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The high-tech industry had a steady stream of deals to be made when four California-based firms opened Austin offices in the 1990s, but that market has dried up, and the firms are seeking other work. “While there’s been a slowdown in our business and technology practice, there’s been a corresponding increase in all of our other practice areas,” says Steven Zager, managing partner in Austin for Brobeck Phleger & Harrison. Zager says Brobeck, which is headquartered in San Francisco, has an advantage over other firms because it’s a full-service firm with about 80 lawyers in Austin. “In our Austin office, 30 lawyers handle the business and technology practice, and the rest are in other areas of practice,” he says. Another California firm that operates in Austin is branching out to weather the high-tech storm. Paul Hurdlow, managing partner for Gray Cary Ware & Freidenrich’s Austin branch, says the firm has an interest in opening an office in Houston but probably won’t be able to until the second half of 2002. The Austin office has stayed busy by building on its litigation practice and other services, he says. “While companies are still living, they need legal services,” Hurdlow says, noting that Gray Cary, which is based in Palo Alto, Calif., provides whatever services its clients need. Bill Cobb, president of Houston-based Cobb Consulting, which advises firms, says the California firms’ Austin offices probably are busy but don’t have the tremendous number of initial public offerings that had been out there. “A lot of venture capital has been scared off,” he says. However, Cobb says it has become more difficult for litigators to be fully utilized because many of the more sophisticated companies are moving toward alternative dispute resolution rather than fighting court battles. NOT AS BUSY “We’re not as busy as we’d like, but I don’t think anybody is,” says Brian Beard, managing partner in the Austin office of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian. But Beard says Gunderson Dettmer, which headquarters in Menlo Park, Calif., is in Austin to stay and is positioning itself for when the high-tech business picks up. Three new attorneys are scheduled to begin work at the firm’s Austin office, he says. Paul Tobias, managing partner in Austin for Wilson Sonsini Goodrich & Rosati, another Palo Alto firm, also says he’s gearing up for when the market rebounds and is in a hiring mode. “I’m looking selectively at talent,” Tobias says. But two former partners at Gray Cary say things may be tougher for the California firms than the managing partners want to admit. “What was once cool about California is not cool any more,” says Bill Hulsey, one of the three founding partners of Gray Cary in Austin and now a partner in the Austin office of Hughes & Luce. Hulsey, who left Gray Cary in October 2000, says what gave the California firms their competitive advantage was their experience in doing IPOs and venture capital. “That market is much, much less than it was two years ago,” he says. The California firms don’t have a lock on the other practice areas that are supporting their business and will find Texas firms very competitive in those areas, Hulsey says. Nick Fox, a partner in Vinson & Elkins in Austin, predicts that more Texas lawyers who moved from Texas firms to California firms will return to Lone Star State firms now that the high-tech market has taken a downturn. “We have seen an increase in the number of r�sum�s from the California firms,” says Fox, another of the founding partners for Gray Cary’s Austin office. Billy Murphy says he left Gunderson Dettmer to join V&E’s Austin office as an associate in June because he wasn’t busy enough at the California-based firm. “The reality is that any transactional group that’s practicing in Austin is slower than it was a year ago,” Murphy says. Murphy says V&E has a lower ratio of associates to partners than the California firms, providing young associates more opportunities to work with partners. Fox says he sees a real opportunity for V&E to make investments in quality lawyers looking to move back to Texas. Beard says he has lost only two associates within the last five months, and prior to that only one associate had left Gunderson Dettmer. The firm’s top managers in Menlo Park, Calif., are “still big believers” in the Austin office, he says. Layoffs aren’t likely at the California firms, the managing partners say. “Basically, we decided early on that we partners would take the risks of the economy,” says Brobeck’s Zager. “We’re better off keeping good people and not laying off.” If there were layoffs, the firm would have difficulty handling the work when the market comes roaring back, Zager says. Tobias, with Wilson Sonsini, says cycles are just a part of doing business. “Texas is still a strong market long term,” he says.

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