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After six months of a sliding Nasdaq, you’d expect law firms that invest in clients would be taking a bath. And some certainly are. Venture Law Group, for example, has watched its client holdings plummet 71.5 percent since March. But overall, the seven San Francisco Bay Area firms that are most aggressive when it comes to taking equity in clients are defying expectations. Case in point: Wilson Sonsini Goodrich & Rosati. Wilson lawyers have seen their holdings skyrocket by 130 percent in the last eight months. Wilson was the best-performing among the seven equity-taking firms. “We got lucky,” said Mario Rosati, the Wilson partner who manages the firm’s stock holdings. No kidding. Wilson was taking Internet infrastructure companies public just as the market fell in love with them. Joining Wilson among the firms that saw growth were Brobeck, Phleger & Harrison, Cooley Godward and Gunderson Dettmer Stough Villeneuve Franklin & Hachigian. Along with VLG, Fenwick & West and Gray Cary Ware & Freidenrich saw their portfolios plunge in value. The snapshot of the firms’ portfolios was based on stock performance compared to the price at the initial public offering. The companies included went public from December through April. Holding the equity are firm investment funds and individual lawyers. The IPO prices were then compared with what the stock fetched 180 days later when most “lock-ups” that forbid certain shareholders from selling shares expire. After recent years of heady market success, the downturn has reminded firms that stock profits don’t come with a guarantee. A senior VLG partner took the sinking stock values in stride. Partner Donald Keller Jr. attributed the decline to a return to a more realistic market. “We all realized that it was too easy over the last year or so and that it would not last,” Keller said, referring to the Nasdaq’s steady march upward in recent years. While the firm counts among its losses its investments in Pets.com Inc., which went out of business in November, the change in overall value of the sample is due primarily to a shift in one company. VLG’s holdings in Onvia.com Inc., a Seattle-based online marketplace for business services, were fetching more than $20 million at Onvia’s IPO. The stake was worth a quarter of that six months later. Despite the shifts in the market, Keller said that taking equity in startups is still a viable long-term strategy. For Wilson, the soaring portfolio was more happenstance. The firm’s stakes in Avanex Corp., a Fremont, Calif.-based maker of speedier network components, and Viant, a Boston-based Internet consultant, tripled during the six months following the IPOs. When shares became tradeable, Wilson’s stake in Avanex was worth $47 million, and its stake in Viant was worth $2.68 million. However, if the firm didn’t sell all of its Viant shares at the lock-up date, it probably wishes it would have. The company’s stock is now trading at under $5 a share. Brobeck also seems like a big winner in the market. The firm saw a 96 percent increase in value of newly tradeable stocks held by the firm and individual lawyers. Meanwhile, Cooley Godward saw a modest 10 percent increase in value, and Gunderson Dettmer saw its one holding increase in value by 28 percent. Fenwick and Gray Cary saw their holdings slide in value by 40 and 44 percent, respectively. The gains and losses sometimes reflect just one stock or one lawyer. At Brobeck, the big winner is partner John Larson. He invested his own money in Richmond, Calif.-based Sangamo BioSciences Inc., a long-suffering biotechnology company, because his buddy is the CEO. Larson is mum on the details, but Securities and Exchange Commission filings show he purchased some 142,000 shares for about $300,000 over four years. He’s also a board member and received more shares as compensation. On the day his total 474,460 shares became tradeable, they were worth some $15.27 million. “It’s one of those things,” said Larson, who did ask his firm to invest as well but was turned down. “Up until about a year ago, it wasn’t at all clear it was going to be a wonderful investment.” Related Chart: Stock Market Survivors

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