Minneapolis, Minnesota. Photo: Shutterstock.

Low costs, a strong talent pool and an abundance of upper middle-market corporations are the factors that are luring a steady stream of law firms to open outposts in Minneapolis.

In 2019 alone, a parade of large out-of-town firms—including Greenberg Traurig, Lewis Brisbois Bisgaard & Smith, Saul Ewing Arnstein & Lehr, and Spencer Fane—have announced they are opening offices in the City of Lakes.

"It's a really underappreciated market when it comes to the economic dynamism of the geography," said Steve Ryan, the president and managing partner of Minneapolis firm Briggs and Morgan. "It's an incredible place for businesses to thrive. There's incredible access to talent."

Last month Ryan's firm announced plans to merge with Cincinnati-based Taft Stettinius & Hollister, creating a 600-lawyer firm and giving Taft, the larger of the pair, a Minneapolis presence for the first time.

Ryan said he expected more mergers to be announced in Minneapolis by the end of the year. But law firm management consultant Thomas Clay, a principal at Altman Weil, said combinations may slow down—precisely because the city has been attracting so much interest.

"It's getting tougher to find tasty morsels," Clay said.

Both Clay and Brian McMahon, the managing director of Major, Lindsey & Africa's Minneapolis office, agreed that finding merger partners in a hot market isn't a challenge that's unique to Minnesota.

But McMahon said he has found that, as more firms enter the Minneapolis market, "local lawyers' and firms' attitudes are evolving, and more firms and lawyers are receptive to attaching to, or at least investigating, a national platform."

He added that he has seen no evidence that national law firms' interest in Minneapolis has waned—he said he knows of at least four that want to be there as soon as possible.

The strength of a legal market is dependent on the regional economy, and there are 17 Fortune 500 companies that call Minnesota home, including UnitedHealth Group, the nation's largest private insurer, which is headquartered in a western suburb of Minneapolis.

Greenberg Traurig already had existing relationships with many of those companies when it opened its Minneapolis office in February, said Michael Fisco, the managing shareholder of that office. He said the firm had been eyeing the market for a while before it found local lawyers with the the right fit—three partners from DLA Piper.

Even though Minneapolis is home to major corporations such as Target, the costs of doing business there are substantially cheaper.

"For a large city with substantial client potential, the overhead is much lower by comparison," said Heather Kliebenstein, the chair of Merchant & Gould's litigation practice group. In terms of price per square foot, the rent on Merchant's office in Minneapolis is cheaper than its New York and Washington, D.C., offices, Kliebenstein said.

That also means lower billing rates. In its 2018 Partner Compensation Survey, Major Lindsey found that, among the partners it surveyed, the lowest average billing rate was found in Minneapolis at $550. The highest average was in New York at $994.

This leads to a disparity in compensation—the average compensation of a Minneapolis partner is $593,000 while a New York partner pulls down $1.4 million, according to the survey.

But quality of life was routinely mentioned as being an important draw for lawyers based in Minneapolis. McMahon said he works with young associates who tell him they're moving to Minneapolis from larger markets on the coasts because "they see it as the perfect combination of a robust legal industry" paired with a good, affordable lifestyle.

Fisco said that's what beckons lawyers from Minneapolis who start their careers on the coasts to return back home: "It's a good market to raise your family and to have a vibrant, sophisticated practice."

Clay noted that his own son is paying a "ridiculous" $1,800 a month for a 400-square-foot apartment in New York City" "Clients, talent, desirability, affordability—Minneapolis, I think, is benefiting from all of that." 

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