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Now that the Internet roar is a whimper, one might think out-of-town firms would be cutting their losses and going back east. Instead, they seem to be staying put — and some are even thriving. While local firms have been ravaged by the fall-off in tech work and are simply trying to shore up their finances, out-of-town firms like Cleveland-based Jones, Day, Reavis & Pogue are hiring homegrown talent. Others, like New York’s Sullivan & Cromwell are hoping disarray at local firms will give them an opening with clients. “I’m one of the few who is not happy the recent economic indicators are turning up,” says R. Todd Johnson, Jones, Day’s partner-in-charge in Menlo Park. “The longer the recession continues out here, the better it is for firms like us.” That’s not to say all the players from big, out-of-town firms are giddy. Kenton King, the managing partner of New York-based Skadden, Arps, Slate, Meagher & Flom’s Palo Alto office, said the firm opened up in Silicon Valley in 1998 to gain a foothold in the venture capital and tech communities. Instead, the firm’s Valley office is living off of work more fitting with Skadden’s longtime stronghold — complex and international transactions. “What’s gotten us through the downturn is the broader platform of services we offer,” King said. Skadden was the highest-grossing U.S. law firm in 2000, according to the annual survey of law firm finances compiled by The American Lawyer, and it has one of the largest teams in the Valley for a firm that isn’t based in the Bay Area. Size, however, doesn’t seem to matter. Mayer, Brown, Rowe & Maw opened up a tiny office in Palo Alto in June 2000 with five partners. It had originally been opened by Mayer, Brown & Platt prior to its merger with Rowe & Maw. For its part, Mayer, Brown had a cache of Valley clients already and simply put their lawyers closer to the action. “We’ve always had a Valley client base, but now we have a physical presence to bolster it,” said Patrick Shannon, a partner. And the firm isn’t looking to go head-to-head with the locals. Instead, it’s marketing specialty practices like appellate law, government relations and tax disputes. Jones, Day’s office is also small — but it’s a scrappy one. The firm opened up shop in October 2000 and was buried by work almost immediately, Johnson said. And he discovered he couldn’t hire anyone, no matter how much money he threw around. That changed last summer, he said. As tech work dried up, Johnson said, lawyers started returning his calls. And since then, Johnson has taken on some choice lawyers. Three weeks ago, James Brelsford came on board after a stint at the now-bankrupt Excite At Home. Brelsford is a longtime Valley lawyer who helped launch Seattle-based Perkins Coie’s Valley office. And last October, former Wilson Sonsini Goodrich & Rosati partner Daniel Mitz joined Jones, Day. He had left Wilson in August 2000 to do deals for Sun Microsystems Inc. but his job dried up as deal flow ebbed. Brelsford said he talked to a lot of Valley firms and discovered the locals were “hunkered down.” “It was a consistent theme,” Brelsford said. “They’re contracting not only at the associate level but also at the senior ranks where I was looking.” By far the least assimilated among the out-of-towners is New York’s Sullivan & Cromwell, which opened up in Palo Alto in September 2000. For Scott Miller, the partner running Sullivan’s Valley office, hiring locals to target startups and build up an equity portfolio is alluring, but he’s not biting. The 18-lawyer office is staffed with transplants from other Sullivan offices. And they’re keeping busy doing deals for international clients and non-tech companies. As Miller put it: “We didn’t have any notions about our ability to select the next Yahoo.”

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