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The New York Stock Exchange late Wednesday asked Silicon Valley securities law guru Larry Sonsini to take over the scandal-rocked Big Board as its interim chairman. As of press time Wednesday, Sonsini, longtime chairman of Wilson Sonsini Goodrich & Rosati and a member of the stock exchange’s board of directors, hadn’t accepted the job. But a Wilson Sonsini spokeswoman confirmed that he had been offered the position and was considering his options. The offer came as the stock exchange’s chairman, Richard Grasso, stepped down Wednesday amid a firestorm over his $139 million pay package. Some securities lawyers questioned whether a sitting board member like Sonsini would be accepted by investors as the right person to help the exchange out of the Grasso crisis. And State Treasurer Phil Angelides, who helps manage California’s large employee retirement funds and advocated for Grasso’s departure, wasn’t exactly enthusiastic about Sonsini taking over the job. Angelides said he would give Sonsini “the benefit of the doubt” and would reserve judgment until Sonsini proved himself able to implement reform. “I have every reason to expect that if Mr. Sonsini takes this on, he has the goal of restoring � respect to the stock market,” Angelides said. But others immediately hailed Sonsini as a strong choice. Though his legal work has given him close ties to the securities industry, Palo Alto-based Sonsini is still something of a Wall Street outsider. He’s also viewed by securities industry insiders as a strong manager familiar with the politics and pitfalls of running a large organization. “He’s an absolutely inspired choice,” said Joseph Grundfest, a Stanford Law School professor and former Securities and Exchange Commission member. A move to New York — even on an interim basis — would be a high-profile plum for one of the West Coast’s best-known lawyers. But it also throws into doubt the future of Sonsini’s firm. Sonsini has long been the firm’s biggest breadwinner, with a book of business north of the $50 million mark. His client list includes Silicon Valley stalwarts like Hewlett Packard Co., and his Rolodex is packed with venture capitalists and technology company chiefs. As the technology industry has grown, he has helped build Wilson from a boutique to a 650-lawyer Silicon Valley institution with 2002 profits per partner of $800,000 and revenues in the $360 million range. Though he has handed much of the firm’s day-to-day operations over to a team of his partners, Sonsini is still seen as the firm’s central decision-maker and best-known attorney. Over the years, Valley legal insiders have speculated that if Sonsini were to leave the firm abruptly a leadership fight among partners might ensue. That view was echoed by Wilson Sonsini partners contacted Wednesday. “He’s deeply involved in everything we do at the firm,” one senior Wilson partner said. “If he left the firm suddenly, obviously we would have to give some serious thought to firm governance issues.” While tech has lost much of its Wall Street luster, Wilson Sonsini has tried to preserve profits by moving aggressively into litigation and more sophisticated capital markets transactions. It also has depended even more heavily on large clients with close ties to Sonsini. In 2002, he personally represented Hewlett-Packard in its successful proxy fight over a merger with Compaq Computer Corp., at one meeting even whispering advice over a headset to HP Chairwoman Carly Fiorina as she tried to field questions about the merger from shareholders. Though taking on a job as head of the world’s most famous stock exchange is likely a full-time task, legal ethicists said Sonsini conceivably could still practice. However, it would be tricky. “There’s no prohibition for a lawyer holding a non-lawyer position with a company and still practicing law, if you can avoid the conflicts,” said Mark Tuft, a partner at Cooper, White & Cooper. However, “it’s highly unlikely [Sonsini] would practice law. The prospect for conflicts could become a real problem.” For West Coast lawyers, the possibility of one of the region’s legal giants leaving the scene left many dumbfounded. Many partners at Wilson said they didn’t even know about the offer late Wednesday, and expressed shock at the possibility that Sonsini would exit — even temporarily. Brian McCarthy, a Los Angeles partner at Skadden, Arps, Slate, Meagher & Flom, said a move by Sonsini “could change the landscape on the West Coast. He’s such a towering legal figure out here, it would be a loss for the legal community and a gain for the exchange.” It’s the fact that Sonsini is from the West Coast and has acquired a reputation as a securities expert that may make him so attractive to his fellow stock exchange board members, Grundfest said. “He’s not an executive at a financial services firm,” Grundfest said. “He’s an outsider from that perspective, and he has as much distance as you can get while still being as knowledgeable a person as you can be.”

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