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Crushing workloads in recent years have taken their toll on many working relationships in Silicon Valley. Particularly hard hit have been the ties between corporate lawyers and investment bankers. They were some of the first relationships law firms dropped when forced to choose between having a banker or technology company as a client when demand began to far outstrip lawyer capacity. Some firms, like Menlo Park’s Venture Law Group, simply stopped taking on investment banking work entirely. But that’s not the case for all firms: Wilson Sonsini Goodrich & Rosati still managed to handle a great deal of underwriting work last year, representing more underwriters than issuers in the market for initial public offerings. And with the recent hire of Nora Gibson from Brobeck, Phleger & Harrison, Wilson appears to be in a better position to maintain its investment banking relationships. Investment banks have long been at the core of practices at New York firms. Upon Gibson’s hire, Alan Austin, Wilson’s managing partner, said the firm is trying to build up teams of securities specialists who can move from one transaction to another, helping the partners who personally manage each client. And Gibson, who represents underwriters almost exclusively, is part of that strategy. Wilson’s investment banking clients need the extra hands, representing among them some strong and important relationships, said Wilson partner Jeffrey Saper. “We don’t want to ignore the fact that investment banks are an important part of the network.” Wilson lawyers, however, are not immune to the pressures of too many company clients and are turning away much of the investment banking work offered them, Saper said. “Given the volume of work which has recently hit us, we’ve been forced to be more selective as to the banks with whom we’ll work and the number of deals which we can execute concurrently,” Saper said. With some 650 lawyers, Wilson had the manpower to continue to staff many deals, but the firm still had to turn away many more. And it was not alone. “There certainly have been times in the last six to nine months where it was a challenge to find underwriter’s counsel for a transaction,” said Paul DiNardo, a managing director at Goldman, Sachs & Co. in Palo Alto, Calif. Getting turned away at familiar doors was disappointing for Goldman, but it was a boon for firms that hadn’t in the past represented Goldman. One of the leading investment banks, Goldman carries a special brand of prestige and is known for its high-quality deals and talented professionals. In recent years, Goldman has expanded its network of relationships to include law firms that “stepped up” when called on, DiNardo said. He would not, however, disclose the firms he’s added to his arsenal. “They stepped up and as a result, we’re going to be working with them more and more,” he said. Lawyers who had to turn away investment bankers with whom they had long-term relationships said they found it difficult but unavoidable. “We were operating in the face of an insurmountable force that kept us from doing the majority of attractive work offered to us, and something had to give,” said Kenneth Guernsey, a partner in Cooley Godward’s San Francisco office. “It was horrible,” he added. “It’s a relationship business, and plenty of relationships got strained.” The work was hard to turn away, and not just because of longtime relationships. Investment bankers can promise lawyers future client introductions. And the work, often a favorite among younger associates, exposes lawyers to a broad array of deal structures and securities-related issues. “It’s another way to build and embellish networks of people,” Guernsey said. Cooley had a hand in 43 IPOs, 16 of them as underwriter’s counsel. Wilson Sonsini, meanwhile, represented the underwriter in 61 of the 116 IPOs in which the firm had a hand. In 1999, Brobeck also represented the underwriter more times than the issuer among its IPOs, taking public 34 clients while representing the underwriter in 39 deals. Ten of those deals were Gibson’s. But like Cooley, Gray Cary Ware & Freidenrich represented nearly twice as many issuers as underwriters. And Venture Law Group last summer put an end to taking on investment banking work. “One reason is it took away some of our focus on company clients,” said Donald Keller Jr., a VLG partner. He added the work with underwriters also fails to deliver the firm an equity stake, which is key to its strategy of profiting with its clients’ success in the market. With local law firms turning away so much work, underwriters turned to the satellite offices of New York firms whose historic stronghold has been in banking. Richard Capelouto, a partner at Simpson Thacher & Bartlett’s satellite in Palo Alto, said the firm has been able to take on new investment banking clients since opening its office last year. “There’s clearly a demand,” Capelouto said, adding, “It’s clearly helped us develop the business.”

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