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Editor’s Note: This is the second of a two-part series on the growth of litigation in Silicon Valley. Fenwick & West partner Patricia Lucas has doubled the size of the firm’s litigation group since taking it over four years ago. And she still may not have enough litigators. Since the bottom dropped out on tech-related corporate work, senior partners have been championing their litigation groups as the saving grace for the bottom line. The trouble is that litigators and corporate lawyers aren’t interchangeable when it comes to the fees they can fetch. To be sure, big-ticket patent disputes and other high-stakes litigation are lucrative for firms, requiring hundreds of lawyer hours. But when it comes to generating revenue, there’s nothing like a desperate company willing to pay extra for an overnight merger. “Litigation doesn’t work that way,” said Lucas. “It just doesn’t happen over a weekend.” Lucas is credited with swelling Fenwick’s litigation group by 105 percent, to 82 lawyers. Overall, the 302-lawyer Fenwick grew 66 percent during the same period. So far, the targeted growth in litigation appears to be paying off. “Since we have improved our position competitively, we’re getting more litigation work,” Lucas said. That’s certainly good news for Fenwick. And other Silicon Valley law firms that grew their ranks of litigators in recent years are seeing as much as a 30 percent bump in new litigation matters. Valley corporate firms are relying more on their litigation expertise for revenue now that transactional work has stalled. And they’ve been bulking up on litigators in recent years. The six largest tech-law firms swelled their ranks of litigators by an average of 62 percent since 1997. That’s when the boom in technology started pushing firms to bulk up on their ranks overall. In the same time, the six firms — Brobeck, Phleger & Harrison, Cooley Godward, Fenwick & West, Gray Cary Ware & Freidenrich, Morrison & Foerster and Wilson Sonsini Goodrich & Rosati — grew by an overall average of 92 percent. Fenwick logged the greatest growth in litigation among the tech firms, followed by Brobeck. The 876-lawyer firm swelled its ranks of litigators by 84 percent, to 374 lawyers. Cooley’s 219 litigators, out of a total of 661 lawyers, represent a 63 percent increase since December 1997. Meanwhile, Wilson Sonsini’s 172 litigators reflect a 50 percent increase and 458-lawyer Gray Cary now has 169 litigators, a 40 percent increase. And logging 30 percent growth in its litigation group, the 955-lawyer Morrison Foerster now has 357 litigators. While the ranks of litigators have grown, they still represent roughly a third of firm lawyers and about the same amount in revenue. “Having a healthy litigation practice will help offset a downturn and the bigger the litigation practice, the better the offset,” said Peter Zeughauser, a principal at law firm consultant ClientFocus in Corona Del Mar, Calif. The emphasis in recent years at the Valley’s firms has been on growing corporate because of the premium billing and equity opportunities, Zeughauser said. Now, the Valley’s corporate-focused firms have to think harder about their core groups and whether they’re counter-cyclical, Zeughauser said. “Firms are now learning why they may want to have counter-cyclical practices but that they might not be as profitable,” as corporate, he said. And Silicon Valley firms are slow to charge litigation clients the kinds of premium rates corporate clients pay, Zeughauser said. Zeughauser said the size of the litigation group depends on whether the firm wants it to service corporate clients or operate as its own revenue generator. Not every firm uses the expertise as a strategic weapon to increase its client base. Wilson Sonsini, for example, says it grew its litigation practice to keep up with the demands of existing corporate clients. Fenwick, meanwhile, was more aggressive. It wanted a litigation group that would score its own clients independent of the firm’s corporate group. Fenwick Chairman Gordon Davidson said about half of the firm’s litigation workload is for existing clients and the other half stems from outside work. And firms like Brobeck and Cooley haven’t let go of nontech litigation work because of the revenue it generates. Cooley Godward, for example, signed on this month to handle a mountain of asbestos-related litigation for a bankrupt building products maker. “The benefits to keeping it are that we’re pretty diverse at this point, and it’s interesting and steady stuff,” said Stephen Neal, a litigator and Cooley’s chairman. Using litigation as a sideline profit generator did wonders for San Francisco’s Orrick, Herrington & Sutcliffe. Litigation, specifically intellectual property litigation, was the weapon of choice for the firm when it eyed a piece of the Silicon Valley market. Rather than try to bulk up on corporate lawyers who would then compete for startups, the firm sent top-flight litigators Terrence McMahon and Gary Weiss to the outpost to market their reputations as trial lawyers. Orrick has scored tech-litigation work from the likes of Cisco Corp., eBay Corp., and even behemoth Microsoft Corp., which has the firm currently working on pending patent disputes. McMahon has since left the firm for McDermott, Will & Emery, which also targeted litigation as a growth opportunity in the Valley. Gary Weiss, managing partner of Orrick’s Menlo Park, Calif., office, has grown the firm’s outpost from two lawyers in 1995 to 53. The office has a handful of corporate and employment lawyers as well. “We thought if we paired strong litigators with the market down here, it would bear fruit, and, boy, did it ever,” Weiss said. For now, there’s good reason for Valley firms to tout their litigation. As David Gross, a Gray Cary Ware & Freidenrich partner put it, the dramatic drop in what companies are worth has clients scrambling for litigation advice. “I think what we’ve seen in the last year, like significant changes in the value of companies, will lead to more litigation,” Gross said. But firms won’t see the kinds of steady increases in litigation that they saw in corporate during the boom, Gross added. “Litigation won’t simply increase because of a tough business market.”

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