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Wilson Sonsini Goodrich & Rosati Chairman Larry Sonsini turned down the job as interim head of the embattled New York Stock Exchange, the firm announced early Thursday. The exchange board had offered Sonsini the post late Wednesday after it accepted the resignation of Richard Grasso. Grasso quit following controversy over his $139 million pay package. Sonsini’s nomination took Wilson Sonsini partners by surprise, and many hadn’t heard their chairman was offered the job even as the firm’s top management scrambled to discuss it with Sonsini. Sonsini was not available for comment early Thursday. Many securities lawyers in the Bay Area had predicted that Sonsini � who sits on the exchange’s board of directors — would take the job given its prestige. The current board members, however, are facing some of the same critics who had called for Grasso’s resignation. It is unclear what prompted Sonsini to turn down the offer or whether he may reconsider at a later date. The New York Times reported that Sonsini was one of the few who had supported Grasso in recent days. On Wednesday,State Treasurer Phil Angelides, who helps manage California’s large employee retirement funds and advocated for Grasso’s departure, had not sounded 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. But others had hailed Sonsini as a strong choice. He’s 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,” Joseph Grundfest, a Stanford Law School professor and former Securities and Exchange Commission member, said Wednesday. A move to New York for one of the West Coast’s best-known lawyers would have thrown 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. 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 might 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.” It’s the fact that Sonsini is from the West Coast and has acquired a reputation as a securities expert that may have made 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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