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Conventional wisdom would say this is the worst time for Reed Smith Crosby Heafey to roll out a venture capital and technology group. Venture capital funding has dwindled, the economy is wheezing, and the dust from technology firm Brobeck, Phleger & Harrison’s spectacular collapse still hangs in the air. But to Gregory Beattie, an Oakland partner who heads Reed Smith’s recently formed 20-attorney group, it’s all a matter of perspective. “There is a likelihood that this practice will grow,” said Beattie, a veteran venture capital specialist. “A little tumult in the marketplace is good for a firm like Reed.” Reed Smith’s Jan. 1 acquisition of Crosby, Heafey, Roach & May gave the Pittsburgh-based firm a West Coast presence. The acquisition of Crosby, Heafey — which acquired Oakland boutique Bay Venture Counsel in 2001 — also doubled the number of Reed lawyers with technology expertise. Once the new talent was on board, Reed strengthened and broadened the mission of its existing tech group. Layoffs and Brobeck’s demise have filled the market with talented corporate attorneys, Beattie said. Reed is negotiating with lateral hires to beef up its tech group. Recently, it snagged of counsel Jay Ward, a former venture capitalist and consultant. Ward also helped open and manage Yazam, a VC that was backed by Texas Pacific Group and the Carlyle Group. He has also headed business development at a string of high-tech firms. Recruiting during the downturn is a good idea, said consultant Steve Barrett. Ambitious firms with a national reach now have a golden opportunity to woo attorneys from firms such as Wilson Sonsini Goodrich & Rosati and Cooley Godward. “It’s the best time to recruit in the high-tech sector, because you will get people to call you back who would have never returned your call,” said Barrett, of Law Firm Strategy Consulting in Rancho Palos Verdes. Reed isn’t the only firm expanding during the economic lull. Morgan, Lewis & Brockius, another firm based in Pennsylvania, snared 60 Brobeck partners — and a total of more than 100 attorneys — after the troubled firm announced that it would disband. The move will give Morgan, Lewis footholds in San Francisco, Palo Alto and Irvine. Chicago-based Winston & Strawn made a strategic merger with Murphy Sheneman Julian & Rogers that strengthened its bankruptcy and transaction practice, beefed up its Los Angeles presence and gave it a San Francisco office. Other Windy City firms such as Kirkland & Ellis and Altheimer & Gray would also be good candidates for such a strategy, Barrett said. Regardless of whether Reed hires reinforcements, it may be hard-pressed to mine Bay Area tech work. Venture capitalists shelled out $21.2 billion in 2002, about half of the $41.3 billion that they gave in 2001, according to data compiled by the National Venture Capital Association, PricewaterhouseCoopers and Venture Economics. Many of the Reed attorneys in the tech practice group hail from Bay Venture Counsel, a firm that benefited from the overflow of venture work in boom times, Barrett said. That kind of business was the first to dry up in the downturn. “It’s not like Bay Venture was VLG [Venture Law Group] or Gunderson [Dettmer Stough Villeneuve Franklin & Hachigian],” said Barrett. Plus, firms that once cherry-picked the best clients have drastically discounted their services and now take work they would have “turned their noses up” at a few years ago, Barrett said. Law firms that don’t have big reputations for tech work will have to compete with premier firms that are doing the same thing for bargain rates, he said. Reed is very aware of those odds, said Peter Blasier, a Pittsburgh-based Reed Smith partner. “Of course our work is cut out for us,” said Blasier, who headed the firm’s old technology group. “We are competing with Wilson Sonsini and people who are well recognized, and deservedly so.” One of those firms was Brobeck. When Blasier heard that the firm would be shuttered he thought “it was a joke.” Reed is better positioned to weather the downturn than firms that are dependent on tech, Reed attorneys say. Their lawyers can shift to other tasks, such as doing bank merger and acquisition work until the tech market returns. “The venture capital market still exists,” Blasier said. “It’s just a depressed market.”

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