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Craig Johnson is still a popular guy at Harvard Business School — even if the Internet economy is in the tank. Recently, the Venture Law Group co-founder trekked to Harvard to answer questions from students who are studying his firm. It’s the second time Johnson has traveled to the university where Menlo Park, Calif.’s VLG is used as a case study in Harvard business professor Ashish Nanda’s class. This time, the class was particularly interested in VLG’s attorney retention goals. Though it may not seem like such a pressing issue given the economic downturn, VLG wants to keep all of its attorneys and has wrestled with ways to sweeten the pot. “Johnson had some very strong views on retention and that’s something we preach for professional services firms,” Nanda said. Nanda learned of the firm from a student’s research report. His series of case studies include a wealth of information on VLG’s professional services model, its equity stakes, and the systematic way the firm approaches retention. For example, VLG limits the number of clients each partner may represent and it lets partners cut back on their workloads in exchange for a cut in pay. Overall, the case study is interesting reading and dishes up to Harvard students and management professionals enrolled in the university’s executive program some juicy facts. For instance, the firm’s founders went without pay for six months while they struggled to get the firm off the ground, and to make its trademark investments in clients. And it took a while for those investments to reach true critical mass. In 1998, VLG Investments doled out just $3 million in stock to partners. That was up to more than $30 million the following year and by 2000, it more than tripled to $100 million-plus. Meanwhile, fees in 1999 generated $53 million in revenue, which came out to profits of $4.53 per point. As for retention, the firm’s turnover rate in 1997 was 16.40 percent, 21.33 percent in 1998 and in 1999, 17.04 percent. And while it’s not zero, that’s not bad. By comparison, San Francisco-based Brobeck, Phleger & Harrison, a firm not known for extraneous retention programs, had a 23 percent turnover rate in 1999.

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