Heller Ehrman's Venture Law Group made it official Friday, announcing that about 35 of its lawyers will join Cooley Godward Kronish.
It's the first major group of Heller attorneys to depart since the San Francisco firm voted to dissolve a week ago.
Cooley says the move will allow it to challenge Wilson Sonsini Goodrich & Rosati's dominant position in the Silicon Valley emerging-companies market.
It also marks the end of the Venture Law Group, an independent law firm that clung to its culture, name and acorn logo even after being acquired by Heller in 2003. At Cooley, said firm CEO Joe Conroy, VLG won't continue as a distinct brand.
"Our firm culture would not be consistent with a firm within a firm," he said.
Mark Medearis, who co-founded VLG in 1993, said his team was ready to let go of that identity. "Obviously we have a lot of affection for all those things," he said, "but we've learned a lot about the practice of law, and we're really excited to be joining Cooley."
The VLG attorneys drew a lot of interest and were still in talks with other law firms like Morrison & Foerster as late as Tuesday. But Cooley had emerged as the group's leading choice.
"I think it's a great fit," said consultant Peter Zeughauser, whose Zeughauser Group was not involved with the deal. "The VLG group has got some great emerging-company lawyers, and Cooley has one of the top practices."
Fifteen emerging-company partners and nearly 20 associates will be joining the firm in Silicon Valley, Seattle and Washington, D.C. Along with Medearis, Menlo Park, Calif., VLG lawyers Mark Weeks, who headed the business department at Heller; Jon Gavenman, who headed Heller's Menlo Park office; Elias Blawie, a clean tech practice leader; Renee Deming, a benefits partner; and tax partner Mark Windfeld-Hansen are joining Cooley. Younger partners John Sellers, Keith Miller, Amy Paye and Mavis Yee also are coming over.
Partners Sonya Erickson, John Robertson, Alison Freeman-Gleason and Kevin Kelly will be in Cooley's brand-new Seattle office. D.C. partner Natasha Leskovsek also will be joining.
The group, the core of the practice, represents not quite half of VLG's West Coast presence. Heller's Web site lists about 30 partners, 40 associates and 10 special counsel from Seattle to San Diego. Heller lists roughly 120 attorneys in the Venture Law Group; about 40 of them are partners.
Often ranked second to Wilson Sonsini's formidable emerging-company practice in Silicon Valley, Cooley now moves into a "neck-and-neck" race with Wilson for the biggest market share, Conroy claimed.
"These are extraordinary lawyers we've known for a long time," Conroy said. "They have practices that fit very well with ours."
Zeughauser agreed that the move will make Cooley a stronger competitor, but added that Wilson still is solidly on top of the market in Silicon Valley.
Wilson Sonsini leaders did not return calls seeking comment Friday, but people familiar with the VLG negotiations said that while Wilson talked with some lawyers, it was not interested in bringing on a big group.
The acquisition by Cooley does come at a price. Sources familiar with the negotiations said that top VLG partners were seeking more than $1.3 million each. But Zeughauser said it's a bet that Cooley, with a strong year in 2007 and so far this year, can afford.
Cooley's Conroy contended that the investment will pay "almost immediate dividends," He said the group would contribute to earnings in its first year.
With the capital markets nonexistent, few of VLG's many private-company clients have much hope these days for becoming big-legal-fee-paying public companies. To Conroy, that's not a problem.
"Over the next two quarters, there's probably less risk with a private-company practice, because venture financing work has not seen the slowdown that the public-company work has," Conroy said.
SEPARATE WAYS
Among the attorneys not making the move to Cooley are some significant Silicon Valley partners, chief among them VLG leader and well-known M&A lawyer Steven Tonsfeldt. Tonsfeldt did not return a call seeking comment Friday, but Medearis said he was conflicted from joining Cooley because he is representing Foundry Networks in an M&A deal with Brocade Communications, a Cooley client.
The VLG lawyers in New York and London are looking into their options, Medearis said.
The rest of Heller's lawyers are still figuring out where they'll land. Failed merger partners Winston & Strawn and Baker & McKenzie have had offers on the table for large chunks of the firm.
Looking back at his time at Heller Ehrman, Medearis said he didn't have regrets.
"Heller Ehrman was a very good experience; the ending has not been very fun," he said. "We couldn't have foreseen this five years ago when we joined or even a couple of months ago."
Medearis said that there were "many factors" that led to Heller's downfall, but emphasized that all the partners leaving the firm put "stress on the system."
In looking for a new firm, the VLG lawyers wanted a financially stable firm, which they found in Cooley, he said.
"We wanted to go to a very well-run, economically, not just stable, but successful firm," Medearis said.
