On the final days of 1999, attorneys at Menlo Park, California’s Gunderson Dettmer Stough Villeneuve Franklin & Hachigian were so busy that they’d stopped taking virtually all new business. And the firm still didn’t have enough bodies to throw at its existing work. “It was killing us,” says name partner Steven Franklin. “We were turning away awesome opportunities, opportunities that three years ago we would have given our eyeteeth to have.” During the year Gunderson had lost roughly 10 percent of its 90 attorneys to Internet companies. After 30 IPOs, 433 private and venture financings, and 47 mergers and acquisitions-mostly for high-tech companies-the remaining associates were desperate for a break.

The partners agreed that they needed to make a bold move to attract new hires and hold on to them. So on December 21 they decided to call a 5 p.m. firmwide meeting. About 40 associates piled into an office conference room, with another couple dozen listening in on speakerphone. Name partner Scott Dettmer put up a slide laying out the new compensation packages. And, by the way, he told the associates, we’re blowing away the competition: First-year associates will earn $125,000, plus a guaranteed $20,000 bonus. Fourth-years will make $165,000, plus a guaranteed minimum bonus of $30,000. That’s a fat 45 percent raise for first-years and 35 percent for fourth-years.