Law firm exports Houston’s cost advantages to Silicon Valley
Using private jets, Texas attorneys avoid the expenses of a Northern California base, where clients work.
In the early light of a Tuesday morning at Sugar Land [Texas] Regional Airport, a group of lawyers in sports coats and button-down shirts with open collars climbed aboard the idling Gulfstream G200 jet, handed their bags to the pilots, and settled into the cabin with polished eye-of-maple paneling, plush leather seats, and a well-stocked bar. A signal came from the top partner. Wheels up.
But this was no junket to a private golf course or to a luxury resort, and the gleaming jet was no trophy from a blockbuster verdict that yielded millions of dollars in fees. Rather, the jet is part of a novel strategy by the intellectual property firm Patterson and Sheridan to expand in Silicon Valley by exporting the cost advantages of Houston to one of the most expensive places in the world to do business.
Instead of plunking down money on astronomically priced real estate and staffing up an office with some of the highest-price talent, the Houston firm bought a nine-seat corporate jet that each month flies a planeload of lawyers from Sugar Land to California, where they meet clients and try to find new ones. Even with the $3 million cost of the jet and the $2,500 an hour it costs to operate it, Patterson and Sheridan says the firm is still able to offer companies and inventors lower costs because most of the patent work is done in Houston, where commercial real estate is 43 percent cheaper, salaries 52 percent lower, and competition for technical talent far less fierce.
The wager has paid off. The firm has gained several major clients, including Intuit, the financial software maker; Western Digital, a computer data storage company; and Cavendish Kinetics, a maker of radio frequency devices. “In some cases, clients pay a little less,” said Bruce Patterson, the firm’s senior partner. “But we make more doing it.”
Fox Factory, a company outside of Santa Cruz, is one of the stops on Patterson and Sheridan’s California circuit. Fox makes shock absorbers for motor bikes, snowmobiles, and other sports equipment and showcases its inventions in a first-floor museum. General counsel David Haugen said it doesn’t matter whether lawyers live in Houston or Silicon Valley as long as they are available when he needs them.
“You can have a firm next door that is inattentive,” he said, “and a firm that is 1,500 miles away that is very attentive.”
It’s not unusual for lawyers to own jets, which have become the ultimate status symbol for millionaire personal injury lawyers. But Patterson and Sheridan’s Gulfstream, known as “the bus” around the firm, is a workhorse, logging 150,000 miles a year, including occasional trips to visit clients in Seattle; St. Louis; Greensboro, North Carolina; and Rochester, Minnesota.
William Cobb, managing partner of Cobb Consulting in Houston, which advises law firms on compensation and strategy, said Patterson and Sheridan has come up with an unusual, if not unique, expansion model. The only similar example he could think of was that of the San Francisco firm Brobeck, Phleger & Harrison, which avoided some of the skyrocketing costs of Silicon Valley during the dot-com boom of 20 years ago by maintaining a small office in San Jose, which it operated Tuesday through Thursday by rotating lawyers from its headquarters about 50 miles away.
“I can see how it could work,” said Cobb of Patterson and Sheridan’s strategy. “If you are trying to establish an office and trying to hire, that would push me toward other alternatives.”
One of Patterson and Sheridan’s competitors is Fish and Richardson, a patent firm with 360 lawyers. Fish and Richardson operates an office in Redwood City, about seven miles from Palo Alto, with about 36 lawyers. Rick Anderson, the chief operating officer who works out of the firm’s Minneapolis office, said the firm has done what it has needed to do to practice in Silicon Valley, including paying exorbitant rents and high salaries to compete for talent, not only with other law firms, but also with high-flying startups and with large tech firms.
But flying in a plane load of lawyers each month? Anderson was surprised to hear about Patterson and Sheridan.
The “bus” pulls out of Sugar Land Airport on the second Tuesday of each month. After a few short safety reminders from the pilot, Jason Branson, and the copilot, Mark Allen, the lawyers get immediately to work—laptops open, papers spread across their laps.
It may seem the firm could spend less by buying round-trip tickets on commercial airlines. But other factors make private air travel more cost effective, said Todd Patterson, who founded the firm in 1996 and is now managing partner of the Houston office. He is not related to Bruce Patterson.
It costs roughly $1,900 per passenger, Todd Patterson estimated, but each hour on the three- to four-hour flight is billable because the lawyers work the entire time. On commercial flights, their work is restricted to protect confidential information because one look from an unknown competitor sitting next to a lawyer working on a patent could undermine the value of an invention.
The private flights also avoid about 36 hours in time spent arriving early for commercial flights, checking bags, and going through security. Apply a $250 per hour average billing rate to the flight and wait times of commercial travel, and it pretty much covers the cost of the trip, Todd Patterson said.
“We fly it full,” he said. “It’s not a luxury item.”
Patterson and Sheridan first hit upon the idea of using a private jet to make regular monthly trips to Silicon Valley in 2010. The firm had tried teleconferencing, but clients found it unsatisfactory because inventors want to sit down and show their inventions. Lawyers also found they could find more business by being around after work for dinners and drinks.
The firm has made the jet a selling point to recruit young lawyers, promoting the chance to work with top tech companies but live in a city far more affordable than Palo Alto, where the average monthly rent for a two-bedroom apartment is $3,800 and median home price is $2.6 million.
It’s a good mix for Puja Detjen, a six-year associate at Patterson and Sheridan who enjoys her periodic trips but prefers to live in Houston, where her husband is a chemical engineer for an oil company. While enjoying the lower cost of living, she said, “we’re able to live in a place with good career prospects.”
On the way to San Jose, the jet stopped at the airport in Carlsbad, California, from where lawyers headed to nearby San Diego to visit clients Taylor Guitars, which makes acoustic and electric guitars, and Qualcomm, the semiconductor company. The jet pulled up to the terminal, shut the engine for refueling and lowered the stairs.
A few feet away, two rental cars waited, trunks open and keys in the ignition. Four lawyers grabbed their bags, threw them in, and drove off.
The jet soon after taxied for takeoff. “Hold your stuff,” Todd Patterson said loudly, over the din of the twin jet engines. “We’re going to take off hard.” With that warning, the Gulfstream pulled up sharply, lest it veer onto the golf course just beyond the asphalt runway.
Next stop: San Jose. Over the next two days, the lawyers fanned out to meet with clients, including Fox Factory and Applied Materials. Around noon on Thursday, Bruce Patterson walked through the firm’s small Palo Alto office, jerking his thumb in the air. “It’s time to go,” he said.
In less than an hour, they were at the San Jose International Airport and on board the jet. Laptops opened, and papers came out as lawyers focused intensely on their work. But when the plane entered Texas airspace, the mood lightened. Some of the men unbuttoned their button-down shirts to reveal T-shirts underneath. Whispered conversations grew louder.
And the bar was open.
© 2017 by Houston Chronicle Publishing Co. Reprinted by permission.