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In March, Spencer Gusick had offers from three dot-coms: a startup with solid financial backing, a more developed enterprise about to go public, and another already on the market and growing. Tech stocks were just starting to falter, but when they plummeted in April — the last company’s shares dropping from $250 to as low as $75 — Gusick was still safely ensconced in his Perkins Coie office, complete with the hip industrial look of San Francisco’s SoMa district. Though tempted by stock option riches, the seventh-year associate decided that “a good law firm job is better than a mediocre in-house job.” He had seen both sides from previous perches at San Francisco’s Pillsbury Madison & Sutro and Graham & James, as well as an enjoyable but frustrating two years at a Web design startup. The rising cost of living in the Bay Area made it hard to part with his recent pay raise, and while he’s betting on tech stocks to rebound, the 32-year-old Gusick observes, “I’ve got friends that were millionaires on paper and saw their stock options [sink] underwater.” In this, the dawn of the New New Reality, startups seem to be losing some of their allure. While salary hikes and stock dips have not dramatically stanched the flow of associates to Internet concerns, attorneys contemplating the switch “are doing a little more due diligence, as one might expect from lawyers who are ordinarily risk-averse,” says recruiter Linda Bierman of New York’s The Artemis Group Ltd. Yet just a few months ago “the word dot-com was so enticing that they were not looking as closely” at a potential employer’s business plan, compensation package, or work conditions. Tsan Merritt-Poree exemplifies the trend. After only four months as general counsel and vice president of business development for NetNoir.com, an online portal for the black community, she returned to San Francisco’s Cooley Godward as a fifth-year associate in mid-January. “People keep asking me, ‘Is the party over?’ ” says Merritt-Poree, 37. The answer is “ no, it’s just gone from a beer bust to a cocktail party.” Merritt-Poree’s concerns with the start-up, though, had less to do with the Nasdaq and more to do with her work environment. She says the laptop computer and fax machine she requested never appeared. She was asked to front the money for Federal Express shipments. And, perhaps the greatest indignity, a human resources executive threatened to dock her when she arrived late one Monday after working through the previous three weekends. Merritt-Poree knows such griping may make her sound like a prima donna. But, she contends, “although the lack of a corporate environment may spur new ideas and quick thinking, it also may be difficult for corporate people to do the job as well as they would like.” “I think she missed out,” responds Noel Johnson, 32, who stepped into Merritt-Poree’s position at NetNoir. Merritt-Poree’s complaints are the classic symptoms of culture shock, he contends. “When you come from a big firm like Cooley Godward, your expectations are just way too high for any startup,” says Johnson, who in 1997 swapped Cooley’s outsized amenities for the opportunity to play a larger role in a smaller firm down the street, Steinhart & Falconer. That transition smoothed the switch to NetNoir, which he likens to any other fledgling endeavor — the inconveniences are a trade-off for the excitement of building a business. Merritt-Poree says she has no regrets. Her time at NetNoir has made her more appreciative of her firm’s varied clientele and solicitous partners; the raise announced on her second day back at the firm helped, too. Both she and Gusick also say they are very happy with their firms’ decision to cut associates into the partners’ investment funds, which include stakes in the dot-coms they advise. Such a portfolio, they say, is more diversified than an in-houser’s option package. Brobeck, Phleger & Harrison already has doubled its $2,500 investment per associate in the firm’s fund and distributed checks to each associate a few months ago. Such perks are paying off in higher retention rates. After watching an alarming 23 percent of its associates defect last year, Brobeck chairman Tower Snow, Jr., sounds relieved to report that the attrition rate in this year’s first quarter was only 3 percent. “People are less inclined to leave very attractive, guaranteed incomes behind to take a flier at dot-com equity,” says Snow. “The easy money is gone.” He tells of one Brobeck associate who had barely left the building before she did an about-face: After the Nasdaq index’s 10 percent drop on Friday, April 14, her last day at the firm, her next employer’s backer pulled the startup’s funding. “So on Monday, instead of starting at a dot-com, she was back at her desk.” Brobeck seems to harbor no hard feelings toward the wayward associate. Leaving a firm for a startup is “a highly personal choice and we don’t attach judgments to that choice,” says Snow. The firm’s need for legal talent (it hired more than 100 lawyers in the first 100 days of this year) apparently overrides any damage to its pride. Shaw Pittman was equally receptive to hiring a short-lived general counsel. After barely six months at Exult, Inc., which uses the Internet to outsource human resources for Fortune 500 companies, William Peters gave up substantial equity to join Shaw Pittman as a partner in February. Now entrusted with building the D.C. firm’s new Los Angeles office, the 33-year-old Peters began his career working at MCI Worldcom, Inc.’s information technology subsidiary, MCI Systemhouse, Inc., while still studying at Loyola Law School. Later, he spent three years at Milbank, Tweed, Hadley & McCloy before bolting for Exult. But he says he soon found himself itching to interact with varied clients and develop a practice. Others, however, are not looking back. The difference may be a matter of where in the digital universe they landed. In April, Alexander “Sasha” Pesic became director of legal affairs for CNET Networks, Inc. — which was one of his main clients at Palo Alto’s Wilson Sonsini Goodrich & Rosati. The former fourth-year associate views the Internet media company’s radio, television, and Web divisions as his “mini-clients,” adding: “I think I’d get bored in another dot-com that only did one thing.” Pesic, 30, says he anticipated a shakeout of tech stocks, and wouldn’t have gone to a pre-IPO dot-com. Despite a recent halving of CNET’s stock value, he’s bullish on both the new economy and his company’s future. In any event, financial concerns take a backseat to career growth, say both Pesic and Stephanie Anagnostou, the just-minted senior vice president and general counsel of Evoke Incorporated, which provides Web casting and conferencing. On Monday, April 17, when the market rallied after a Friday selloff, Anagnostou started work at Evoke’s offices, a short drive from the Boulder digs of Cooley Godward — where she had hopes of making partner the following year. “I would be doing more of the same at Cooley,” says Anagnostou. “But by going to Evoke, a client, I was expanding my skill set by being a businessperson as well as a lawyer.” And if it doesn’t work out, that light in Cooley’s window is flashing: Welcome back, we need all the help we can get.

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