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In 1996, Yahoo! Inc. used Silicon Valley-based Venture Law Group to handle its initial public offering. But this year, when Yahoo bought France’s bargain-hunting Web site Kelkoo for $575 million, it tapped a New York shop to work the deal. Sunnyvale, Calif.-based Yahoo also hired Skadden, Arps, Slate, Meagher & Flom to manage its $1.8 billion acquisition of Overture Services Inc. in 2003. After years of nibbling crumbs left by the Wilson Sonsini Goodrich & Rosatis of Silicon Valley, New York firms are finally taking a big bite. “The little Yahoos and the little [Hewlett-Packards] are now grown up,” said San Francisco legal recruiter Avis Caravello. “They have very sophisticated needs that New York firms argue are best served by firms with global M&A practices-namely, themselves.” Kevin Baker, general counsel of Fremont Partners, a San Francisco-based private equity fund, agreed. “Any time a company goes from startup to middle market, it upgrades its counsel for more sophisticated counsel,” said Baker, who worked at O’Melveny & Myers for nine years. Shifts in market Shifts in the marketplace have created a toehold for New York firms. Many of New York’s elite law firms opened outposts in Silicon Valley during the dot-com bubble of the late 1990s. Back then, it was fashionable for local companies to take their IPOs and technology deals to homegrown California firms. New York firms kept busy by serving their East Coast clients’ local needs and picking up new clients where they could. As Silicon Valley emerges from the dot-com bust, new market forces are at play. The Sarbanes-Oxley Act and other accounting rule changes make deals more complex and clients more cautious. Conservative New York firms, with their expertise in complicated financial transactions and experience in down markets, have new appeal. “There’s a greater appreciation for people who’ve been around the block, who know how to do more complicated things and have been through down cycles,” said Rod Howard, a Silicon Valley-based partner at New York’s Weil, Gotshal & Manges. “Corporate scandals have made companies and boards more cautious,” Howard added. “You won’t get criticized for hiring a [top New York firm].” While New York firms are making inroads into Silicon Valley, native firms are still the teams to beat. Yahoo General Counsel Michael Callahan said his company continues to do plenty of corporate and patent work with the firm that took it public, VLG, now a unit of Heller Ehrman White & McAuliffe.

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