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NEW YORK � Back in 2000, even a small Silicon Valley player like Gunderson Dettmer Stough Villeneuve Franklin & Hachigian had enough dot-com cachet to set the law firm world ablaze. This was the firm that started the associate salary “war,” by boosting first-year associate pay to $125,000 (plus a $20,000 guaranteed bonus) and set thousand-lawyer giants scrambling to catch up. But like many of the startups it helped take public, Gunderson Dettmer’s image � workload � tanked after the tech bubble burst. The firm slipped from The Am Law 200, its core public offering work dried up, it laid off associates and closed its Austin office. If there had been a vote among Silicon Valley insiders, Gunderson Dettmer probably would have won a contest for “firm most likely to implode.” These days, the firm brags that it’s the most profitable in the Bay Area, with profits per partner of $1.1 million. So how did Gunderson Dettmer go from dead firm walking to million-dollar partner paydays? For one, says Robert Gunderson, Jr., who founded Gunderson Dettmer 10 years ago, the firm was able to fall back on a strong store of venture financing clients. Even though dot-com startups were out of vogue, venture capitalists were still spending hundreds of millions on Valley entrepreneurs. The firm handles hundreds of financings every year, charging $15,000 to $35,000 per deal on average and occasionally more than $200,000. The firm has also relied on its venture fund practice, which generates about 20 percent of the firm’s revenue. It has handled a growing number of mergers and acquisitions, closing 65 M&A deals since the beginning of 2004 alone. It’s touting its complex corporate partnering transactions, including representing Theravance Inc. and Vitae Pharmaceuticals PLC in deals with GlaxoSmithKline. And it represents venture funds and investors pouring money into Chinese companies. Gunderson also still gets a trickle of initial public offerings � last year it took three companies public � though that’s a pittance compared to the 29 IPOs the firm ushered in 1999. Despite the downturn, Gunderson has made Forbes magazine’s Midas List of the top 100 dealmakers for each of the past five years. He ranked No. 98 in 2005, down from the No. 12 spot in 2002. (Three other attorneys are on this year’s list: Larry Sonsini, of Wilson Sonsini Goodrich & Rosati; Joshua Green, of Heller Ehrman; and Gordon Davidson, chairman of Fenwick & West.) These days, Gunderson Dettmer has 105 lawyers � down from 140 at its height � with 20 equity partners and a revenue number that is likely north of $60 million. (The firm confirmed its PPP, but wouldn’t divulge its exact revenue.) Three of the partners are laterals who joined in the last year. Gunderson says the firm’s narrow focus and businesslike operation are the reasons it has survived. The firm has no debt other than small loans for improvements at its offices, Gunderson says. And costs for its offices in Menlo Park, New York City and Waltham, Mass., are 5-6 percent of the firm’s revenue. “There’s no rabbit in the hat,” Gunderson says. If you’re busy and have a good realization rate, “you can get to those numbers.” Still, the firm’s deals are more indie than blockbuster. Just three of its 2004 M&A transactions, for example, were worth more than $100 million. It is also no longer able to count on one of the big upsides of the boom years: taking equity in clients. Though Gunderson says the firm still does it, the equity stakes are small and not as frequent. And despite the high profits per partner, Gunderson continues to face the fundamental question of whether it can survive long-term by focusing exclusively on startup tech and life science companies. “One could question what happens if the market goes away or has a downturn,” he said. “That’s a legitimate question. But we stand for the proposition that you can build an attractive business, a firm that is focused on a part of the market and does not compete with Skadden or Wachtell.” Brenda Sandburg is a reporter with The American Lawyer, a Recorder affiliate based in New York City.

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