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For the second time in less than a week, a San Francisco Bay Area technology firm is dissolving: Partners at Skjerven Morrill have voted to disband the firm. The firm’s management announced the news to Skjerven’s 62 attorneys and 115 staff members at a 10 a.m. meeting Monday. According to a statement released Monday by Skjerven, the decision to dissolve follows months of failed efforts to find a suitable merger partner. “Factors that affected the merger discussions included the cumulative effect of the continuing downturn in the general and technology economies, as well as the major structural changes in the firm’s organization and geographic base and continuing declines in attorneys and staff levels, during the past year,” the statement read. A partner at Skjerven put it more bluntly: “We ran out of money. We’ve got debt, we’ve got leases, and our income is not enough to make it a viable entity going forward over the long haul.” The partner said the vote to dissolve took place Friday. “It was clear that the situation was bad for a while. It was pretty much inevitable by last week.” The news comes on the heels of San Francisco-based Brobeck, Phleger & Harrison’s high-profile collapse, announced Thursday. It also represents the latest midsize IP firm to disappear from the Bay Area landscape in recent years. Since 2000, IP boutiques Lyon & Lyon; Limbach & Limbach; and Majestic, Parsons, Siebert & Hsue have all shut down. And Flehr Hohbach Test Albritton & Herbert, another IP player, merged with Minneapolis-based Dorsey & Whitney last summer. Edward Anderson, Skjerven’s chairman, and David Hopmann, its firmwide managing partner, did not return calls for comment. Skjerven will wind down its operations over the next several weeks as attorneys take care of client matters. While a precise date for the firm’s closure has not been set, the announcement said that Skjerven expects the firm to shutter by March 1. It’s still unclear whether the firm will shut down through a bankruptcy court filing. A partner said the preferred route is to wind down operations outside of federal bankruptcy court. Skjerven’s announcement comes days after the legal community was rocked by the news that Brobeck was disbanding. Similar to Brobeck, whose partners decided to call it quits after unsuccessful merger negotiations with Philadelphia’s Morgan, Lewis & Bockius, the Skjerven demise was triggered by failed efforts to find a merger partner. Skjerven was apparently in parallel merger discussions with San Francisco-based Pillsbury Winthrop and Chicago’s Sidley Austin Brown & Wood. Pillsbury Winthrop Chairwoman Mary Cranston acknowledged that her firm was approached by Skjerven about a potential merger several months ago. According to Cranston, Pillsbury concluded that a merger didn’t make sense, and informed Skjerven of its decision three weeks ago. “The firm [Skjerven] had shrunk but had pretty substantial lease obligations, and we couldn’t figure out how to make that all work,” Cranston said. Representatives at Sidley Austin could not be reached for comment. A large number of Skjerven attorneys are expected to move to Pillsbury Winthrop and Sidley Austin nonetheless. More than a half dozen of Skjerven’s partners, including managing partner Hopmann, joined the firm from Pillsbury in 1999 and 2000. Cranston confirmed that Pillsbury was talking to numerous partners at Skjerven, including several former Pillsbury attorneys. Founded in San Jose, Calif., in 1976, Skjerven was one of the Bay Area’s seminal IP boutiques. It was especially known for its strength in the semiconductor industry, with clients including SanDisk Corp. and Xilinx Inc. But the firm was hit hard by the economic downturn of the past two years. The firm, which had 140 lawyers in August 2001, reduced its ranks by 29 attorneys and 27 staff members in two rounds of layoffs in late 2001 and early 2002. In April, Skjerven shuttered two of its four offices, in Austin, Texas, and Newport Beach, Calif. It’s unclear whether the firm was able to find tenants to sublease its office space in Austin and Newport Beach. Meanwhile, the firm’s reduced ranks meant that it was only partially occupying its office space in San Francisco and San Jose. The firm suffered another blow in April when name partner and rainmaker Alan MacPherson jumped ship to launch his own firm following a management shake-up. His departure, along with that of several other partners, robbed the firm of much of its IP talent and expertise. The result was more of a general practice firm than an IP powerhouse. “There was no guiding intelligence at Skjerven since MacPherson left,” said IP management consultant and recruiter Katharine Patterson. “Everybody’s a very high-quality attorney there, but they lacked a perceptible business plan.” The firm also suffered from the same market forces that have challenged other IP specialty firms recently, particularly increased competition on the litigation front from general practice firms like Morrison & Foerster. “When the new work was coming along people were not turning to a firm like Skjerven to do it; they were turning to major litigation powerhouses, or boutiques like Keker [& Van Nest],” said Patterson. “That just leaves Skjerven in the dust.”

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