firm has been involved with some of the region’s highest profile deals, from the redevelopment of Westfield UTC to the development of the Saggio Hills luxury resort hotel, residences and spa in Healdsburg, Calif.
CGS3 also represented The Robert Green Co. in its negotiation of a $138 million construction loan for the Pendry Hotel in downtown San Diego, the Port of San Diego as the landlord for the $130 million development of the hotels at the Lane Field site, and the developer of the new $115 million Lucky Dragon Casino on the Las Vegas Strip.
Clients include Sumeet Parekh, managing partner of HP Investors, the developer of Makers Quarter in East Village.
“It is great to go to a one-stop shop with a group of guys who cover the full gamut with their experience,” Parekh told The San Diego Daily Transcript. “They are a lean and mean machine.”
Founded in 2013 by five former partners of the commercial real estate firm Allen Matkins Leck Gamble Mallory & Natsis, CGS3 has expanded to 17 partners, the majority of whom came from large law firms and in-house general counsel offices. It recently opened a second location in Santa Monica.
The founders brought with them an average of 25 years of experience, but they saw a troubling trend at big firms that was using pressure and business metrics to gauge performance and incentivize behavior, Southard said.
“Lawyers had an overinflated sense of self-worth, and every partner fashioned him or herself as captain of their own ship,” Southard said. “Everybody was jealously guarding their book of business and all their relationships … The behavior that that ultimately incentivizes is to keep things closed, don’t collaborate, control, guard, protect, defend.”
Those aren’t the behaviors that CGS3 encourages or promotes. They’re not good for clients or the firm, Southard said. On the heels of the recession, clients had purchasing power, and they didn’t contract based on names; they wanted the best service.
That’s what CGS3 strives to offer.
The firm differentiates itself from its competitors with its creative fee structure, its responsiveness and its product quality.
Its non-hierarchical environment is fueled by its compensation structure, which is tied to 25 core values, meaning attorneys are more invested in the firm’s success as a whole. Attorneys aren’t paid based on hours or origination credit, but rather on the value proposition to the partnership. That may be scary for people who like the traditional formula, but Southard said every success is a firm success, and every failure, a firm failure.
“It’s very egalitarian, and it’s just very different,” he said.
The firm’s three newest partners are Heidelberg, previously with Procopio, Cory, Hargreaves & Savitch LLP; David Swartz, former general counsel of Arden Realty Inc.; and Dawn Saunders, previously with Mintz Levin.
Swartz joined the firm in March to lead the new Los Angeles office. Having worked as general counsel for one of the nation’s largest publicly traded real estate investment trusts, Swartz was impressed by how different the philosophies at CGS3 are — and how they actually play out. For instance, within weeks of starting, Swartz had one of the founding partners working on a loan for him, and he almost felt guilty about it.
“The client is the firm’s client,” Swartz said. “It’s a really big deal.”
CGS3 is dedicated to helping all of its attorneys succeed, both individually and as a team.
A marketing consultant builds a business plan for each new lawyer, and CGS3 provides resources to reinvigorate individual brands and to determine how they fit into the firm’s theme. At large firms, such investments are made only in the big moneymakers, leaving others to fight for themselves.
“I have been really appreciative of the business development and marketing resources at my disposal,” said Heidelberg, noting that resources weren’t spread equally at her previous firm.
During business development strategy meetings, the CGS3 staff gathers in a conference room to collaborate. Everyone shares his or her relationships and experiences, quickly leading attorneys to determine the right person to talk to for a particular business deal.
“It’s 180 degrees different,” Swartz said.
Such meetings help attorneys become familiar with each other’s specialties, aiding in the firm’s completion of large deals and developments.
“Everyone here is a competent generalist,” Southard said. “We’re all general real estate lawyers first. Kind of like every Marine is a rifleman, every CGS3 lawyer is a real estate lawyer.”
For one project that involved entitling thousands of acres for solar farms, due diligence had to be done in one weekend.
“It was an all-hands-on-deck exercise, but we were able to do it,” Southard said. “At the end of the day, we’re all riflemen. We’re all real estate lawyers who can read a document and make a decision about how best to summarize it.”
Among the challenges that all firms face is succession planning. CGS3 focuses on hiring young, innovative, like-minded, entrepreneurial lawyers whose personalities mesh well with the rest of the firm, Southard said. New hires are as much about the future of the firm as the present. The committee that’s working on CGS3’s new strategic plan is made up of three new lawyers — rather than founders.
“We’ve gotten us this far; you get us to the next place,” Southard said about the trio planning for the future.
Also at CGS3, everything that can be outsourced is, from accounting to human resources to public relations, which means attorneys can focus on being attorneys.
“We really tried to create a team and a platform that watches overhead and makes us competitive in terms of price and work quality,” Southard said.
That’s made the firm more flexible, so new attorneys can get creative ideas OK’d more easily than they would be at large law firms.
There will always be a place for the mega firm, and there will also always be a place for solo practitioners, Southard said. But the Am Law 200 regional firms could be in jeopardy in coming years.
“We’re seeing a lot of breakout firms, but we’re not seeing a lot of innovative firms,” he said. “If we [continue to] do as well as we are, it’ll be a model more will look at, because it’s working.”