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The lure of the dot-coms — with promises of massive payoffs for those willing to take a risk -� may not be what it used to be, but it is still alive in Texas. Those startup Internet companies are famous for often giving general counsel stock options and an equity position, setting the stage for multimillion-dollar payoffs if the firm successfully goes public. But in the past year, tech stocks have taken a hit, and there is growing suspicion among investors about the short-term ability of dot-coms to deliver on those promises. Ron Frappier, practice group leader of the corporate securities section at Dallas’ Jenkens & Gilchrist, says he has seen six lawyers leave in the past six months, with most of them heading into the areas of technology and dot-coms. The only one of the six who left for another firm went to one with dot-com connections and hopes to work his way into that field. “It certainly has its pull on all of us,” Frappier says. While the exit of a half-dozen lawyers is far from a flood, it is being noticed because “this firm has had historically incredibly low attrition.” Steve Mims, a headhunter with Texas’ Prescott Legal Search, says most of the action is in Austin, where a number of technology and dot-com businesses are sprouting. What’s happening there is nothing compared to the rush for dot-coms by lawyers in California, but Mims says it is a career move that is still common in Texas. Mims says he has represented several recent dot-coms that were searching for general counsel and easily found candidates for those positions. But he says there is a trend toward caution on the part of the prospective lawyers and, for that matter, a dimming of the bright offers. INTEREST IN BUSINESS WORLD “The lure of the Monopoly money guarantees of equity are fading,” Mims says. The typical lawyer making the jump to a dot-com is young and willing to take a risk, he says. And Mims says it is now more likely that the lawyer has a personal connection with the dot-com founder or some other background with the enterprise. He adds that the lawyers who do move from firms to dot-coms often had a hard time earlier in life deciding between law school and an MBA program. Houston-based Fulbright & Jaworski’s head of corporate business and banking, Mike Conlon, echoes Mims, saying the young lawyers who move to dot-coms often have more of an interest in the business world than the legal world. “It’s an opportunity through options to grab a real big brass ring,” Conlon says. He adds that Fulbright & Jaworski has lost few lawyers to the dot-coms. Steve Leshin, in the corporate section with Jenkens & Gilchrist and a member of the firm’s board of directors, says some of the young associates moving to the dot-coms are being a bit greedy, with visions of fast cash.” The way the market’s gone has put a little grill on that greed,” Leshin says, referring to the downturn in tech stocks. Leshin says one lawyer who left for a dot-com has since come back to the firm. “He was a dot-com guy, and he returned to the mother ship.” Leshin says many lawyers who leave the firm for a wide variety of reasons often return later on, making them members of what he calls “The Boomerang Club.” Charles Szalkowski, head of the technology and emerging growth companies practice group for Houston’s Baker Botts, tells of a lawyer he knows who joined a dot-com that had big plans. The high-profile startup was poised to go places. But then the market turned sour, a planned public offering was put off, and Szalkowski says reality set in on the lawyer, who is now “quietly looking” for a new job. Frappier says the r�sum�s he sees from headhunters now include a surprising percentage — about 25 percent — of lawyers with dot-com experience. He believes they are lawyers who may be part of a reverse trend: dot-com lawyers heading back to firms. Akin, Gump, Strauss, Hauer & Feld’s Ken Menges, head of the Dallas firm’s corporate section and chairman of the Dallas office practice committee, says his firm has lost several associates in the past year and adds that many other associates are interested in dot-coms. But he adds that one of the exiting lawyers has since returned. Menges, like Leshin, says lawyers often return to the firm after trying something else. But Menges says he believes more dot-com lawyers are likely to take their skills and move to other dot-coms, rather than return to the former firms, if they become unhappy with the jobs. ALL THE GOLD IN CALIFORNIA Steve Zager, head of the Austin office of Brobeck, Phleger & Harrison, a firm headquartered in California’s Silicon Valley, says there has been a dose of economic reality thrust upon the dot-com lure. “We had the zeal of the gold rush. Everybody wanted to get out to California to pan for gold,” Zager says. Now, he says the stock options and deals that helped hire general counsel are in many cases sour investments that have turned into “golden handcuffs.” Headhunter Mims isn’t so sure. He says it remains to be seen if the dot-com lawyers truly have any of what he calls “buyer remorse.” There are more dot-com lawyer r�sum�s circulating these days, but he points out that there are also more dot-com lawyers than there used to be. The buzz over dot-coms is a non-event for the managing partner at Houston’s Vinson & Elkins. Harry Reasoner says his firm has lost lawyers in recent years to a variety of startup companies, but he hasn’t seen anything with the dot-coms yet that will have any particular impact on his firm. Even though Brobeck’s Zager also sees no significant run of lawyers from his firm, there is a proactive dot-com style plan in place that may help stem any tide. The firm sets aside a portion of profits to invest in startup clients, taking equity positions in emerging companies. And part of the profits from that are set aside for associates. “They’ve made some money,” Zager laughs, saying the fund “supplemented their income nicely.”

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